Buying a home with bad credit already puts you at an unfair disadvantage. Even if you have the income to afford a mortgage and other home expenses, you are considered a risky borrower by most lender standards. In this instance, it is important to educate yourself on the home buying process, and avoid common mistakes, which could disqualify you for a mortgage loan.

Avoid Making a Major Purchase

Before approving a mortgage loan application, lenders will carefully examine your finances to ensure that you are realistically capable of handling a mortgage payment. If you earn a large salary, qualifying for the mortgage is likely the least of your concerns.

On the other hand, if your salary is modest, adding an additional monthly payment before the loan is final may significantly increase your debt to income ratio. When this occurs, lenders may decide that you are unable to afford the home. With this said, avoid making any large purchases prior to closing. This might include financing a vehicle, furniture, etc.

Avoid Changing Employers

In some cases, changing or switching employers while trying to buy a home will have little effect on a mortgage approval - especially if you remain in the same field. However, if you work on commission or considering self-employment, avoid such changes until the loan papers are signed.

Mortgage lenders require predictable income. If you have a habit of changing employers, lenders may be unable to foresee future earnings. To avoid hold-ups or the hassle of re-qualifying for a mortgage loan, it helps to maintain the same employer until the loan papers are finalized.

Avoid Switching Banks

Getting a mortgage loan approval is a long and tedious process. In addition to reviewing a borrower's credit and income, lenders require banking information. On average, lenders want to see all banking statements for the last three to six months. If you are self-employed, they may request the past year's banking statements. Here is a list of recommended Bad Credit Mortgage Lenders online. It's important to use a reputable lender online to make sure your personal information is secure.

Paper trails are very important. When a potential borrower transfers funds to another financial institution or opens a new banking account, it becomes difficult for a mortgage lender to verify or document funds.

Visit ABC Loan Guide for more information about a Bad Credit No Down Payment Mortgage Loan. Also, see our suggested lenders for a First Time Home Buying Program.

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