If you have bad credit, you might be under the impression that you don’t have any hope of buying a home. Not only is that not true, but 2016 real estate trends might even demonstrate that this is the best year for success when it comes to buying a home with bad credit.
Consider All Lender Options
There is a good chance that if you just walk in a bank and apply for a mortgage while having bad credit you are going to get turned down. In fact, don’t even try that option until you have looked into a few others. Consider things like FHA or VA loans, which have more flexible credit limits on them. They also allow for variations in terms that other lenders might not, like letting gifts from family members be applied toward the down payment.
Ask About Seller Financing
Seller financing is probably one of the most popular options. It may even give the seller more room to customize the purchase. That gives the seller a lot of power, but as long as the terms are ones you can live with, this might be one of the easiest ways to buy a home with bad credit. Look to sellers who are interested in being relieved of a mortgage or who already have the house paid for. People who aren’t in a hurry to sell may be less likely to offer you this option.
Settle for Less
If you have bad credit, it may not be possible for you to get the home of your dreams, but that doesn’t mean you can’t get a home at all. Look for homes that are affordable and livable, but may need a bit of work. This allows you to mot just buy a home, but make an investment that you might realize a profit from in the future.
There is potential for a new bill to pass which allows rent and utility payments to be considered along with the FICO score. If this passes, you won’t be put out of the running just because you don’t have a credit card. For the first time, making your rent and utility payments on time will actually count toward your buying potential.
You may have to deal with high interest rates and a fixer upper, but as long as you can afford the payments, you can always pay a little extra to limit your interest. In the future, you can sell the home once it and your credit is fixed up. Then you can move into the home of your dreams at an interest rate you can afford.