How To Finance A Modular Home With Bad Credit
The real estate market is heating up in many areas of the country. As prices continue to increase, more people than ever are searching for a home to purchase. It can be difficult for people with bad credit to get approved for financing in the traditional way in purchasing a new home. One of the biggest trends in real estate today is the purchase of modular homes. These modular homes are professionally built homes that are of great quality. Not only are they just as nice as a typical home, but they also are much more affordable. However, many people with bad credit assume that they cannot finance the purchase of a modular home. Here are several areas in which a person can work on to get approval for financing with bad credit.
Debt To Income
One of the most important metrics for financing approval is the debt to income ratio that a person has. This ratio basically shows how much total debt that a person is carrying relative to their income. People that have a high ratio are thought to be less likely to get approved for financing. If you have a high debt to income ratio, it would be a good idea to start paying down some debt to get the ratio down. People with bad credit need to have other areas of their financial life in good shape. Working on your debt to income ratio is one of the best things that you can do in order to enhance your chances of getting financing approval.
Another important metric that people look at for financing is the annual income that is coming in. A person is much more likely to get approved with bad credit if they have an annual income that can support the purchase of a home. If your annual income is not as high as it needs to be, work a couple of side jobs in order to get that income up. There is some documentation that must be presented to show proof of income when it comes to financing approval. There are many financing companies that will not even look at your credit score if your income is high enough. Always work to get the annual income up the year before you would like to purchase a modular home. This will go a long way in getting approval if your credit score is not as high as you want it to be.
If you have ever rented a home or an apartment, it can go a long way to have a letter from them showing that you paid all of your bills on time. There are many people that will be much more likely to lend money if they know you have a history of making rental payments on time. Although a mortgage is different than renting, you will still be required to make monthly payments for your home. Having a solid rental history with a couple of references is a great way to prove that you are accustomed to making monthly payments on time with your housing costs.
Perhaps the best way to get financing for a modular home when you have bad credit is to have a nice down payment. This is one of the most important areas that any financing company or bank will look at when approving a loan. Having a down payment shows that you are in a financial position to save up a large sum of money. If you are thinking about getting financing for a modular home, work extra hard to get a nice down payment of ten to twenty percent of the purchase price save up.
There are many metrics to look at outside of the credit score for people that need financing on a modular home. If you have bad credit, you may think it will be difficult to finance your purchase. However, by increasing your income and saving up a large down payment, you will be much more likely to get financing approval from financial institutions. A modular home is a huge purchase for many people, and one that will pay off over the long run.