If you want to buy a house with bad credit you need to realize that it is possible. But, you also need to know that it’s not easy, and you are going to pay more money than someone with good credit.
A bad credit rating can be associated with people who went through some type of hardship. Like a foreclosure or filing for bankruptcy. The mindset of most banks is that most banks or lenders won’t trust you with their money when you are faced with bad situations.
However, what if I told you that there is a way to purchase the home even if your credit is bad. But keep in mind you can’t have your cake and ice cream at the same time.
What that means is if you know you have bad credit you have to understand that lenders are not going to give you the best interest rates. So you must realize that there is a trade-off.
Understand that you are considered a higher risk and because of that the interest rating is going to be higher than what it would be if you were to have good credit. There are some lenders who might be willing to loan you a loan. But you have to realize that it comes at a cost.
This type of loan is more expensive than the regular loans available by people who have good credit standing. The lender will have to charge you a higher interest rate but if you really need the loan, you will not mind at all. This will assure them that you really can pay off the loan.
You should also try to save up at least a 10 % down payment on the loan. Giving a deposit will give the lender the impression that you are willing to pay off the loan. It also lowers the monthly payment when you have more down. Then, of course, make sure you avoid late payments and make the payments.
You can not afford to miss a payment when you are given a chance to get home. Also, avoid extending your terms from the original terms. These conditions will not help your financial standing. We are going to talk about a few ways to start buying a house with bad credit.
How to fix my credit score to buy a house?
How to fix my credit with no money? This is the question that we always ask ourselves. And if you want to do it yourself then I got some good information that will help you to do it yourself.
So let start with the first step. I’m sure you are doing your reach search and googling different terms to find some of the things to help you fix your credit. I would like to add that if you are in Dallas, Frisco, Plano, and surrounding areas and you’re needing an Agent to help you in this process then give me a call.
There is a blog site that I have used in the past to help me understand or find a lot of different letters when you are trying to do the DIY(Do it yourself). One website that I’m going to give you is Creditboards.com. This website has been around forever and it has tones of information in reference to helping you to fix your credit yourself.
It will take you a while to go through it because it has people who have been going through this for years. The board has tons of information as well as letters to write to creditors.
Another good source would be a book called credit secrets. This book is packed with a ton of information on how to fix your credit. I believe the book has very good letters you can use and gives very good solid information.
I have personally used this information and I’m making it available for everyone to use. Remember, that everyone results will be different so you have to make sure that you use your own common sense. I’m giving this to you because I want to help someone else. You can find it right here —-> CreditSecrets.
Settle the debit…
Regardless of what anyone tells you. One of the best ways to get things going is to do what we call debt settlement. This is where you go to the collection company and find out what percent amount they will take for the debt.
For example, if you have a debt on a credit card and for some reason, you weren’t able to pay the card off you can go back and look for the letters that were sent to you. On the letter, you will see a percent amount. In this example, we are going to use 40 percent off.
So if you owed them $400.00 and they said they are willing to settle for 40% that would be around $160.00. Now I know this will have a negative effect on the credit report, but remember you are rebuilding your credit. So your credit is already bad.
If you settle the debt it means that it will be finished and it will not get sold off and it will report back on the credit report as a paid collection. That’s the key thing you have to understand that if it’s not paid that means it still out there. So it might get sold again and then re-put back on the credit report by the collection who bought the aging debt.
Understand something. If the debt is past the statute of limitation it means that the creditor can not file a lawsuit against you. You can check out the statute of limitations article. You can go through the article and see the statute of limitations table.
On this table, it will show you the time frame per state that the creditor can go after you for judgment. So remember if it’s past the statute of limitations the creditor can not take you to court and put a judgment on you. But you have to remember that the debt is still owed.
The other thing to pay close attention to is the time frame that the debt is on your credit report. If the debt is on the credit report for more than 7 years that means that creditor is past the actual time frame to report the debt. You should then contact all three credit bureaus and send in a dispute letter.
These letters can be found on creditboards.com and also when you purchase the book credit secrets. Remember this is for information purposes only and you will need to speak to an attorney about your state laws concerning this.
Also, you want to sign up for a monitoring service such as Credit Karma or Experian or Trans Union. You want to be able to monitor to see what updates are being made to your report as you work to repair your credit.
Even if you are getting a service to help you repair your credit it would be a good idea to keep tabs and be able to review your credit report. The Credit Bureaus do charge for this service. Capital One also has monitoring services as well. Also, check out Credit Karma Saving Account.
Who can fix my credit report?
That is normally the next question. If for some reason you do not want to fix your credit yourself you can look around and find someone who can fix it for you. The main thing you want to do is make sure that the person who is going to do it has years of experience doing it.
Also, look for someone who has been around for a long time. Reputation is a good thing. It means that the person or company has a good reputation for getting it done. Sometimes you have to pay attention to there ratio of success.
You can also ask them for referrals of people that they have helped recently. Ask them can you call the referrals. If you are in the Dallas FT Worth Area and you need assistance on this fill free to contact me.
So yes, someone can do it for you. Understand that it is going to cost you. So you have to make sure that you are ok with how much it cost. If you ask me how much? The answer is everyone is different.
You going to have to make sure that you are able to deal with the cost of service. Also, be prepared to go for a few months to get your credit scores up. Keep this in mind, it will depend on what is reporting on your credit report. Sometimes it will take a few months to get the scores up.
Remember, there is no quick way to fix your credit report. If you do the process right, you should be able to see some results within 6 months or so. The goal is to get your scores up to 620 so that you can qualify for the 203B loan or 203k loan.
How to be pre-approved for a credit card?
This is normally one of the next things you will have to do once you get a lot of your credit items off your credit. Keep in mind that if you are still paying for a car and if the car is reporting on the credit report that is considered a tradeline. Next, you’re going to look for a secured credit card.
This is a card that you will need to pay a deposit of some amount and the credit card company will give you what is known as a secured credit card. The one thing you have to ask the person at the bank “do you report to all 3 credit bureaus.”
If they tell you they do not, then keep looking for one that does. Bear in mind that these credit cards do not hold the best APR Rate. But that’s not what you trying to do, your goal is to try to get re-established credit.
You can also use Credit Karma and some other platforms and they will give you suggestions of credit cards to apply for. Once you have your credit card done its a matter of making sure you are monitoring your credit and see if your scores are increasing.
The goal is to increase your scores up to 620. With a 620 credit score, you will be able to qualify for programs like TSAHC and Seth or other down payment assistance programs.
Getting a CD Loan to help with your credit score
A Certificate of Deposit (CD) is a product offered by banks and credit unions that provides an interest rate premium in exchange for the customer agreeing to leave a lump-sum. Almost all Consumer Financial Institution offer them. Although it’s up to each bank which CD terms it wants to offer, and how much higher the rate will be compared to and what penalties it applies for early withdrawal.
It normally has a very low-interest rate but you can get a loan against the CD which would be considered a secured collator loan. You have to make sure that you find a bank or credit union that reports to the credit bureau.
If they report to the credit bureau then you can go into the bank and let them know you want to take out a CD. After a few days or maybe 2 weeks go back into the bank and ask them about taken out a loan against your CD.
This is called a secured collator loan. The interest rate is going to be much lower. You can then put the amount in your checking account. And pay the monthly payment for 5 to 6 months. Review your credit to see if your scores have increased any. Again the goal is to get your credit scores up to 620 to qualify for the 203B loan or the 203K loan.
Conclusion:
Home Ownership is in your grasp. But, remember it’s going to take some patience. If you have the patience and you follow the process. You will be setting yourself up to own your first home or help you to re-establish your credit so that you can do other things that you want to do.
We all have to set goals in life. One of them should be Home Ownership. There is a lot of information available. So it’s up to you to get started with the process of buying or selling a home. Remember, if you are in the Dallas Ft Worth Area, Frisco, Plano or surrounding area feel free to contact me and let me be your agent on your next home.