CENTURY 21 Northwest is here for anyone and everyone when it comes to advising prospects. If you believe you are ready to buy a home but you’re not sure how to do it with your not so bright credit history, then you are in the right place. Give us the time of day and we’ll show just how to get the home you need!
Federal Mortgage Options
When it comes to finding the right mortgage, it is important to look at state and local programs that might be able to help you. Some of the organizations that would be worth looking into are ones like The Federal Housing Administration (FHA) and the Veteran’s Administration (VA) which provide loans that have more forgiving credit standards to qualify for loans. For additional help check with your local housing authority.
Eye Out The Right Home
When looking for a home it is important to actually take the time to search for ones that would suit your needs based on their location, condition, and size. Visit our buying a home page and let us know your situation and we will do our best to help!
If you have bad credit you might not be able to get a loan for your “first-choice” home, unfortunately and even if you do the interest rate will be much too high. Be realistic about what you can afford – buying a home is one of the most important financial transactions you’ll ever make. If this means you have to opt for a smaller home or a home in a less desirable location, so be it – it’s better than defaulting in the future.
Find A Low Down Payment
If you can find a loan through The Federal Housing Administration (FHA) you would likely receive low down payments. A typical down payment is around 20% of the total loan and the FHA will go as low as 3.5% in some cases. The FHA will approve loans for people with a minimum credit score of 580.
Save For Large Down Payment
A majority of loans will require a 10 to 20 percent down payment. Because you have a risky credit profile this means you will tend to be less favorable for your down payment. You will want to have nearly 20 percent saved up for your down payment so you can look more attractive to a lender. You may also want to plan for “closing cost” such as attorney fees, title service fees, and survey fees.
Expect High Interest
Unfortunately with bad credit, you will more than likely have a higher interest rate than you want to pay. A bad credit history shows that you’re a risky person to lend to. Because the bank or lender thinks it might not get all of its money back when it lends to you, it will require you to pay more each month than a less-risky person would. This might not seem too bad at first – the monthly payment on a high-interest loan may be only a little higher than on a normal loan. However, because mortgages can take decades to pay off completely, over the life of the loan, this can add up to thousands of extra dollars.
If you’re absolutely set on buying a house while you have bad credit, these steps should get you there. However, if you’re looking to repair that credit before buying a home, stay tuned for our next blog about how to fix your credit! Contact CENTURY 21 Northwest and see if we’ve got the home you’ve been searching for!