It seems to me that there are more options for purchasing a house, condo, whatever for people with suck butt credit, but trying to rent an apartment with suck butt credit, well, sucks butt.
2006-11-01 11:10:52 · 9 answers · asked by Inquiringmind 3 in Business & Finance ➔ Renting & Real Estate
A major difference between purchasing a house and other credit-based decisions is that a loan for a house is collateralized, meaning that the house itself is collateral for the loan.
A car loan has the car as collateral, a boat loan has the boat, etc. When you apply for a credit card it's an unsecured loan because there is no collateral for the issuer to come and take if you stop making payments.
If you purchase a home for $100,000 and put down $5,000 and are able to get the house appraised for $110,000 then the mortgage company is thinking that they won't lose money if you were to stop making payments. In fact, to help ensure that they don't lose money they'll have you pay for PMI (Private Mortage Insurance) if your downpayment is less than 20% of the selling price of the house.
So in addition to the mortgage you're now paying an additional amount of money (insurance) that goes to a third party that will help to cover a shortfall if you should go into foreclosure on your house.
2006-11-01 11:20:26 · answer #1 · answered by drew30319 2 · 1⤊ 0⤋
2
2016-07-19 16:58:04 · answer #2 · answered by Houston 3 · 0⤊ 0⤋
Because if you rent an apartment with bad credit, they probably think you are a turnip (as in "you can't get blood out of a turnip"). The landlords don't want to get involved in that.
If you're credit is bad, you'll pay a higher rate for the mortgage to compensate for the risk, plus the theory is that you have some equity in the house you probably won't want to lose.
2006-11-01 11:16:07 · answer #3 · answered by open4one 7 · 0⤊ 0⤋
Not really. You still have to ahve atleast 580 for a home loan and that's about what it takes to rent an apartment WITHOUT the extra deposits and such. Its just that NO apartment complex makes a big "BAD CREDIT OKAY!" beucase they dont want to turn away the renters who have good credit and worry its a dump.
2006-11-01 11:18:12 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Because the bank will have collateral in case you would default on the house payment. They can foreclose on the house and resell it. The landlord of an apartment can only count on your credit score to determine if you are a worth risk to rent an apartment to.
2006-11-01 11:17:21 · answer #5 · answered by rogueryche 3 · 0⤊ 0⤋
For starters, if you default on paying your rent, the owner isn't going to be able to get anything of value from you to recoup the loss, where as a repossessed house is auctioned off to cover the lost cost of the loan.
Then, you have co-signers to help out with loans, who are agreeing to pay a defaulted loan if the main person defaults on the loan.
Then, you also make interest off of letting dead beats have things they can't pay for.
2006-11-01 11:17:19 · answer #6 · answered by Anonymous · 0⤊ 0⤋
You would have a very hard time doing either. With bad credit...you will find it nearly impossible to get financing. With bad rental history...you will find it nearly impossible to find a landlord willing to rent to you.
2016-05-23 08:25:12 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Because once you make the purchase of the home or condo or whatever, you now have collateral that the lender can foreclose on. When your in an apartment , no collateral exists.
2006-11-01 11:16:09 · answer #8 · answered by 86Mets 4 · 0⤊ 0⤋
because it's about supply and demand. there is more of a supply of houses
2006-11-01 11:16:06 · answer #9 · answered by Anonymous · 0⤊ 1⤋