Buying a first home with really bad credit...?

Question

We live in oklahoma, and our credit is absolutly shot from my husband getting out of the military. We had our cars repossessed, defaulted on everything, because my husband had a hard time finding a job. Now we make really good money, and can afford a house payment, but are hindered by our terrible credit...Any suggestions?

Answer 1

Hi There,

Here is the reality:

You can buy a house with your credit the way it is at the moment, yes it will cost you a lot higher to start off with, but you keep paying your mortgage on time and I mean really strictly on time.

You really cannot be a day or a minute or even an hour late and you will have the best way to start rebuilding your credit. Of course you will have to be very strict with yourself and pay off all of the other things that have gone wrong.

You see a little known secret is that mortgage payments that are made on time every time are weighted very heavily by these companies and will stand you in extremely good stead. I completely understand the difficulty that you have gone through and that you are trying to rebuild your life now, right here is the opportunity to do so.

Then, after you have been paying your mortgage faithfully for a year your credit rating would have improved to such an extent that your agent can help you to refinance to a considerably better interest rate and you will have your new home and a wonderful credit score and no one can tell you that you have not worked hard for it.

What's more is that most of the states have outstanding programs for first time home owners to assist them with owning a home and there might be a remote possibility that something like that could exist for you.

Here is a gentleman who works for Wells Fargo that I have worked with before who is absolutely outstanding at what he does and I would recommend him with a clear conscience.

Answer 2

I have read the suggestions that have been left for you and while they are all good ideas for home mortgage, I believe you are asking about more than just mortgage. You are also asking about whether renting is your only option or is it just in your best interest to continue to rent. Renting is always paying for someone else's equity in their property. If the taxes or insurance go up, so does your payment. You are already making a mortgage payment it just belongs to someone else - unfortunately! In my experience the key to getting a loan is down payment. If you put down 20% or more there are very few mortgage companies that will turn you away. They are getting so much equity the deal is a good one for them. They might still hit you with a high interest rate but this can be refinanced in a couple of years to a nice low rate. 20% down also makes the payments affordable. You guys can do it. Find something affordable and get some good credit history under your belt and then get what you want.

Answer 3

yes.... Disclipline... Think about this......

If you can afford to pay a mortgage, then couldnt you afford to put that money away into an account minus a bit less coz of interest saved and then pay for a house up front after less time??...

In my eyes credit is just a mindset, u never really own anything if it is on credit.. As with a mortgage, u never own the house until the final payment is made, the bank does... On top of the outrageous total u have paid in the long run on all that interest...

Only trouble with this is u need a place to stay in the meantime...

lol

Answer 4

Look at it this way: If you have bad credit, that means you made mistakes. Having a house is a huge whammy. You've got a big mortgage payment, interest, insurance, taxes, and then you have to keep up with any maintenence issues that arise each year. It's thousands and thousands on top of the mortgage. It might be a good idea to learn new ways of managing money, get your credit rating cleaned up, and then the bank will see that you do know how to manage money. They'd refuse now for a reason : you're not ready for the responsibility yet.

Answer 5

Look into a rent-to-own property, or stick with renting till your credit clears up. Trying to get a mortgage with horrible credit means you are going to have some pretty hefty interest rates. Plus, most market analysts are predicting the real estate market is going to cool off or even decline in value in most of the US. Put those together and you will end up paying way too much interest for a home that cost more than it was worth. Give it a year or two, build your credit to the point where you can get a reasonable interest rate, and let the market shake itself out.

Answer 6

It takes alot of time and effort, to improve your credit rating! Many times, you can pay off those bad debts, for alot less than the original amount. Get in touch with a credit counceling agency. Make sure it is one of those not for profit places. Your other option may be to buy now and take the higher rate of interest, and re-finance in a couple years, after establishing a good payment record.

Answer 7

It may help to resolve some of those credit issues before getting a loan. It would be a good idea to get a hold of your credit report (both you and your husband's) and see if everything on there is accurate. You may be able to contest some of those items on there due to improper filing by the reporting agencies. Overall, it may be the best to work on your credit a little before going in for a loan. It doesn't hurt to go in and talk to someone at your bank about your options.

Answer 8

I know all about that, when my fiancé returned (army Ranger) he also had his credit shot from identity theft that went unnoticed while he was overseas.

First off, I'd make a serious effort within the next year to fix your credit. If you make stellar payments and make them often you can repair it in less than a year. Once you have improved your score it might save you a couple of points in interest (every little bit counts).

Here's an article to refer to when you are ready. It's about the "costly" mistakes people make when purchasing a home.
http://www.foreclosure.com/articlecenter.html?action=displayArticle&articleId=1154&isLatest=false

Answer 9

All good advice. If you are serious you have to change your habits, save and pay on time, or forget it. Owning your own home takes on even MORE responsibility so you have to start right this minute.

Then maybe you can find a seller who will finance the property for you since a bank is going to see you as a risk.

Answer 10

Not really. What mostly likely will happen is you will have a high interest rate mortgage. I would suggest, renting for a year or two, work on repairing your credit history, then buy a home.