Need Ideas About Buying a Home with Bad Credit

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Author: Deanna Mascle

Article source: http://www.articledeshboard.com/. Used with author's permission.

There are any number of reasons that a person could end up with poor credit and not all of them come from being lazy or cheap. A bad accident or illness, hospitalization, the loss of a job or bad choices in a person's younger years could all be the basis for having bad credit in their adult years. The events might have happened years ago and the individual may have since repaired their ailing credit; however that stain remains and makes future purchases difficult. Now that you're older and wiser you find that you want a new home. Can you buy a new home with your bad credit?

The easiest way to own a home with poor credit is to try your best to get your credit back on track. If you can pay 2% on the mortgage loan interest rate, you will be saving over $70,000 throughout the years. The best thing is to order a free credit report and to go over it with a fine tooth comb. If you find any disputes that you want to take up with creditors, dig up your receipts, and write some letters trying to straighten out whatever is being falsely claimed. The law states that the credit agency will have to address the dispute within 14 days or they will have to remove the disputed item completely. After all of your disputes have been settled, you should insist that there be a new (and corrected) report sent out to all of the creditors who have received your report in the last six months. The process of having the corrections sent out is laborious, but it could mean a greater chance of you owning your own home, so be persistent.

One way to own a home with bad credit is to go straight to the source. Many homeowners are willing to sell you a home under a selling finance agreement. This agreement provides a "contract" that allows you to make payments to the actual seller instead of making payments to a bank. Another option when buying through a seller, especially if a down payment is not an option, is to find a seller that is offering a lease-to-buy option. When you do a lease option, you will have to work out the math ahead of time to determine how much rent is going for a down payment, and after a certain period of time, how much credit you are going to end up with.

When you own a home there are many ways that your home can make money for you. If you continue to keep up with your payments and send them in a timely fashion you can increase your credit rating. This in turn can help you when you make the choice to refinance your home. Refinancing your mortgage can give you more money to use towards paying off other debts as well. In this way you lower your house payments and erase some of the other debts you may have all in one shot.

Looking for your first house can be a very exciting time, and in the end the experience of being a homeowner can be both rewarding and worrisome. The main thing to keep in mind is not to get so caught up in the thrill of it all that you purchase a house that is clearly beyond your means, especially if your credit is less than ideal. You will be much happier if you find a house that is within your means.

Learn more about budgeting money management and personal finance at budgetingmoneymanagement.com/