Buying A Home With Bad Credit

buy with bad creditAre you sick and tired of making payments month after month, yet having nothing of value to show for it? You’re not alone. Now there’s good news for people who are tired of pouring their money into someone else’s property.

How Do People with Bad Credit Get Approved?

People with credit challenges can still buy a home, even in today economy. Everything is credit score driven, most lenders want a 640 score. For those of you who don’t know what I am talking about when I say “Credit Score” we have three credit reporting agencies Trans Union, Equifax, and Experian. When you pay your loans or credit cards on time you receive a score. If you get late pays or collections your score will go down. Out of the three score we throw out the low and the high and take the middle score. That is how we determine your credit score for purchasing a home.

Receive a free credit report

We start by pulling a free credit report so I can look at the whole picture. Generally 8 out 10 people are ready now; the other 2 could be ready in 30 days, 3 months or 6 months. We try to look at the report and determine what it is going to take to get you ready to purchase a home. Most of the time a person’s score is low from lack of trade lines, most lenders like to see 4 trade lines car payment, rent, credit card, and personal loan. They do not like to see any collections or late pays in the last 12 months. If you are in default on any student loans, have a judgment or behind on any installment loans it is important that you get them current and keep them current for 12 months. Before trying to purchase a home, you can have collections as long as they are old that 12 month rule comes in to play,

Don’t make one of these two common mistakes:

  • Don’t waste your time applying with your local bank, because banks have the strictest underwriting rules and they want to approve only the borrowers with the best credit.
  • Don’t click on Internet ads, because those are lead generation services that sell your information to banks and lenders who are “cherry picking” the best applications. Not only is it a waste of your energy, but it also has the potential to lower your credit score even more with multiple inquiries to your credit

Instead, go to a mortgage broker. It is important that you go to someone who understand bad credit and what it will take to get you on track. I have a hand full of lenders who will look at people that are credit challenged and work them to get ready to purchase a home. It could be something as simple as paying one thing off or getting a credit card to establish credit.

Now is the time to take action. Attached to the webpage is a short application if you can fill it out and email it to me I can pull your credit and get back you so we can start your search for your new home.

First Time Homebuyer Grants

There are first time homebuyer programs to help you with your down payment the seller can also help with closing cost. The city of Cedar Rapids sometimes has down payment assistance but not always. There are several types of loans out there one is called IFA that offers a $2500. down payment assistances.

Buying a home on Contract

Buying a home is contract is where the seller or a third party person buys the home and sells it you on contract and you make your payments to that person. The drawback to this is most of the contract holders want 10 to 20% down, interest rate of 10% and a 2 year cash out. Which means you would have to be ready to go to a lender in two years and get a mortgage. The down payment is the most difficult to get most of the time if you have $7500. You would be able to repair your credit.