20 Jun What You Need to Do to Buy a Home with Bad Credit
You are sick and tired of wasting your money by renting apartments and houses. You want to make your money finally work for you by buying a home, but you have one glaring problem – you have bad credit.
You might think that means you can’t buy a home, but you can. You just need to know some secrets, and you will be a homeowner before you know it.
Look at Your Options
First, you need to understand that your situation might not be as dire as you think. While most banks require that you have a credit score of at least 580 to qualify for a mortgage loan, that number isn’t set in stone. The Federal Housing Administration (FHA) insures mortgage loans for borrowers who have credit scores of 500. There are two catches, however. You will likely need to put at least 10 percent down to get this loan. Also, the FHA doesn’t lend the money. It only insures it, so you still have to find a lender who’s willing to work with you. There are some out there, but they’re few and far between.
Put More Money Down
Lenders are hesitant to finance large amounts of money to people who have bad credit. They always look at the risk and reward, and the risk is just too great. However, you can tip the odds back in their favor by putting more money down. You will be amazed by how much more willing lenders are to loan people money when they put big chunks down. If you can put down as much as 30 percent, you’re much more likely to get a “yes,” even if your credit leaves something to be desired.
Make Sure Your Report is Accurate
Some people think they have bad credit when, in reality, their reports are riddled with errors that make their credit look much worse than it is. In fact, 25 percent of Americans find errors on their credit reports when they check them, so you need to check for errors as well. Make sure your report doesn’t have any errors. If it does, clean it up. Then, apply for a mortgage loan. You might be able to get prime rates once your report is fixed.
Consider the HOPE Program
If you have a low income and bad credit, you might feel as if everything is going against you. Fortunately, you might be able to get some help with Operation HOPE. This program is available in select locations, ranging from Alabama to Washington, D.C. The lenders can help you find loans from Federal Deposit Insurance Corporation-insured institutions, even if you have poor credit. In addition, you don’t have to put any money down on this loan. With so much to offer, this is a terrific option for people who have experienced trouble getting a home loan. This just might give you the chance to buy a house finally.
Remember That You’re More Than a Credit Score
You’re more than a credit score, so if you have a good debt-to-income ratio and money in savings, lenders might be more willing to sit down and talk with you. Be ready to state your case when you meet with the lender. It could make all of the difference when getting approved or denied for a loan.
All hope isn’t lost if you have bad credit. Use these insider tips to your advantage, so you can finally get a new home. Then, you will be an investor instead of a renter. That will help you build your credit.