Bad Credit Is not a Death Sentence


Many potential new home buyers have been discouraged from purchasing a home by the perception that those with bad credit have no ability to do so. While it can be difficult to purchase a home with a bad credit rating, it is certainly not impossible. What is true, is that higher fees and interest rates are the price potential home buyers pay for a less-than-stellar credit rating.

That is true unless you are willing to be somewhat creative about how you go about a potential home purchase. The following are some tips designed to help even those with less-than-optimal credit own real estate while remaining Bad Credit, Death Sentence?flexible to creative situations that can sometimes circumvent the bulk of the negative aspects of bad credit.

Bad Credit, Will Buy Home
One of the potential methods available to potential home buyers with bad credit is engaging in a rent-to-own or lease-to-own arrangement where a portion of the rent payment each month is applied towards a possible eventual purchase of the property. While this does not build up equity as fast as say a mortgage does, it does get around the problem of financing a home purchase with bad credit while still making headway on purchasing the home.

The down side of this type of arrangement is that those with bad credit may be better off working to raise their credit score instead of going through the process of hunting down a rent-to-own situation. Rent-to-own and lease-to-own properties are not nearly as common as conventionally financed properties, giving you a smaller group of homes to choose from for potential purchase.

As an alternative, some sellers offer their own financing options on properties for sale, circumventing the problem of banks and credit scores all together. This kind of activity is also less common than conventionally-financed real estate, but the arrangement has the potential to be beneficial for both parties, especially in a market that is down, if it exists in your area.

Generally speaking, your realtor will work with you in looking for a way to get you financed for a home that you are interested in. Of course, there are limitations and that million dollar home may not be a realistic proposition, but there are certainly instances when your credit rating will net you a home that you can love. If that process requires hunting down a seller willing to do their own financing or a rent-to-own situation, your real estate agent would be more than happy to go through that process with you.

If all Else Fails
If all else fails, work on small piece of your credit score to improve them and perhaps get financed for a loan and interest rate more accommodating to your needs. That could mean paying off debt on your credit cards or letting some credit inquiries on your record clear a bit before getting pulled again. Even if you do manage to find a home you can finance in the midst of bad credit, these are good steps to take regardless.

Many times, your concept of bad credit may not indeed be as bad as you think. Your realtor will also be able to tell you what kind of threshold is necessary to get proper financing for a property and just what steps you can take to reach that threshold. The dream of owning your own home is a common one and one that should be experienced by as many people as possible.

With that in mind, Realtors and other real estate professionals would like nothing more than for everyone to have that thrill, so letting them work for you is a great way to get started on the road to home ownership.

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