How To Buy A House With Bad Credit But Good Income

These purchase tips are meant to provide you options and prevent your bad financial history from holding you back.

 

Top Strategies for Buying a House with Bad Credit

First, review your credit information. Allow for the possibility of errors contributing to your credit rating. As the frequency of this happening is high, it may be reassuring to know you can repair your credit to improve your chances of qualifying for a mortgage. Reviewing your history will also help you to recall what happened which caused the negative items in your report. Your loan broker may ask you to provide a letter accounting for any missteps in the past, in an effort to get your application approved. Ensure that your replies are objective to increase your credibility.

Work with the government. The Housing and Urban Development (HUD) offers a lot of plausible options for home ownership. Through its partnership with licensed private and non – profit organizations, options for affordable homeownership are available. The Federal Housing Authority (FHA) offers federally insured FHA loan programs which can help increase your chances of qualifying. FHA-approved lenders are insured against your default allowing them to ease financing restrictions.

Get a mortgage. Consider applying for bad credit mortgage loans if you feel you can get approved. Your costs to finance will be higher, but bank financing does exist for people with bad credit but good income levels. You may not be able to qualify for a no money down loan, but qualification in itself is a victory.

Additionally, if you are having trouble getting approved, consider an Adjustable Rate Mortgage (ARM). You can always look to refinance a few years after your purchase to fixed rate financing to lock in lower rates after your credit rating has improved.

 

Creative Purchase Alternatives: No Documents, No Credit, No Problem

Consider a partnership. Working with a mortgage broker helps in three ways: you can get pre–approved, you can get professional advice when considering your loan options, and if you don't qualify, a good broker will tell you the hard truth, so you can fix it. Be sure to take advantage of any first time home buyer deals may be available when comparing lenders.

The loan officer at your local bank is worth a try, but because they derive financing from the bank they work with, your chances of getting approved to get financing in order to make your purchase may be a challenge.

 

Consider attending classes. If you have bad credit, and your personal finances are still a mess - it may be time to consider getting help. Ultimately, you need to borrow responsibly, if you are having trouble managing your personal finances, it may not be the right time to add the pressure of a mortgage to your monthly bills.

 

 

For Sale by Owner: Why Buying Direct Gives You Purchase Power

Work with the seller. Working with a seller provides you three workable home buying options:

Rent to own. With the cooperation of the seller you can work out a renting to own deal. Because rent-to-own offers the you a chance to rebuild your credit while making payments on the house, it is a great option that benefits both buyer and seller - win, win. Also known as a lease-option, it usually requires paying more than you would if just renting, but the additional amount goes towards your down payment or to reduce the ultimate purchase price. You also get to lock in current prices while you rent to own. The house may rise to a higher value while your purchase price stays the same, waiting for you to exercise your option to buy. This means you are gathering equity while you work towards exercising your purchase option in the contract.

Wraparound mortgage. Sellers may still owe financing but using a wraparound mortgage you can secure your interest to buy. You can offer to assume the monthly payments on the existing loan and allot an extra amount for principle. Be sure to protect yourself with your contract. Research how to buy a house subject to, and a quality escrow company can help you structure the documents for your protection.

Seller financing. The seller may offer to help you finance your purchase in lieu of getting a mortgage with a bank. This means you will not have to go through the trouble of getting approved with a mortgage lender that will work with your credit history. The seller essentially becomes your bank and are typically much more flexible. Look for 'owner will carry' options in the classifieds, as this indicates a homeowner that is looking for just this sort of deal. It saves time and money.

 

Make Borrowing Easy

Place a competitive down payment. The more money down you can raise the more likely you will be able to make the deal happen. Cash is king so to speak, and you can prove your home buying viability with a larger deposit.

Consider your financing options. Borrowing money from sources like your family and personal circles can help, if you can get the money with non traditional financing you are ahead of the game. Working with your employer is also an option to consider. Apart from the housing benefit that comes with your employment package, retirement accounts can be used to put together a down payment or used as collateral. Talking with your retirement department may help you to know options you were unaware of previously.

Talk to a co-signer. Your co-signer acts as a guarantor for the your lending. Someone who understands or is personally significant to you, and who possesses an excellent credit score can qualify for you and get secure your financing. Keep in mind that because someone conceded to co-sign a property purchase with you, you will want to keep your payments, they are on the hook and you will ruin their score if you default.

Get out and talk to home sellers and make offers and learn from negotiating with real people what is possible. Make a list of the roadblocks preventing you from buying the house you want and remove them.

Find out if you qualify and see a rate quote online with our recommended financing options here, there is no obligation, find out if they can finance the purchase of your dream home today....