You should read this article if you want to buy your own house but have some credit problems. I will show you how you can buy a home even if you do have poor credit. After you have finished reading this article, you will know what the most common methods are for buying a home with bad credit.
How To Buy A House With Bad Credit
If you are looking for a home mortgage loan but you have bad credit you will want to find a lender that specializes in either sub-prime home loans for people with bad credit. You may be eligible to finance 100% of your home purchase even if you have bad credit. If your income can be verified by the lender and you are making a reasonably good living then it is possible for you to buy a home even with your credit problems. Even though you will probably pay a higher interest rate because of your bad credit you can still own a home of your own.
There are two mortgage choices available to you and they include bad credit secured loans and bad credit unsecured loans. The secured loans are usually available with a lower interest rate and they do not require collateral (read also: how to use collateral loan without risking the property). The second choice is bad credit secured loans. They are called this because a requirement of the loan is that the borrower must pledge some type of collateral to secure the loan. This decreases the risks for the lender.
You Can Rent To Own or Lease-Purchase
There are many homes available with these options. There are more of these now than ever due to the state of the economy. A major drawback of this type of purchase is that the rent on the home is almost always over $1000 a month. It is fine if you can afford to pay this but if you have a limited budget it is probably out of the question. You may be able to find a house that is a little bit cheaper, which means that the asking price is somewhere between below average to average. Your rent will usually be a lot less when this is the case.
Some investors will sell homes that rent for a year or two to give you a chance to re-establish your credit. At the end of that time you must get your own financing. One of these companies is National Home Buyers Assistance. Most of these investors will rent or lease to you for at least a year. When the year is over you have the option to purchase the property for a price that was determined when you signed the rental or lease agreement. If you need more time you will be allowed to extend the contract.
This works great for anyone who has credit problems and cannot get traditional financing or if the person does not have a down payment. This method also works well for self-employed people, those who may possibly change jobs or relocate, and for under-employed households to get into a house of their own. This can be a great alternative for you if you need to sell a home before you purchase another or if you just prefer to get to another neighbourhood before you make a permanent decision.
Contract for Deed
It is not always easy to find a contract for deed and it may require some work and research on your part. However, if you are willing to put forth some effort it usually will pay off in the end. If you are looking for a contract for deed home always check the listings in your local newspaper and online. Many times you can work out a deal with these people than is beneficial for you both. The payments can be set up for an amount that you can afford and sometimes you may be able to make an interest only payment for a period of time. This can give you a chance to improve your credit or make repairs to the home.