Tips for Buying a Home with Bad Credit


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Purchasing a home today is harder than ever. If you have bad credit, it can seem nearly impossible. Thankfully, there are things that you can do to lessen the chance of rejection when it comes time to buy a home of your own, even if your credit is less than stellar.

Published in: Real Estate
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Tips for Buying a Home with Bad Credit

  1. 1. Table of Contents Tips forBuying a Home with 3 Bad Credit Am I Ready to Buy 9 a Home?
  2. 2. Tips forBuying aHome withBad Credit
  3. 3. P urchasing a home today is harder than ever. If you have bad credit,it can seem nearly impossible. Thankfully,there are things that you can do to lessen thechance of rejection when it comes time to buya home of your own, even if your credit is lessthan stellar. Here are a few simple things that you cando to raise the odds in your favor.
  4. 4. Check Your Credit Report In a lot of cases, a bad credit doesn’t stemfrom something you have done, but rather fromhonest errors and mistakes on the report. It isimportant to review not only your credit ratingon a regular basis, but also the report that goesalong with it. After all, that’s the only way thatyou’re going to catch the mistakes, out of dateinformation, and evidence of fraud that couldbe bringing your score down.
  5. 5. Get Pre-Approved for a Pre- Loan If you’re preparing to buy a home, chancesare you’ve got a steady income, and you under-stand how to budget. If this is a case, takesome time and try to see if you can get pre-qualified for a loan. If you can, this will go along way to offering an assurance to the pro-spective seller that you have the capabilities ofmeeting the demands of home ownership. Notonly that, but you’ll know exactly how muchyou can afford to borrow; something that somebuyers fail to realize. Plus, it can be a greatway to rebuild your credit. Paying a mortgageon time can boost your credit score immensely.
  6. 6. Bide Your Time Perhaps one of the most overlooked strate-gies to buy a home when you have bad credit isto wait. If you take the steps to improve yourcredit, such as paying your bills on time, pay-ing down your credit cards, and clearing upany misinformation about your credit history,the chances of you getting a mortgage loan ap-proved will be greater than ever. Also, it willgive you a chance to save up some money for asizable down payment, something that is prettymuch a requirement during these economictimes.
  7. 7. By doing these three things, and living in amanner that is not above your financial means,you should be able to purchase a house, even ifyour credit is less than perfect.
  8. 8. Am I Ready to Buy a Home?
  9. 9. Y ou’ve lived in your own apart- ment for a while now, andyou’re starting to consider the benefits ofowning your own home. But the question is,are you ready to buy a home? Today, the realestate market is certainly working in yourfavor. Because the market itself is down, thereare plenty of bargains to be had if you knowwhere to look. Plus you know that owning ahome can be one of the most successful longterm investments that you can make.
  10. 10. If you’re curious to see if home ownershipis in your immediate future, here are a fewthings that you should definitely consider.
  11. 11. Getting Qualified for a Mortgage Before you even start looking for a home tobuy, you have to make sure you can get amortgage to pay for it. Generally speaking, thebank or other lending institution will look atthree main areas of concern. The first is yourcredit score, the second is the amount of yourdown payment, and the third is your debt to in-come ratio. The credit score is a useful indication ofhow diligent you have been in paying yourbills and debts on time, a good score indicatesthat you may be a good risk for the lending
  12. 12. Getting Qualified for a Mortgagepayment can not only lower the overall amountof the loan, but also indicates your ability tosave and budget your finances toward a goal.Needless to say, more banks would beinterested if your down payment is close to20% or 30% of the purchase price. Finally themortgage lender will look at your debt toincome ratio as an indication of whether ornot you can afford the monthly expenses asso-ciated with owning a home. In order for you toget qualified or even approved for a mortgageof any size, you must have strength in at leasttwo of these three areas.
  13. 13. Determining How Much a Home You Can Afford Once you’ve gotten approval for amortgage, you also want to make sure that theamount of the potential loan is something thatyou truly can afford. What would happen ifyou were to lose your job? Or perhaps had areduction in income coming in due to injury orillness? There will be times while you own ahome when things don’t go according to plan.One option for those times is additionalinsurance, either private mortgage insurance ora specialized home owner’s insurance. Yourmortgage lender or financial advisor shouldhave information that you can use. Once you
  14. 14. Determining How Much a Home You Can Affordknow that you can truly afford the mortgagethat you’ve been approved for, shopping for ahome will become easier indeed.
  15. 15. For more information aboutBoulder Real Estate, Estate, please check out Denver Real Estate. Estate.