Buying A Home – When Your Credit Is A Disaster

If you’re living with a devastated credit score, you probably assume you’ll never qualify to purchase a house. Before the mortgage industry crashed, an individual who suffered through a previous bankruptcy would be able to get a home loan in just over 12 months. The current lending disaster has forced many lenders to impose stringent requirements to qualify for loan.

Mortgage lenders tend to place greater priority on an individual with a high FICO score. If you have less than perfect credit, there are strategies to help you buy a home. With some diligence and perseverance, you can rebuild your credit history so you can qualify to purchase a home. Expect the process to take six months to twenty four months before you’re able to qualify with acceptable credit.

If you can convince a potential lender your financial dilemma was due to reasons beyond your control (such as divorce, business failure, medical bills, unemployment) or provide evidence you’ve become financially responsible, you might convince the lender to give you a second chance. But you need to be aware trying to restore your credit requires long-term planning, preparation, and hard effort.

On the other hand, if you haven’t filed a bankruptcy or suffered financial problems, but still have other issues affecting your credit such as self employment or a new job less than two years, expect to face an uphill battle trying to qualify for a home loan. Because the mortgage industry is constantly changing, you should speak to a knowledgeable mortgage broker or representative about your available options.

Another alternative to traditional financing is to consider owner-will-carry (OWC) financing. If you have no established credit, minimal savings, and a low paying job, this strategy can help you get your foot into the real estate market. Try locating mature homeowners who are fed up with managing their rental properties, but still desired the monthly income a rental property brings. These homeowners make great participants for owner-will-carry financing.

These sellers are eager to unload their properties because it frees them from the hassles problem tenants, clogged sinks, and faulty air conditioners. They also receive a great return on investment which surpasses the amount they would receive from a bank savings account or CD account.

A positive feature of owner or seller financing is the seller has the freedom to negotiate terms with any home buyer. If your credit prevents you from qualifying with a normal bank, research the option of OWC financing. In fact, you may just decide to drop regular financing and pursue all OWC situations as your primary alternative. Lots of real estate investors and home buyers rely on this method and bypass the troubles of qualifying with a traditional bank.

Learn more about Tustin homes for sale. Use these local Tustin Realtors and see what they can do for you.