How To Buy a Home With Poor Credit

Buying a home with bad credit

These days buying a home is not as easy as it once was. Bad credit is a big hindrance when it comes to buying a home. However, buying a home is not something that can never be achieved by those with poor credit. It will just take some effort and the desire to making buying a home a reality. There are some things that you can do now to help improve your chances of being about to qualify to get a home loan. The earlier you start working on improving your credit to get a home the better. The better your credit score, the better the terms a home loan will have.

Step 1

• If you have credit cards, pay down your debt. You do not want cards that are charged up to your limit.
•  If you do not have a credit card, obtain one. Make regular payments and do not be late. Paying on time and even paying a bit more than your minimum payment will all look good and help to improve your score. 

Step 2

• Have enough money put aside for your down payment. You will want to have a percentage of whatever the price of a house will be available for the down payment.
• Be able to show steady employment. Lenders for a home loan will look for approximately two years of steady work and wages.

Step 3

• Find a home with a lease to own option. In this type of home, you will be paying rent for anywhere from one to three years. While in the home, you will work on your credit in order to be able to obtain a home loan at the end of the lease.
• Owner financing is another way to get into a home with poor credit.  In this situation you can move in right away and will make payments to the homeowner. Often this works well with owners who already own the home outright.

Step 4

• Speak to someone at FHA about loan insurance. This may enable you to get a home loan even with credit issues. This could help sway the home loan decision in your favor. 

Step 5

• Dispute any errors on your credit report. If there are any items that you feel are a mistake, file a disbpute. Even a few points can make a difference in whether or not you get a home loan. Every little bit you can do to make your score better is a help.

Tips

If possible, you may want to postpone buying your own home for a couple of years. This will enable you to work on your credit. The better your credit the better the terms of your loan will be. Your interest will be lower which will make your monthly payments lower. This will also allow you time to save for a larger down payment.

Avoid applying for a home loan at large banks and lending institutions that typically have more stringent guidelines. They will most likely deny anyone with bad credit and the inquiries into your credit report may actually lower your score.

 

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