Anyone renting a house will tell you their ultimate dream is owning a home. There are numerous benefits associated with home ownership that everyone aspires to. For people with bad credit, owning a home can be a challenge as it’s difficult to get a mortgage. Even so, there is still hope. Today, it is much easier for people with bad credit to own homes. If you are a potential homeowner with bad credit, here is how to buy a house with bad credit.
- Check Your Current Credit Score
As a person with bad credit, the first step to homeownership is getting to know your credit score. This information can be obtained from numerous online resources where you can check your FICO score. You need to get 3 credit scores from three credit bureaus. Most mortgage lenders will need your median credit score to determine whether or not you qualify for a mortgage loan. The median score is the one that is between the highest and lowest score from the three reports.
- Fix Your Credit Score Errors
If you notice any discrepancies in your credit report, you have the right to dispute them with the three bureaus that gave you the scores. It is possible to dispute any item on your credit score that you disagree with. Check to ensure that all your details are correct, including addresses and account information. An accurate account will take you closer to owning a home if you qualify got a mortgage.
- Improve Your Credit Score
Before you can apply for a home loan and actually stand a chance of qualifying for one, you need to put some effort towards improving your score to one that is favorable. Usually, high credit scores stand a better chance of getting loans approved. To improve your credit score:
- Dispute errors
- Pay any credit card balances you may owe
- Get any collection accounts removed
- Finding Low Credit Mortgage Lenders
The best way to buy a house with bad credit is by going to low credit mortgage lenders. FHA home loans are the best bet if you want to own a home with bad credit. These are loans given by lenders for foreclosures. It is possible to get a foreclosed townhouse, condo, mansion, or flat. With FHA loans, you don’t need a good credit score. You only need a 500 sore and ability to pay 10 percent deposit. Even so, some lenders may have other requirements. Compare different lenders to find one that suits your needs and abilities.
- Get Your Pre-Approval
Once you have your credit score in check and you have found a lending facility that is willing to work with you, you will need to get a pre-approval letter. This letter is only given once your loan officer assesses your credit info and verifies that all the bank and income details are correct. Once this is done, you can expect that your home loan will be approved.
Once you get pre-approved, you can find an agent and start looking into homes to buy.