Home Buyers Guide: Buying a Home with Bad Credit

 
5-important-things-about-bad-creditA huge myth I want to talk about is, you can’t buy a home with bad credit… I will say that some people’s credit is so bad that they would definitely never qualify for a mortgage, but even for these people, home ownership is not out of the picture.

The government came up with a program to help people get into a home with questionable credit, called FHA.  It was designed to not only allow people trying to buy a their fha-loanfirst home with poor credit, but it also reduced the down payment to 3.5%! Before you would need solid credit to qualify for a conventional loan (and have 20% down), you now have the opportunity to actually get into your 1st home with marginal credit and only having to come up with 3.5% down.The government recently reduced the amount you can use on FHA to $287500 MAX loan limit… It used to be $417k and we all hope one day they will raise it again because we all know trying to buy a home in Las Vegas for $287500 or less is not easy.

There is another government secured loan that allows for lower FICO scores and that is VA… VA loans are exclusively for active & non-active military!! They also come va-loanswith a 0% down up to $417,000… The closing costs on these loans are very minimal and if you have an amazing agent (like ME) you can sometimes get the sellers to pay up to 3% towards those closing costs… I have literally closed several VA loans recently where the client walked out of the signing with a check in hand!! Literally ended up with a home that cost them $0 out of pocket expense to get in to… Truly AMAZING!!!!! If you want to know how call me 702-218-4585!!

As I explained earlier, for people with terrible credit that will not ever qualify for a loan, there are other options. In this day and age there are a lot of people out there with very bad credit but are very good & solid buyers!! They have a ton of cash and just wBalancing a home mortgageent through a bad time which ruined their credit. For those people there are a few different options: #1 would be getting a mortgage with a hard money lender. The interest rate is normally a few points higher than normal and the investor charges a few points up front and normally requires 30-40% down. #2 is doing a lease option,  sometimes you can find sellers that own their home outright and are willing to do either lease options or they will act as the bank and do seller financing. Both of these will cost you 10-20% down, points up front and a higher interest rate. Lease options are normally 3-5 years long with a balloon payment due at the end. The seller financing normally last just as long but sometimes you can get the seller to do a 10-15 year term.

As always, for your real estate needs do not hesitate to reach out. Visit http://www.HannaGroups.com for more information.
DH

174 thoughts on “Home Buyers Guide: Buying a Home with Bad Credit”

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