Mortgage Options for People with Bad Credit
Like so many other people, you may have found out that the recession has had an effect both on home sales and on rental prices. Many times, renters will find that the more cost effective option these days is to buy a home.
The thing is, not everyone has good credit. Having a sketchy credit history can and does make qualifying for a mortgage difficult. Is there any way that you can increase the chances of you being able to buy a home?
Yes, there is.
Check your credit. You can do this for free at a few web sites. If you find anything on your credit report that is incorrect, contest it.
Check on your FICO score. This is the 3 digit number that comes on your credit reports. Again, this can be checked for free on a few different web sites. It is important to know what your score is because this will be instrumental in knowing whether or not you will be able to qualify for a mortgage and which mortgage options might be best for you. Know that if you want to get the very best of terms for your mortgage, your score will need to be higher than 725.
Do what you can to improve your score. Pay your bills on time and make sure that you have a steady source of income because lenders also look at the stability of your income.
If you don’t qualify for a mortgage, there are some other options available to you. These can include but are not limited to:
Find a home that is a rental or lease that also offers the option for purchase. You might consider getting the advice of an attorney for this just to make sure that you are protected from all of the little legal potholes that can be present.
Private lenders are also an option for people with less than ideal credit. You will face having to pay a higher rate of interest this way, but it might be the best option depending on your circumstances.
Check into the different programs for buyers who have a low income. Most of the programs of this nature are locally run, so you can find out more about this type of program from the social service agencies in your community. Some of these places — such as Habitat for Humanity — will require what they call sweat equity. This basically means that you and your family will need to pitch in and get your hands dirty while the house is being built.
You might come to find that you will just need to keep struggling the rent that is higher for the foreseeable future while you are at work on getting your credit score up to snuff and can qualify for a mortgage. If this happens to be the case, try to talk your landlord into giving you a two year lease. This way, the rental amount will not go higher for the duration of the lease.