Are you anxious to move into your dream home, but you are worried about the way your credit score will impact your ability to finance the purchase? If you are getting ready to buy your dream home, then you need to look at mortgage options that are available. A bad credit score doesn’t mean that you won’t be approved for a loan. But, you might need to work with the lender to meet the financing requirements.
Here are four steps that you can follow to buy a house, even if you have a low credit score:
Offer a Big Down Payment
People with a credit score under 580 definitely need to have a large down payment ready when they want to purchase a home. Even if your credit score is a little higher, you still need to be prepared with a larger than normal down payment to compensate for your low credit score.
If possible, aim for a down payment of at least 20%. This effort shows the lender that you have the ability to carry the loan and it helps to lower your loan-to-value ratio.
Have a Conversation with the Lender
Many financing institutions use computerized systems that provide an automatic approval or denial. But, just because the computer says that you are ineligible, doesn’t mean that you can’t get the financing that you need. Lenders have the option to underwrite the financing manually.
During this conversation, you need to show financial stability despite the low credit score. Provide proof of on-time payments for the past year or a savings account with at least six months of expenses for emergencies. You will also need to be prepared to explain the conditions that caused your credit score to be so low.
Find Private Financing
If you are unable to get a home loan through a financial institution, then you might consider private options. Some sellers will offer a lease-to-buy contract. You will be able to move into the home and lease the property for a while to rebuild your credit history. Then, the sale can be finalized, and you can take ownership of the home.
Another private option is to find a family member or friend who is willing to lend you the money. A private loan can come from any person or company with the money to pay for the property. Before the transaction, the terms will be negotiated to ensure that it is a fair deal for both parties. This financing could be risky to your relationship, but you don’t have to meet certain credit requirements for the loan.
If you are ready to rebuild your credit so that you can buy a home, then you need to talk to our team at DUFFY Realty. We can refer you to the financial professionals who will help you qualify for the mortgage that you need. Contact us for more information about buying a real estate property in Atlanta: (678) 318-1700