Tips for Buying a Home with Bad Credit

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    09-Mar-2016
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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.

Transcript of Tips for Buying a Home with Bad Credit

  • Table of Contents

    Tips for Tips for Tips for

    Buying a Home with Buying a Home with Buying a Home with 3 Bad CreditBad CreditBad Credit

    Am I Ready Am I Ready Am I Ready

    to Buy to Buy to Buy 9 a Home?a Home?a Home?

  • Tips for Tips for Tips for

    Buying a Buying a Buying a

    Home with Home with Home with

    Bad CreditBad CreditBad Credit

  • 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 the

    chance of rejection when it comes time to buy

    a home of your own, even if your credit is less

    than stellar.

    Here are a few simple things that you can

    do to raise the odds in your favor.

  • In a lot of cases, a bad credit doesnt stem

    from something you have done, but rather from

    honest errors and mistakes on the report. It is

    important to review not only your credit rating

    on a regular basis, but also the report that goes

    along with it. After all, thats the only way that

    youre going to catch the mistakes, out of date

    information, and evidence of fraud that could

    be bringing your score down.

    Check Your Credit ReportCheck Your Credit ReportCheck Your Credit Report

  • If youre preparing to buy a home, chances

    are youve got a steady income, and you under-

    stand how to budget. If this is a case, take

    some time and try to see if you can get pre-

    qualified for a loan. If you can, this will go a

    long way to offering an assurance to the pro-

    spective seller that you have the capabilities of

    meeting the demands of home ownership. Not

    only that, but youll know exactly how much

    you can afford to borrow; something that some

    buyers fail to realize. Plus, it can be a great

    way to rebuild your credit. Paying a mortgage

    on time can boost your credit score immensely.

    Get PreGet PreGet Pre---Approved for aApproved for aApproved for a

    LoanLoanLoan

  • Perhaps one of the most overlooked strate-

    gies to buy a home when you have bad credit is

    to wait. If you take the steps to improve your

    credit, such as paying your bills on time, pay-

    ing down your credit cards, and clearing up

    any misinformation about your credit history,

    the chances of you getting a mortgage loan ap-

    proved will be greater than ever. Also, it will

    give you a chance to save up some money for a

    sizable down payment, something that is pretty

    much a requirement during these economic

    times.

    Bide Your TimeBide Your TimeBide Your Time

  • By doing these three things, and living in a

    manner that is not above your financial means,

    you should be able to purchase a house, even if

    your credit is less than perfect.

  • Am I Ready Am I Ready Am I Ready

    to Buy to Buy to Buy

    a Home?a Home?a Home?

  • Y ouve lived in your own apart-ment for a while now, and youre starting to consider the benefits of

    owning your own home. But the question is,

    are you ready to buy a home? Today, the real

    estate market is certainly working in your

    favor. Because the market itself is down, there

    are plenty of bargains to be had if you know

    where to look. Plus you know that owning a

    home can be one of the most successful long

    term investments that you can make.

  • If youre curious to see if home ownership

    is in your immediate future, here are a few

    things that you should definitely consider.

  • Before you even start looking for a home to

    buy, you have to make sure you can get a

    mortgage to pay for it. Generally speaking, the

    bank or other lending institution will look at

    three main areas of concern. The first is your

    credit score, the second is the amount of your

    down payment, and the third is your debt to in-

    come ratio.

    The credit score is a useful indication of

    how diligent you have been in paying your

    bills and debts on time, a good score indicates

    that you may be a good risk for the lending

    institution to make. The amount of your down

    Getting Qualified for a Getting Qualified for a Getting Qualified for a

    MortgageMortgageMortgage

  • payment can not only lower the overall amount

    of the loan, but also indicates your ability to

    save and budget your finances toward a goal.

    Needless to say, more banks would be

    interested if your down payment is close to

    20% or 30% of the purchase price. Finally the

    mortgage lender will look at your debt to

    income ratio as an indication of whether or

    not you can afford the monthly expenses asso-

    ciated with owning a home. In order for you to

    get qualified or even approved for a mortgage

    of any size, you must have strength in at least

    two of these three areas.

    Getting Qualified for a Getting Qualified for a Getting Qualified for a

    MortgageMortgageMortgage

  • Once youve gotten approval for a

    mortgage, you also want to make sure that the

    amount of the potential loan is something that

    you truly can afford. What would happen if

    you were to lose your job? Or perhaps had a

    reduction in income coming in due to injury or

    illness? There will be times while you own a

    home when things dont go according to plan.

    One option for those times is additional

    insurance, either private mortgage insurance or

    a specialized home owners insurance. Your

    mortgage lender or financial advisor should

    have information that you can use. Once you

    Determining How Much a Determining How Much a Determining How Much a

    Home You Can AffordHome You Can AffordHome You Can Afford

  • know that you can truly afford the mortgage

    that youve been approved for, shopping for a

    home will become easier indeed.

    Determining How Much a Determining How Much a Determining How Much a

    Home You Can AffordHome You Can AffordHome You Can Afford

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