By Vicki Duong
It’s often said that nothing’s impossible… though people with poor credit who desperately want to buy a home may say, “Oh yeah?!”
If you have bad credit, are you going to get the best loan possible? No. Would you be better off in the long-term to wait to buy until your credit improves? Maybe. Obviously, no one is going to argue that it’s no problem to buy home with bad credit, but is it totally impossible? C’mon now. Of course, it’s possible. Read on to learn how to buy a home with bad credit.
Before you’re handed the keys to a new home, there are several things you must do if you’re looking to purchase while your credit is weighing you down. The first thing you have to do is to know your credit score and obtain get your credit report. You’re entitled to one free credit report per year, so if you haven’t obtained it yet, get out there and within minutes, you’ll be able to print up your report.
Once you have your report, make sure there are no errors in it. You might be surprised how often people find little dings here and there on their credit report that are simply errors that have gone unnoticed over the years and are bringing down their overall score. Even the slightest improvement in your credit score could lower your interest rate, even if it’s only a half a percentage point.
If you have the luxury of time, do your best to clear your credit report of as much damage as possible, whether it’s paying down large balances, reducing your spending, or making sure you are no longer delinquent on your payments.
Once your credit score is as good as it is going to get, it’s important for buyers with bad credit to get pre-approved for a loan. While this is important for all home buyers, it’s especially important for those with bad credit because they have to know exactly how much they are able to spend. Along these same lines, bad credit buyers should be prepared to save up for a larger down payment than normal.
As you’re shopping for loans, be picky! Don’t be quick to go for the first loan offered. There are still plenty of banks and lenders that will work with bad credit buyers, so it’s important to not jump at the first offer because there’s a decent chance that a better one is out there. Even though you have bad credit, you still deserve the best reputable loan you can find.
So you still want to buy a house with bad credit? It’s going to take some work and some time. You need to repair your credit, reduce your debts, build up some savings, and then find the best loan you can. It won’t be easy, but yes, it is possible.
How to Buy a Home with Bad Credit by HouseHunt