It is possible to buy a home with poor credit. There are a few things you need to do to ensure that it happens. You need to know exactly what type of credit you are working with. You should know your credit score the same way you know the balance in your savings or checking account. Without this knowledge you limit your housing options. The latest housing market crash has placed more stringent rules on home loans, but you can still get a home.
FSBO
For sale by owner should be one of the places that you can look to purchase a home. Many people are willing to work with you if you can purchase their house. They might allow you to assume the payments for the equity in the home. This benefits you as you would probably get a lower interest rate than if you were to finance it yourself to try and buy a house with poor credit.
Nonconventional Mortgage Loans
You can buy a house with poor credit by getting a nonconventional home mortgage loan. The cons are that you will have a higher interest rate which may be more than you are willing to pay. However, if you continue to work on your credit score you can eventually refinance you loan for a cheaper rate. That should be your goal if you try this route. Make sure that you set a deadline to refinance in two years.
Rent to Own
Many companies or individuals now are willing to allow you to rent a house for a few years and then let you purchase it. You would sign a contract stipulating your intent to purchase in a certain time frame. You may be given credit for all or some portion of the rent you paid to be used towards the purchase of the house. This allows you to get your credit score in shape while you are in the house of your dreams. So you would be able to buy a house with poor credit. The intent is to improve your score enough that you can get a conventional loan of your own with decent credit.
*Affects pricing. With the No Closing Cost
Option, borrowers finance the closing costs instead of paying for them at
closing. Borrowers who pay closing costs at closing may qualify for a lower
interest rate. Some upfront fees (ex. credit report and appraisal) may apply
and may be credited at closing.
*Refinancing or taking out a home equity loan or line of credit may increase
the total number of monthly payments and the total amount paid when compared to
your current situation.
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