I want to buy a house but my credit is shot.?

Question

I owned a house 3 years ago and lost the house due to foreclosure. I filed a chapter 13 twice to save the house but due to lost employment, efforts were futile. I am in a lease with purchase option and have been here for almost 3 years. I have tried very hard not to create any new derrogatory credit entries but score is still very low. What is the lowest score that one can have and still get financing.

Answer 1

Most lenders will fund if there is the E word involved. "Equity" They want you making payments on a place that is worth more than what you owe.

It's all about risk based lending. The less of a risk to the lender, the easier to get funded.

Answer 2

Rent to own is a con. With RTO, you are HOPING that your credit will be ok in a couple of years. You put up a deposit and pay extra each month to the landlord - all of which is usually used as a downpayment. So far, so good. However, in a set period of time, per the contract, you will need to qualify for a mortgage with a lender and settle on the property. If you fail to do this, then you usually lose the money you put into the deal. So that is were the problems are. What happens if you can't get the loan because your credit is still to low? Or if rates increase and you can't qualify? Fix your credit now and then buy.

Answer 3

Zero. You need a lender that does 'manual underwriting'. This is where a PERSON evaluates your application, not just punch it into a computer. To qualify, you need to have paid your rent early or on time for two years and show that all your other bills are paid on time. Churchill Mortgage does these loans.

Before buying a house, you need to follow a few steps. You need to pay 20% of the asking price as a down payment. You need to be debt-free. Your mortgage cannot exceed 25% of your take home pay (including taxes, insurance, etc) on a 15 year fixed note. You also need 3-6 months living expenses in the bank for emergencies.

Buying a house while carrying credit card, auto, and student loan debt, with no money down (for move-in equity), and no money in the bank will put you right back where you are now. It's an invitation to another foreclosure. One lay-off and you lose your house. With no emergency fund, you're holding your breath, hoping that the furnace doesn't go out or the water heater doesn't leak. Home ownership is only a blessing if you're prepared for it. Not preparing makes it a burden, like your last house.

Answer 4

It really depends on the loaner. They all have their standards. The normal credit score when purchasing a house is around 650. You may not find one lower than that. At least a score of 600 may get you financed. If you have a great deal of money to put down it may help balance that lower score issue. Check with credit unions, they tend to have lower standers and better rates. Good luck and remember save, save,save!

Answer 5

Low 500s but it isnt just credit score. approval is based on risk factors such as income, other debts, history, credit score, etc. In 7 years from date of derogatory input your file will get better because it will fall off. You can either hang in there for a few more years or get a co-signer with fair credit history.

Answer 6

You can almost always get a mortgage. As I'm sure you know, people will let other bills slide in order to make their house payment. Your interest rate will be fairly high but I would still try and see what happens.

Answer 7

Focus on private owner contracts. You'll pay higher interest (at least 8%), but sure beats paying rent. "ownerwillcarry.com" has a few if you are flexible with area. Sometimes you can find someone who will even barter for down payment on those. They are hard to find, but do exist.

Answer 8

Credit reapir can boost your scores. Having chaper 13 twice isn't going to help much though.

Answer 9

Has your situation really changed? with foreclosure and bankruptcy so recent, maybe you should wait until you are on firmer financial footing to buy a house.