|Sub-prime mortgages are a type of low-credit housing loan|
By Chad Deveault
Buying a home with bad credit can be a hassle, but there are ways around it. Here are five tools that can assist you in the process of buying a home with bad credit.
1. Check your credit report. As an American citizen you are allowed one free credit report per year (by law). A credit report will have important information about your financial transactions, accounts and how you pay your bills. You will need to verify who you are and then they will give you information about your credit score. There are three major credit bureaus in the U.S., and some may charge a subscription fee for you to find your credit report. You can find a free credit report at: www.annualcreditreport.com. Also, as of 2014, many credit card companies now provide a free monthly credit score to all of their cardholders.
2. Apply for a Federal housing administration (FHA) loan. The FHA is a fairly simple loan to apply and qualify for, even for people with poor credit. There may be some problems obtaining an FHA loan if your credit score is 500 points or lower. Those who have a credit score from 500 to 579 may only qualify for borrowing a 90 percent loan-to-value. If your credit score is below 500 and you meet requirements, you may be able to apply under what is called "non-traditional credit history or insufficient credit." The FHA is government funded and offers flexibility for people with poor credit.
3. Build your credit. Specifically in the area of mobile homes, there is a program for those with weak credit scores that allows you to build your credit, while putting money toward a mobile or manufactured home. When your credit has gained some ground and you are eligible for a loan, the service fees you give can be put towards your own mobile home. So you can build your credit while adding money for a down payment on a home. You should always be working toward building your credit, so why not contribute to a down payment on a home as well?
4. Use a mortgage calculator. A mortgage calculator can help you by calculating your monthly mortgage cost when purchasing a home. It's a quick and easy way to find out how much you would pay throughout the years your mortgage would last. This may also involve property tax, home insurance, and mortgage insurance. Enter your location and price, and this tool can be of great assistance in helping with finances for home buying.
5. Stable income. No one likes to be financially unstable and it sure doesn't help in home buying. Showing stability in your income can greatly increase your chances of being approved for a home. If you can show you are able to keep a good reliable job that will cover a mortgage, and that will be a big help to you, even if your credit score is low. To be able to display a solid quantity of money in your savings account can also go a long ways when buying a home with poor credit.
These are just a few tools and tips to consider using for those with poor credit. Don't let a bad credit score stop you from working towards your home today!
About the author: Chad Deveault (with article contributions by David Leiter). Chad works on a marketing team as a freelance writer covering a wide range of topics in the oil, housing and trucking industries.
Image: Author owned and licensed