Discover how to buy a house with bad credit. I did it. Now you can buy a house with bad credit too…
There are a few ways you can learn “how to buy a house with bad credit”. Perhaps the easiest way is to save up a good 15-20% of the purchase price of the home in your local area and then find someone in your family to co-sign for the loan. Assuming, of course, your co-signer has good credit. So one good credit score with a FICO of 700+ will offset, in many cases, a lower FICO score below 500. The challenge, in today’s economy, is the real estate marketing is severely depressed. Which means there aren’t a lot of lenders anxious to make cut a mortgage to anyone with less than a stellar history of making payments on time, every time.
Buy a House with Bad Credit – Lease to Own
There are a lot of “short-sales” and REOs on the marketing right now. A short sale is when the seller of a home is asking less than they owe on their current mortgage. This is a way to save their own home from going into foreclosure so they don’t wind up with a bad credit score down the road. REO stand for “real estate owned” by the bank and you can find these properties by going through a local real estate agent or broker. The beauty of these types of residential properties and condos are the lending institutions are often willing to work with you to help you learn how to buy a house with bad credit because they cannot afford to keep the upside down note in inventory.
You can also find vacant homes on the market and see if you can contact the owners to arrange a nice lease-to-own or rent-to-own deal where you are actually leasing the home month to month but a portion of the payment is being applied to a future date when you intend to buy the home. It will take a little bit of time and legwork on your behalf to find a great deal, but they are out there right now. You simply need to put in the effort to find them. Look for vacant homes, over-flowing mailboxes and over-grown yards. Broken glass is a sure sign.
Don’t Buy a House with Bad Credit
Bottom line is bad credit home loans are not readily available. Not today. Not after the huge housing collapse of the last few years. You might also contact the habitat for humanity foundation and see if you qualify for their services. With this program you actually help build your own home. You might also investigate the FHA for first time home buyer programs and if you fall into certain categories, perhaps a homeowners grant of some kind.
First things first, however. First contact Experian and all of the other top credit reporting agencies. Ask for a free credit report and work with a counselor,if necessary, to clean up your credit. This is the first step you should take because, if enough time has gone by, you can often improve your FICO scores dramatically by writing a few simple letters to get older, negative marks off your report so the latest, good marks dominate.
So there you go. Personally, we cleaned up our credit score, researched lease options and other ways to how to buy a house with bad credit. We took action. We took our time. And it worked. Good luck.
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{ 2 comments… read them below or add one }
I had a short sale last year and I am very happy to be able to purchase again. Too a while but you can get back into a house after a default.
Thank you, Patti for sharing. We lost our home way back in the late 90′s and it was the same thing. Took about two years to re-establish credit to buy another house.