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can I buy a house with bad credit?Submitted by PattyCakes on Tue, 04/08/2008 - 2:21am.
Is it possible? Did you? I need to know. Renting a house for a family, might as well buy if they are in the neighborhood from 11-1400. Screw giving my money to the somebody who is putting a curfew on the garage and who won't replace the carpet after they promised. I don't know where to begin, but I need to. I think you still have to get approved for the loan and all, but the Clackamas Community Land Trust owns houses and sells them for cheap for people who qualify for the program. I don't know that much about it, but I think it is for first time home buyers and seems pretty cool. My friend is in the process of getting a house through the program. I'm in that boat. Our credit pretty much is bad due to medical bills from an accident I had when I was 21. We were getting our act together with improving our credit score and working with a lender about 2 years ago, and then Matt lost his job and well....you know. I called them back a few weeks ago because there is a house around the corner super cheap. He basically told me that they aren't looking to lend at all right now to people with sketchy credit. Basically they want high credit scores only right now. So I'm out. At least for now. Then I try to justify not buying, because I can't. Like, do I really want to be locked into a home that I can't sell? I'm curious to see how this all pans out. I hate having my kids get older, knowing I don't have a place that is my own. But then again, no one really has a home that is their own. People's homes are foreclosing left and right. It's a mess. "Life may not be the party we hoped for but while we're here we might as well dance".- Maya Angelou It is possible, but in today's market, not likely. Lenders have really cracked down on who they lend money to. I like etta's advice and agree with it all. go to a bank and get pre approved, that will give you an idea if you can get a loan worth having. we bought our house through a mortgage broker and then refinanced it through a broker... both bad financial moves on our part. the latter being the worst. if you're credit score isn't high enough to go directly through a bank, you may need a broker. a bank will have maybe 6 different types of loans to offer but a broker has access to 100 different lenders. the broker i went to charged a flat rate for both transactions. i don't know if that is an anomaly of if many of them do it. good luck! the whole process sucks ass but is worth it in the long run when you finally have your own space. A bird does not sing because it has an answer. It sings because it has a song. - Chinese Proverb there are less underwriting banks, so the brokers don't even have that much lenders at their disposal. and, they are all pretty much operating in the same confines right now, so if you get turned down by one, you will most likely get turned down by any other reputable bank. i went through a broker too. it worked for me because the home i was buying was worth about 30% more than we were financing, so we always knew that if something happened, and it did, we could sell the house. but even now, we sold the house for a lot less than we could have, and still made some money. but in the vast majority of cases, it doesn't work that way. i can't stress enough that you need to know all the property values where you are buying, taxes, and i would even suggest researching development plans that could affect your property value. wow, i didn't realize it was that bad with lenders right now. i had the same broker situation as you, so it also worked for us. it was the refinancing that did us in because we took money out on the house. bad move for us but we put almost all of it towards bills and home improvement. the second time we refinanced we went through a bank, got a fixed interest rate, and are sticking to it until we either sell or leave the house to our kids. i'm going to have to bookmark this blog because there is a lot of good info here! thanx etta! A bird does not sing because it has an answer. It sings because it has a song. - Chinese Proverb Not to hyjack Patty's blog, but where do you find out the info about property taxes? We've looked at a lot of houses that have had major renovations so we know that the previous years taxes wouldn't apply once we buy, so how can you estimate what the new taxes will be? And what's the best way to go about estimating the insurance for a property? I'm completely in the dark about the real estate game, so I'm trying to learn as much as possible before we seriously start looking. BleuRoo Handcrafted Sweetness call and ask, basically. they can give you a pretty good estimate, based on information about the house. flood zone, nearest fire hydrant, size of structure, size of lot, how much parking, that sort of thing. so when you have a general location and basic size of house in mind, you can get an estimate. then after you close on the house, they send out adjusters who test the age of your roof and shit like that and then they send you a letter saying you have to do X Y and Z repairs or we drop you. at least that's how its worked with us. i would love it if they could have done that prior to closing, so i coudl factor those (MAJOR) expenses into my costs. as to taxes, yeah, my taxes doubled last time it was assessed, my whole town's taxes did. there was such an uproar. you call the tax department of the town and they can tell you how they assess. it's only going to significantly change if the renovations add square footage or plumbing, basically. your lot coverage, height, number of bathrooms, number of total rooms, these are the things that factor into it. if you really think that the taxes will be different, i've never actually done this but i would actually call the tax department and tell them exactly what i was doing. i'm buying a house in your town, and i am trying to get a good estimate on the taxes, please tell me what would change the tax burden. and also get the date that they reassess the whole town. it's usually every ten years. that's when new codes go into effect. before that, you can figure out the taxes based on teh relevant information i talked about above. i feel like one of those "you can get rich on real estate" people right about now. just look at me! i'm unemployed, unshowered in fleece pants on a tuesday morning. you can be just like me! Haha, I wanna be like Etta when I grow up! Just need some fleece pants now..... Thanks for the info, I'll be happy when this is all over with, then I can stress over something else. That's interesting about the insurance, when we bought the house we're in now, we didn't have to do any repairs or anything like that, guess it's different by company or state or something. Although we are in a flood zone, so that sucks, definitely make sure we aren't in our next place. BleuRoo Handcrafted Sweetness the question is, is it something you would want to do in this economy. when you talk to lenders, do NOT believe what they present as your monthly payment. there are mortgage calculators online (don't use one from a site of a lender), that can give you a ballpark estimate. you need to know where you're buying and what the taxes are in that town. they vary widely, it can be a several hundred dollar per month difference, so you really need to know that. loan officers tell you they can estimate. they can not. when you say bad credit, it's hard to tell exactly what you mean. do you have judgments against you, and for how much? any judgment will be paid off when you buy, usually before you get the loan, but if not, then at closing. you can't buy a house with outstanding judgments. the basic rules are, consistent employment (18 months of pay stubs)and a low debt-to-income ratio. if you have that, then you don't have bad credit. using the phrase "bad credit" is kind of a ploy that lenders use to convince you that you need to pay them higher interest or "points." which is just shooting them a few hundred bucks per "point" for the privilege of borrowing their money. there is no reason to accept points. if you have a downpayment, that lowers the amount that you will have to borrow. in teh last ten or so years, people have been doing 100% or even 125% financing. this is why there have been so many defaults and foreclosures. there is a reason you shuoldn't borrow a high percentage of the property value. you'll default and lose it. so, the only reason you should borrow that high a percentage of the purchase price is if you are getting the property for significantly less than the actual property value. it's really simple. if you sign the mortgage, and you lose your source of income, you become disabled, say, and you have to pay off your mortgage. you need to be able to sell the house and cover it all. if you can't do that, then you're borrowing too much. any mortgage worth having you can get from a regular bank. do not go to one of those wholesale mortgage places. they exist to get you to sign something, whether you can afford it or not. and usually not, because they get commission, so the higher the amount you borrow, the more money they get. so they are predatory. go right to the banks that underwrite the mortgages. that's all i can think of right now. good luck. your credit may not be as bad as you think, but the economy is so sketchy now. habitat for humanity is for that exactly. you get like a "worker" they get your credit report and you have to work with them and get all past debts paid off or under good control they will set you up with budget counseling and all. then you and whoever will be in the house like hubby or older children and you all have to work so many hours building other houses the person i know i think each person had to put in 40-80 hours (not all at once or in one week or anything like that) and then you usually have to come up with a small down payment usually a few thousand dollars depending on your income and all and then you have to pay closeing which was a small amount as well i think like $1500. also contact you Housing an urban development for your city. good luck mama i wish i was in shape to buy a house too!! Jessica The first person you need to talk to is your banker. It may well be possible, but to stay out of a crappy financing instrument (e.g. ARM) you may have to have a significant down-payment. It also depends on the first-time homebuyer assistance programs in your area. But talk to your banker. Ask for a pre-approval application. They're pretty easy, and it gives the mortgage officer a good chance to see your situation and say what they could fund you for. Good luck! |
We closed last thursday, and DH and I have mediocre credit. Your best bet is to just do what we did. Go to the bank and ask them what is up. Let them know what you are looking for, and what price range. We went into it not thinking that we could do this, and just wanted some financial counseling to tell us what we needed to so to be able to buy a house. We knew that we could afford $900 a month because we've been doing it on one income for the past two years with our rental.
So, our broker laid it all on the table for us, let us know how much mortgage, taxes, insurance, hoa fees, etc we would be paying, and then pre-approved us.
The funding was what was a problem. We initially got approved for 100% financing through a bond program with our city at a low interest rate. Then one week before our original closing date, mortgage insurers across the state of TX decide that they will not insure anyone who does not put down at least 3% of the purchase price on their home. We had to switch to FHA at the last minute and come up with $3030 for a downpayment (thank you MIL).
You have to jump through all of the bullshit hoops in the world, and you really should anticipate at least 3% for a downpayment, but if you can qualify... I recommend and FHA 30 year fixed rate mortgage.
Good luck mama, and here is to paying your own damn mortgage not some other a-holes!!!