Did you know that there are 138.45 million housing units in the U.S.? Are you dreaming of owning your own home but afraid it's not in reach due to financial difficulties?
In this article, you'll discover the top tips for buying a home with bad credit. Read on to learn how to make your dream a reality so you don't have to wait on that dream home.
1. Find a Flexible Lender
If you have bad credit, it makes it harder to buy a home or even diamond engagement rings for the love of your life. When you're buying a home with bad credit, you'll want to find a flexible lender who will be understanding and open even though you have bad credit.
Although an FHA doesn't have a credit score requirement, lenders are allowed to choose their own requirements such as a down payment and credit score. One option you can do is check out online lenders so you're not continually driving from lender to lender in the area. Online lenders you can find plenty of options as far as finding one who will be the right fit for you.
2. Apply for an FHA
An FHA loan, also known as the Federal Housing Administration, normally has lower credit requirements than other loans. You don't need to put a large amount toward your down payment either.
Keep in mind though that just because you can have a lower credit score, doesn't mean a lender will honor that, so it's important to find a flexible lender. Another thing to keep in mind is the fact that with a traditional loan you can cancel private mortgage insurance(PMI) once you build up enough equity, but not with an FHA.
You can wind up paying PMI for the entirety of your loan.
3. Boost Your Score
Even if you have bad credit, you can still work on improving your credit score as much as possible. You'll really want to try to increase your credit score preferably a year or two before applying for a loan. Take a look at your statement and notice if there is any incorrect information on them. You can then dispute any incorrect information.
A credit repair process can take months but it might be worth it to get your score to a better number.
4. Build Your down Payment
If you have a larger down payment, lenders might give you a chance even if your credit isn't an ideal number. While it's possible to get a loan with putting as little as 3% down toward a down payment, you'll want to interest the lender by putting down a larger amount.
Tips for Buying a Home With Bad Credit
While buying a home with bad credit might seem overwhelming, it's entirely possible to make your dreams a reality. Follow these tips, make sure to save money toward the down payment, and before you know it you can have a home.
Would you like to learn more about real estate and finances? Check out our other articles.
