Buy a house with bad credit? Are you kidding - after what our real estate market has been through??
Buy a House With Bad Credit
Well, you have more options than you may think! Let’s take a look at two of them:
FHA has long been one of my favorite methods for financing a home purchase. It requires less down payment than most other loan programs, it has uses more liberal guidelines for the income required to qualify, and it allows for a more forgiving credit history.
This last part is a big deal!
While conventional lenders look for a minimum FICO score of around 660, FHA can go much lower – to around 620, I am told.
In addition, they more likely to consider an explanation of any derogatory entries on your credit report. That is, if a derogatory credit trade was due to a medical issue or an unusual one-time event, FHA is more likely to view that as an anomaly rather than a pattern of disregard for your obligations.
In addition, FHA is more forgiving and has a shorter time period required after a foreclosure or bankruptcy than conventional lenders.
FHA is certainly one place to look if you have had unfortunate events in your credit history.
Another place is local credit unions.
I received a message the other day from Golden One Credit Union telling me about a program designed to help Californians who have lost a home to foreclosure or filed bankruptcy obtain financing to purchase a new home!
Naturally, there are factors involved in qualification and there are loan limits, but at a $417,000 loan amount, this may be a perfect way for a borrower who has suffered a financial calamity to re-enter the real estate market and begin the process of re-establishing their credit.
Before you worry about bad credit, it is important to find out how bad it is. And how recent.
With these or any other loan program, it is always best to speak with a professional mortgage consultant – and one you can trust!
Any loan program, regardless of your credit history, has many details that should be explained and clearly understood before you enter into a contract to purchase a home of borrow money.
But many people who have suffered the downside of these difficult economic times think they will never be able to own a home again. For many, this is simply not true.
It may be that, if you buy a house with bad credit, you may just make your credit good again!
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