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Insight to Help You Buy a Home With Bad or No Credit

2 June 2021

Cody Day

When you know you want to buy your own home and move out of the rental lifestyle, there is some preparation you will need to take care of in order to buy a house. From finding a realtor to applying for a mortgage and closing on the home, be sure you can qualify for a mortgage that helps you more easily afford a home and all its other costs. However, when your credit is not so great, or you do not have credit, this can put a damper on your home search and purchase. The following provides you some information to help you buy a house in today's market with bad or no credit.

Look For Seller Financing 

Not every seller may need to sell to a buyer who has their own financing. At times, a seller may own their home in full or have a smaller mortgage and they are in a position where they can act as the bank in the transaction when they sell their house. A seller who offers to finance the home at the same time as the sale stands to earn interest on the payments and get a good return on their investment. And when you don't have credit or your credit is poor, the seller is not going to put you through a rigorous approval process. They will, however, have a lien on the property with their mortgage paperwork, with interest in the property so they have foreclosure protection if you default on your loan. 

Keep in mind seller financing is a great option that you can use for a few years then refinance when your credit is better, or you can extend the payments out further, depending on how long the seller is willing to provide their lender position.

Shop For a Mortgage

When your credit score is low and your credit is in bad shape, don't be discouraged and think all is lost for you to get approved for a home mortgage. There are specific loan programs, such as those insured by the FHA (Federal Housing Administration), that will lend to buyers with poor credit. 

Look for a lender who is approved to give FHA-approved loans and they can start the process to get your pre-approved. Just keep in mind they will charge a bit higher interest rate and will require you to put a down payment toward the purchase. So plan to start saving toward a home mortgage down payment.

For more information about how to receive loans on homes with no credit, contact a real estate agent near you.

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