Buying a House with Bad Credit
Believe it or not buying a house with bad credit is possible. I did it myself. All the mortgage company
wanted to know at the time I bought my house four years ago was if I had enough income and could make the monthly
payments on time.
Credit is important but it isn't all a bank or mortgage company is interested in. You can even qualify for
100% financing. Bring up all your positive attributes and get the mortgage company to see that you are still a good
risk even though you have had some financial difficulties in the past.
You will go through an income verification process before being approved for your home loan and if you make an
appropriate amount of money your mortgage company will approve you and you will see that even with bad credit
buying a house is possible.
One thing you can do to make buying a house with bad credit much, much easier is to come up
with a down payment. Your mortgage company can usually work with bad credit issues if you can put down some money
on your loan. A good average down payment should range anywhere from 5-20%. Save the money if you can or borrow
from family and if these are not options for you try to get a personal loan or apply for a grant.
Grants will take the longest to get so do not expect to be able to use one readily unless you apply for and
receive one prior to applying for a loan to buy your house.
It is possible, too, to get what is called an 80-20 loan. This is when you basically have two loans on your new
house, one for 80 percent of the purchase price of the house and one for 20 percent. You will have two separate
payments to make. Each loan is a separate entity and if you do end up running into some difficulty each loan can be
sold to separate loan servicing companies so you will have to make your payments to different companies. The loans
cannot be combined into one.
If you cannot come up with a down payment, this can also be dealt with and worked around by agreeing to pay for
private mortgage insurance. Private mortgage insurance is an aspect of buying a home that protects the mortgage
company from the borrower defaulting on the loan and makes it possible to purchase a property with no down payment
and bad credit.
Private mortgage insurance amounts vary and depend on the amount of your loan. You may pay as little as $20 per
month or more. The mortgage company will determine what you will pay based on the amount of the loan you have been
approved for. If you continue to make your payments on time it is possible that you will be able to drop the
private mortgage insurance after a few years.
Encouraging the mortgage company to concentrate on the positive things about your financial life will make
buying a house with bad credit easier than you might think.