What is my best approach to buying my first house, if I have a poor credit history?

Answer 1

the best way is to go FHA. Its kinda hard to find a home that will pass for the guidelines but some sellers will make the necessary repairs to make it pass just to sell the home. By getting an FHA loan you get a lower interest rate than you would with traditional home loans, and another program they have is called Ameridream. That will assist you on your down payment and roll it all into your total loan amount so you can buy a house with nothing in your pocket at all! This is what I did and it worked out great. But if you decide to use cash for downpayment this is always the best way! the more the better, and the better interest rate you will get. Also the more stuff you can get fixed on your credit before you buy will be very helpful! I put some links below with good info.

OH YEAH! ONE MORE THING! DONT USE A REALITOR!! THEY DO HARDLY ANYTHING AND THEY GET A BIG CHUNK OF CHANGE FOR IT! YOU CAN DO WHAT THEY DO ON YOUR OWN! This will save you alot of money!

Answer 2

Purchasing a home is the biggest investment you'll ever make. Don't rush into it. Unfortunately, we live in a society that is driven on instant gratification: drive-through windows, instant messaging, emails, etc. In this instance, take your time.
Having said that, clean up your credit. If you have lingering collections or charge-offs, make those your first priority. Even if you are able to get a loan with those issues, they will still haunt you after you purchase. You will also save yourself by qualifying for a lower interest rate.
Next, save up for a down payment. Oftentimes, folks w/ bad credit think that the "$0 down, bad credit, no problem" guys are the only way to go. Not true. You can get into a conventional loan with a reputable lending institution if you show good faith by clearing up your credit AND have a decent amount to put down on the house. When I say "decent", I pretty much mean to save up as much as you possibly can - the more you put down, the less you have to borrow. Plus you are covered for any surprise expenses. I'd say 5-10% of the purchase price is good. If you want to put more towards it, by all means do it!
Finally, get your bills in order. Here in Ohio, lenders are able to use non-traditional credit to base a mortgage lending decision if the consumer has no credit or poor credit. This might be an option for you. The lender will check the person's rent history as well as the following bills: car insurance, lights, gas, phone, cable, etc. They send a letter of verification to the companies' A/R depts. and base their decisions on that. They want to see that you've paid those bills on time for at least one year. Not all places do this, but it becoming more popular- especially if you live in an area that is in desperate need of new first-time home buyers.
Those are the three things I'd suggest.
Good luck to you!

Answer 3

Save up for a good sized down-payment. Typically you will need at least 5% down on a home. If you credit is bad, that may be 10% or more. There are loans out there for 1st time home buyers that will go 100% financing but you need to have at least average credit - say a 600 score.

You could also work on improving your credit. Pay off any current collections. Judgements and liens will need to be paid off before any lender will give you a loan. Keep all of your payments current. Remember this: the higher your credit scores the more doors are open to you regarding home loan programs.

I know these things- it is my business- I'm a mortgage broker.

Answer 4

First, off work on getting a your credit history fixed.
The biggest thing to hurt your credit is late payments. A good way to prevent this is to have the amount due automatically taken from your account on the due date. Get your credit report and look over it for errors and get that updated.
Second, you will probably have to pay a higher rate for the loan due to your credit history.
Third, get pre-approved for the mortgage that you can afford the monthly payments, this allows for a bit of bargaining power for you.

Answer 5

Get pre-approved for a mortgage. Anything less than that and no one will want to touch your credit history. This also gives the seller something to go on and your seriousness in buying. A pre-approval will also tell you how much mortgage you can afford. Debt is the American way of life - anybody can get a mortgage. Granted, your interest rates will be higher, but it CAN be done! Good luck!

Answer 6

Make sure you have money to put down plus closing costs. Be aware of the fact that your interest rate will be higher than people with good credit. Go to see a mortgage broker, they will have access to tons of different programs and will be able to help you find a loan. If you don't already have a mortgage broker I would be happy to help you out. Send me an email letting me know what state you are in and if I'm licensed in your state I can help you find a loan. Good Luck!

Answer 7

You are probably going to have to pay a higher interest rate for awhile. Go to a bank and talk with a loan officer and be honest with them that you know you have poor credit. They might have some ideas on how you can get your credit rating up before you get the mortgage. Have them run a credit report for you and they can help guide you on how to clean it up a little.

Answer 8

Being snicker out of an place of work isn't very uncommon presently. First walk in there with self belief and comprehend what you elect for. 2nd do no longer and that i REPEAT do no longer fall for a adjustable cost very own loan or intrest basically very own loan. maximum very own loan officers attempt to get first time purchaser's to evaluate those form of loans exceptionally once you have undesirable or honest credit. third attempt to instruct the non-public loan officer that your paying all your costs on time and that your additionally attempting to hold your credit up from all your scientific expenditures. final in the event that they do no longer even provide you a shot save up some money and walk in that place with an astonishing finding down fee. stable success

Answer 9

Have cash in-hand and a low debt-to-income ratio, and it doesn't hurt to have been in your same job for awhile.

Good luck!