Buying a house with bad credit; 5 immediate steps to buying a home with bad or Less than Perfect Credit
Home ownership is a big responsibility and getting your credit scores where they need to be is one of the first steps in making that a reality.
In today’s economy, having less-than-desirable credit isn’t unusual; it’s the norm. With that being said, buying a house with bad credit or trying to purchase a home with a marginal credit score is not an easy task. There is hope however, follow these, easy to implement suggestions and you’ll be snuggling up on the sofa in your new home in no time…
Buying a house with bad credit:
- Pay stuff off! DUH, seems obviously right? You’d be surprised how many people we talk to who have plain forgotten old debts. Start today and pay off old overdue debts, get current on any new debts and pay cash whenever you can. Just remember, big improvements can be made with just a little effort and this is the biggest piece of the credit puzzle.
- Save Money! As in, put as much in the bank as you can possible afford. Cash in the bank and used as a down payment will not only reduce your Loan to Value (LTV) but also plays the biggest part in reducing your monthly payments and ultimately what you can afford. No matter what your credit score, if you can’t afford the monthly payment – you can’t afford the home. Mortgage companies understand there is less risk (on their part) when you have more “skin” in the game and are more willing to lend on a lower credit score with a higher down payment.
- Use the Government. Keep your eye out for qualifying government backed mortgage programs. Traditionally these loan types, FHA or PFHA for instance, allow lower credit scores and reduced down payments.
- Owner Financing. One option, that is almost always overlooked, is to find a Seller who is willing to hold the mortgage (instead of a bank) for you. This can truly be a win-win for all parties, getting you into the home you want and allowing the Seller some passive income opportunities.
- Find a reliable Credit Repair Company. Yes, there is a cost involved here but sometimes it’s easier to let the professionals do their job. Plus, it is possible that not everything on your report is valid and if this is the case, these guys know the shortest path to resolution. Just make sure you partner-up with a reliable company or better yet, talk to your Real Estate professional (or send us an email) and ask for the name of someone they’ve had success with in the past.
Credit scores can change weekly and marginal credit scores can be fixed relatively quickly. Whether you realize it or not, lower credit scores will lead to you paying a higher interest rate; higher interest rates equals less affordability; less affordability mean you may not get the home you really want. Remember, no matter how bad they are, RIGHT NOW is the time to start the Credit Repair process.
Buying a house with bad credit, buying a home with bad credit