what is the best way to buy a home with poor credit? Helpful answers only Please.?

Question

I make approximately $55k annually and still rent because I am afraid that my poor credit will not permit me to purchase a home. I am paying someone elses monthly mortgage in the form of rent and am tired of throwing my money away. I am interested in information on first time homebuyer programs in southern California or programs designed for the credit challenged.
Desparately seeking homeownership.

Answer 1

Let me be the first to congratulate you on a great decision to buy a home.

WHY HOMEOWNERSHIP IS SMARTER THAN RENTING

- Income Tax Savings

- As a homeowner, you can deduct your mortgage interest from your personal taxes. This can really add up. That's thousands of dollars per year - in your pocket! If you add up the tax savings, you might be surprised to find out that, after you factor in tax savings, you can own a home that has more room than your apartment - and still end up paying less than you are paying right now for rent!

- Home Equity - Every time you write a check to your landlord, you might as well be flushing that money down the drain. It's gone forever. But when you own a home of your own, you will be building equity in something that belongs to you. The principal you pay each month is similar to depositing money into a savings account. After many years of paying into the home, you will have a tidy nest egg saved up that you can use for emergencies, your children's education, or retirement.

- Security, Comfort, and Privacy - There is a reason people call homeownership 'The American Dream'. A home is something special that you can call you own. You can be proud to invite your friends and family over and show them 'your home'.

THE MONEY - HOW TO GET THE FINANCING YOU NEED

- Banks vs. Mortgage Lenders - You first need to understand the difference between banks and individual mortgage originators like us. Banks handle savings accounts, car loans, investment accounts, etc. Mortgages are just one of many services they provide. We're different because we only deal in mortgage loans. We sleep, eat, and breathe mortgage loans and nothing else. Would you go to a general physician to have heart surgery performed? Of course not. So why go to a big bank, when what you need is a mortgage specialist?

- Timing is Everything - It has never been cheaper and easier to borrow money to buy a home than it is right now. Even if rates go up a bit, they will still be monumentally lower than they were back in the 1980s, for instance. Back then rates were as high as 20%! Nowadays, even people with bad credit regularly get rates much, much lower than this. But don't wait too long. Rates are cyclical. They will start rising again, and you will have missed your chance at homeownership.

UNCLE SAM WANTS TO HELP YOU BUY A HOME

- Uncle Sam is Your Friend - The U.S. Government wants for you to own a home and they will go the extra mile to help you afford one. Why? Well, every time one home is built, the effect on the economy is quite significant. Think of all the people involved in the construction of a new home, for instance. Welders, Electricians, Carpenters, Plumbers, Framers, Roofers and others are greatly affected by your choice to purchase a home.

- Little or NO Down Payment - Uncle Sam has programs like FHA and VA that can help you get into a home with a low down payment, or in some cases, with ZERO down.

- FHA and VA Programs - If you read our mortgage glossary, which is available for download by visiting my website, you will discover that FHA stands for 'Federal Housing Administration' and that VA stands for 'Veteran Affairs'. Get familiar with these programs, because they just might be your ticket to the American Dream.

HOW TO DETERMINE IF YOU QUALIFY FOR AN FHA OR VA LOAN

- VA Specifics - The VA Loan allows active or honorably discharged military personnel to obtain a home loan with 0% Down Payment. In addition, the seller is required to pay a large portion of your loan closing costs!

- Do You Qualify for a VA Loan? - To determine if you qualify for the VA loan, you simply need to meet the following criteria. First, you must be either active in one of the Armed Forces or an honorably discharged military veteran. Second, you must have reasonable debt-to-income ratio. This means that your current bills (car loan, student loans, bank loans and credit card bills) cannot exceed 41% of your income.
- FHA Specifics - If you don't qualify for a VA loan, then you should look into an FHA Loan. The FHA Loan Program allows little or no down payment, depending on your circumstances. The largest down payment you may be required to provide is 5% down. In addition, the FHA loan is also very liberal, in that, it allows a 41% debt-to-income ratio (including your mortgage payment), just like the VA Program.
- Do You Qualify for an FHA loan? - If you have proof of employment, a small down payment, and a decent payment history for your other bills in the last two years, you would likely qualify for an FHA Mortgage.
- What if you are Self-Employed? - If you are self-employed, that's OK too. We will simply need proof of income from your most recent tax returns. If you can provide this, and meet the regular criteria for an FHA loan as listed above, you qualify!

ABOUT YOUR CREDIT SCORE

Studies show that most Americans would rather see their dentist than have an appointment with a mortgage loan officer. The likely reason is that they are afraid of rejection - afraid of the big bad loan officer who will stamp a big red NO on their application. This is far from reality. Remember, Commissioned Mortgage Originators are in the business of saying YES. We've heard it all and seen it all and we are willing to help you, no matter what your situation is.

- Credit Problems are OK - You might be confused about how a lender determines if your credit is good enough to qualify for a mortgage loan. Let's clear up that confusion right now. Basically, if you've had credit problems in the past, the mortgage company will look at those problems and ask the following questions:
a.) How far in the past are your credit problems? (i.e.- if you had multiple delinquencies on your credit card this year, you might not be able to obtain a loan)
b.) If your credit problem is in the past, is it likely to recur again?
c.) Is whatever it is that caused your credit problem gone, or is it still present today?
d.) How good is the probability that you will pay your bills faithfully every month from now on?

- Judgments - If you have a judgment against you that has not been satisfied, you will not be able to obtain a mortgage loan. To obtain a mortgage loan, the mortgage company will require title insurance. Title insurance cannot be applied against your loan if you have an outstanding judgment.

- FICO Score - Although lenders look at much more than just your 3 digit FICO (credit) score, you should try to keep your credit as clean as possible, because the higher the score, the better!

- No Credit History - Even if you don't have any credit history whatsoever, you can qualify for a mortgage loan. As a matter of fact, it's not all that difficult. If you have a stable income, proof of employment, and a small down payment, you too can qualify for a mortgage loan!

MORTGAGE TERMS 101

As a First-Time Home Buyer, you are going to encounter a lot of new and unfamiliar terms. You should educate yourself on the meaning of these terms. To help you in this process, we would like to give you access to the 'Ultimate Glossary of Mortgage Terms'. To access this glossary, click here : http://www.freemortgageinformationsoutherncalifornia.com/glossary.aspx

GETTING PRE-APPROVED IS THE SMARTEST MOVE YOU CAN MAKE

In many areas of the country, home sellers won't even speak with you unless they can confirm that you will qualify for the financing to purchase their home. In addition, you need to make sure you know how much you qualify for so you can avoid wasting time and effort inquiring about homes that are priced above what the lender determines you can afford. Get pre-qualified. It's fast, easy and best of all AT NO COST!

New! - We are now offering a NO-COST Pre-Approval Service for First-Time Home Buyers. It's fast, easy and at no cost to you. You'll get a copy of your credit report, as well as a NO-COST mortgage analysis.

- If you qualify, we'll provide you with a certificate that you can show to home sellers to prove that you are qualified to purchase their home. We'll also allow you NO COST Access to our VIP Home Buyer Service, which will allow you to find out about HOT New Listings before even some Realtors find out about them!!
- If you don't qualify, we'll be honest and professional, giving you the same respect we would give an A+ credit borrower. We'll show you why you don't qualify and then give you a specific plan to follow so that we can provide you with home financing sooner, rather than later.

Also, here is a Free calculator that will help you calculate if it is cheaper to Buy vs. Rent :

http://www.freemortgageinformationsoutherncalifornia.com/calculators.aspx

Remember also, that you can change the with holding on your pay checks to take home more money each month, because now you have a new tax write off by owning a home.

Here is a free report which might also provide you some added information : http://www.freemortgageinformationsoutherncalifornia.com/stop_renting.aspx

Please let me know if you have any other questions.

Best Regards,
Darren Meade

Answer 2

First, if your score is not atelast 580, you cannot do 0 down, so you'll need a down payment.

That said, if you cannot afford your rent and are making late payments, then you shouldn't buy a house to begin wtih.

Get everything sorted, financially, FIRST. Start paying down CC's, and making on time monthly payments on everything else, and your score will rise. Initiate investigations/disputes on any inccorrect information you have. Old, paid collections can be deleted if you try hard enough-- even if they are legitimate.

BTW, you are NOT 'throwing away money". You are exchanging money in return for a place to live, and you are not responsible for a dime in repairs or maintenance. You also get the luxury home owners dont get-- you can move any time you want (sans a lease) without having to sell. There are SOME Positives to renting.

Answer 3

First step, pull your credit report and score....you get the report free at AnnualCreditReport.com. Check for errors or inaccuracies. If you find any dispute them using the instructions on the credit bureaus site. Start paying your bills on time NOW! The sooner you do this the quicker your score will improve. Consult a mortgage broker rather than a bank/credit union. They can offer many more products and options, especially for someone with bad credit. If your credit is above a 550 you will qualify for a mortgage, however you will pay a higher interest rate. The most important thing is to Pay your bills on time.

Answer 4

Lender will give you money for sure. Probably charge you a higher interests rate and extra insurance on the loan for having bad credit.

Would you consider delaying your plan? As housing market slump, it is easier to calculate "Rent vs. Buy" scenario. Because "appreciation" is no longer a factor.

Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it.

If interests portion of the mortgage payment is roughly equal to rent of equivalent property, then it is a decent buy.

For example, let's buy a $500,000 condo with 0% down and apply interests only loan (just like renting a place). Mortgage payment would be $3250/month. It is a bad buy, because you can enjoy same property for $2000/month.

Please note that I assume the tax benefits from home cancel out fees from home association and property tax. For more accurate calculation, consult with your CPA or accountant. But NOT your realtor, whom will say anything to get the deal to go through.

And again, if you like a particular property, then paying more may be reasonable. You are the only person who can decide how much more premium you are willing to pay.

http://money.cnn.com/2006/08/24/news/economy/newhomes/index.htm
http://money.cnn.com/2006/08/23/news/economy/homesales/index.htm

Answer 5

When you have poor credit, you're gonna pay a butt load of interest so the best thing to do is call your credit card companies and ask them to give you a break on the interest. If they know they're going to get paid they'll cut you some slack. Work out a payment plan with them.

Answer 6

That depends on how bad your credit is. Your obviously going to pay a higher interest rate but in a few years once your credit improves, you could always refinance.

try http://cms.longbeach.gov/hdc/programs/schfa.htm

they may be able to give you some assistance. I wish you luck...its a cruel world out there for those of us with poor credit.

Answer 7

there is a HUD program that allows people who are credit challenged purchase a house. you will have to attend a class which lasts 8 hours. you must attend the whloe class in ouder to receive a certificate from HUD. they will pull your credit report and tell you what they will allow and what to make an improvement on. on some things you do not have to pay the wole bill but just show that you are making an effort.

Answer 8

Your first task in building wealth is a maniacal
dedication to thrift. What ever habits that got you into the position of a bad credit rating have to be corrected or you'll never keep your head above water.

Answer 9

Try ACORN, they are good for first time home buyers. Hopefully they have something out where you are. I know they work with the banks here in the east coast. Good luck.

Answer 10

just save up about 10 percent for a down payment. when you have cash in hand they wont say no no matter how bad you credit is.

Answer 11

Try this website. They will only pull one credit report, and will match you to several lenders who will be waiting for you to call them, once you decide which one suits you best.

http://www.lendingtree.com/