Does having a big deposit to put down balance having a bad credit rating help when getting a home loan?
A large deposit to put down on a home loan doesn't necessarily balance out bad credit, but it will give you a better chance of being approved for your home loan. Obviously, the best thing to do is to take as much time as you possibly can to try and build your credit back up to good standing. However, we all know that the perfect house doesn't go on sale when you want it to and sometimes you have little or no time at all to strengthen your credit rating.
Having more money in hand to put down on a home loan is actually great for anyone, but it will especially help you if you have bad credit. This is because the more money that you can pay up front, the less money that you will actually have to be asking the bank for.
If you have a lot to put down, it also shows the bank that you are not completely irresponsible with money, and recognize that putting it all into your home is a great investment to make.
Not only will it improve your chances of getting a home loan, but the payments will be lower because the loan is for less. This is especially good because many people with bad credit will have higher interest rates for the life of the loan.
If you didn't have as much money to put down in the beginning, your monthly payments would be even higher than someone who has excellent credit. This means you could end up paying thousands or tens of thousands more than the actual cost of the house, depending on what it's worth.
Basically, having that larger down payment will help your loan process along even if you have bad credit, but it will not excuse it, so the best thing you can do for yourself is to start working to bring that low score back up in the good range, and then keep working until you have excellent credit.
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