Buying A Home - When Your Credit Is A Disaster

If you're living with a devastated credit score, you probably assume you'll never qualify to purchase a house. Before the mortgage industry crashed, an individual who suffered through a previous bankruptcy would be able to get a home loan in just over 12 months. The current lending disaster has forced many lenders to impose stringent requirements to qualify for loan.

Mortgage lenders tend to place greater priority on an individual with a high FICO score. If you have less than perfect credit, there are strategies to help you buy a home. With some diligence and perseverance, you can rebuild your credit history so you can qualify to purchase a home. Expect the process to take six months to twenty four months before you're able to qualify with acceptable credit.

One good strategy is to negotiate with a potential bank to understand your money problems were caused by situations out of your control (such as marital dissolution, a failing business, medical problems, and loss of a job) or show proof you've taken steps to be responsible with your money. You may be able to persuade a potential bank to offer you another opportunity at home ownership. However, you need to wake up to the reality that rebuilding your finances requires extensive planning, preparation, and hours of labor.

On the other hand, if you haven't filed a bankruptcy or suffered financial problems, but still have other issues affecting your credit such as self employment or a new job less than two years, expect to face an uphill battle trying to qualify for a home loan. Because the mortgage industry is constantly changing, you should speak to a knowledgeable mortgage broker or representative about your available options.

Another alternative to traditional financing is to consider owner-will-carry (OWC) financing. If you have no established credit, minimal savings, and a low paying job, this strategy can help you get your foot into the real estate market. Try locating mature homeowners who are fed up with managing their rental properties, but still desired the monthly income a rental property brings. These homeowners make great participants for owner-will-carry financing.

These sellers are eager to unload their properties because it frees them from the hassles problem tenants, clogged sinks, and faulty air conditioners. They also receive a great return on investment which surpasses the amount they would receive from a bank savings account or CD account.

The beauty of owner or seller financing is the flexibility to work with any home buyer a seller can come to agreement with. If a traditional bank won't consider your application, explore the alternative of OWC financing. In fact, you may choose to circumvent regular financing and try OWC financing as your first alternative. Many real estate investors and home buyers depend exclusively on this financing option without fretting about qualifying with a traditional bank loan.