If you have bad credit and need a loan you have a few different options. The first option is to ask your mortgage broker about sub prime mortgages. Sub prime mortgages are for people that have bad credit and need a loan. The other option is to repair your credit to a point where it is no considered bad and apply for a loan at that time.In addition to having liquid assets, or even instead of having a lot of liquid assets, having a low loan to value ratio will give you a better chance at being approved for a mortgage than if you had a high LTV ratio. For example if your home was valued at 200k and you only needed to borrow half of that, 100k this would improve your chances at getting approved for a loan, even though you have bad credit. Now on the other hand if you have a home worth 200k and you need a mortgage loan for 180k, this would be a high loan to value ratio and would not help to improve your chances at being approved for a mortgage.
If you have bad credit and want a loan you should consider taking steps to improve your credit. Paying down your balances and disputing inaccuracies on your credit report can improve your credit and help you get a loan.
There are mortgage loans for those with bad credit, however they come with higher interest rates and have tighter guidelines for qualifying for them. If you are showing a lack of tradelines on your credit report, a easy way to help those scores is to acquire a secured credit card that is insured by a pre-paid payment deposit. Secured credit card issuers will report payment info to the credit bureaus allowing you to establish a credit history.
The first step is to carefully review your credit with a mortgage professional. Are there any items being misreported or that have been paid off already? Is your mortgage history being reported accurately? The easiest things to take care of are errors on your credit that you can substantiate in writing as errors.
If you have bad credit, a lot of assets can help determine whether you're worthy of a mortgage or not. If you have 6 months of reserves in liquid assets you will have an easier time qualifying for a mortgage. Be sure to let your mortgage professional know about all liquid assets you have (Checking, Savings, Stocks, Bonds, Mutual Funds, IRA, 401k).
