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Hallway With Staircase

Buy a home with bad credit

3 Ways to Buy a Home with Bad Credit

27 Aug , 2014  

Hallway With StaircaseIt is a common belief that when you have bad credit, you are not able to buy a home. Well, this statement might be partly true since having a bad credit means that you cannot get a mortgage. Or if you get it, it is very expensive and at the same time loan rates might be high for you since you are a credit risk. This makes purchasing a home nearly impossible or too expensive. You are not alone in this experience.

However, there are some ways you can purchase a home, even with bad credit. There are also ways to improve your credit with a specific credit-improving plan. Even though this might take some time, in the long run it is going to pay off. Therefore, the following are three ways you can use to purchase a home even if you have bad credit.

Seller financing

You can buy a home from a seller under a contract and let them carry the financing. This sometimes is offered by elderly people who might have retired and want to move to a much smaller house, or to home investors who no longer want to be in a particular property. Your payment might give the person an extra income, or get them out of a contract they just don’t want anymore. The house might have been in the market sometime back and no one bought it. This makes the homeowner a little desperate to get it sold. However, it is important you confirm with the owner first if he is willing to carry the financing and that you go into these agreements only with the advice of a 3rd party to ensure you are getting a fair and legal contract.

Lease

In this agreement, you lease the house for a period of around one to three years. You can purchase the house during the lease period at a price agreed on in the start. Leasing and lease-to-own or rent-to-own properties are one way that people with bad credit can buy a home. This will give you time to improve your credit rating so that you qualify for straight mortgage. Don’t be fooled by the scams out there; some leasing options are legitimate.

Buying subject 2

In this case, you will be making the payments to the mortgage company but at the same time, the current owner remains on the contract. This mainly applies in cases where the sellers are facing bankruptcy or foreclosure. By stepping in and taking over the payments, you assist the seller preserve their credit rating. You will also be able to give them some money upfront so that they walk away and go get a fresh start.

Even though each method contains a dark side of it for the homebuyer, they are usually used every day by perceptive investors to buy houses without being qualified. Seek appropriate professional counsel before using one of these methods to buy a home with bad credit.

 

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