How to buy a house with bad credit depends on a number of factors. Most noteworthy, buying a house is one of the most important decisions that someone will make in their lifetime. In this article we’ll highlight tips and strategies on how to buy a house with bad credit.
First of all, it’s important to understand that you are not alone. Trying to find your dream home with bad credit is not an impossible task. Above all, people with bad credit will have to work harder. However, the task is achievable and in this article, we’ll show you how.
To clarify, 80% of homeowners have credit scores above 700. Based on FICO standards, that would be considered a good to excellent credit standing. On the other hand, 20% of homeowners have bad to fair credit. On the surface that doesn’t seem like a big number. However, it’s actually quite significant. Above all, we’ll show you how to become apart of the 20% and move into that new home of your dreams.
Steps On How To Buy A House With Bad Credit
Set A Starting Point
First of all, don’t rely on a bank nor broker for identifying what your credit score is and what negative marks are attributing to it. As a prospective buyer, you should be armed with this info from the beginning. Most importantly, this info is readily available for you for free. Above all, we recommend CreditRepair.com and Lexington Law. Both companies offer a free consultation, credit score and credit report. Similarly, both companies have in-house attorneys trusted by millions of clients for credit advice and repairing credit fast.
Once you have your credit score and credit report, you can then establish a starting point of where you are. As a result, you can put a plan into place to improve that credit score as much as you can in no time.
Fix The Easy Negative Marks On Credit First
Our Digital Marketing Agency just wrote an article answering the question of how long does it take to build credit. Most noteworthy, we highlighted how negative marks, especially errors can be fixed in months. As a result, credit scores can actually improve quite quickly. So, yes, you may have bad credit now, but companies like CreditRepair.com and Lexington Law will identify errors on your credit report and force companies to remove them fast.
In addition, they both send good faith letters to creditors. For example, these letters will help to reduce or completely eliminate past debt. As a result, your credit score could climb in no time. As a result of improving your credit, you can avoid high rates above the prevailing rates.
Bankruptcies, foreclosures and liens can hamper your credit for years. However, these minor marks can be targeted and eliminated in no time. To learn more about CreditRepair.com and the steps they use with how to buy a house with bad credit, see our review on Credit Repair Companies. Also, take a look at our article which features how to raise your credit score by 200 points.
Consider A Larger Down Payment
The easiest way to get your foot into the door is to save up for a larger down payment. To clarify, most people with good credit may have to put down a 10% down payment on a new home. On the other hand, someone with bad credit will be looking upwards of 20%. In some cases, this number is non-negotiable. A lot will depend on credit score. If a credit score is below 585, a person could expect to pay in the area of 20%-25% for a down payment on their home.
Above all, FHA loans are less restrictive. Most noteworthy, FHA looks more so into your current and future situation as opposed to your past issues. Furthermore, if you have a credit score above 585, you can expect a down payment of only 3.5%. Federal Housing Administration loans is overseen by the Department of Housing and Urban Development.
How To Buy a House With Bad Credit Summary
To sum up, fixing your credit should be your first step. Minor negative marks can be fixed in no time if you work with Credit Repair Companies like CreditRepair.com and Lexington Law. With the guidance from their lawyers and experts, you can see an increase in your score in as little as three months. Below, check out Alex’s story from CreditRepair.com as well Joy’s story from Lexington Law.
In short, there are other options out there like Private Mortgage Loans. However, you’ll be dealing with a private person with a high interest rate. Even more so, you may have to put up collateral. Ultimately, at the end of your term, you’ll want to avoid financial pitfalls that others have experienced. And, the best way to go about that is improving your credit, save money and think about an FHA loan.
The question of how to buy a house with bad credit can be achieved by:
- Obtain credit report and credit score and take advantage of free consultation with Lexington Law and CreditReport.com.
- Set a game plan for fixing minor negative marks
- Set a timeline for buying home
- Save Up
- Continue to monitor credit with Lexington Law and CreditReport.com
- Buy that dream home.