How to Buy a House with Bad Credit

Buying a house with bad credit in 2010, is it actually possible? This seems to be on practically everyone’s tongue these days. We’ve seen home values around the world tumble to a fraction of what they were worth just two years ago. Over 10 percent of Americans are currently unemployed, and the government’s deficit spending is through the roof. The world wide economy is showing some signs if improving, but the measurements are more in inches then in miles at this point. The financial turbulence has rocked us all and also rocked credit scores too. Bad credit is rampant. And for people who don’t have good credit, this makes the question of buying a home all more important.

Ok, here’s the skinny: as of 2010, you can still buy a home when your credit is poor. BUT, you are going to need to have a steep down payment to sway the banks. They are currently very unwilling to give out mortgages to people with a history of late or missing payments. It’s not surprising since a significant number of homes the past 2 years have gone into foreclosure. Banks and mortgage lenders are looking out for their own interest, which unfortunately makes it difficult for the rest of use to secure funding to buy new homes!

If you happen to have good credit, a steady job employment history, and a good down payment, then you are in pretty good shape to secure a mortgage loan. If you don’t – and this describes most of us these days – then it’s certainly not going to be easy to get   a mortgage.

THE BEST solution for buying a house with bad credit is to first fix up your credit then apply for the loan. There are a number of reasons why you might want to improve your credit first. For one, if you have good credit, you are far more likely to secure a loan. And when you do get a loan, the interest rate will be low. Should you somehow say a bank  to give you a subprime loan – that is, a loan with a higher interest rate than the standard – you are going to pay dearly for it.

How can you repair your credit? It’s a bit beyond the scope of this article to give all the details – credit repair is a complicated and rather long topic – but here are a few tips.

1. Secure some sort of credit access to establish a credit history. One sure method is to look at getting a secured credit.
2. Make sure you pay off all owed bills each month.
3. Keep a low debt ratio. You don’t want to wrack up debt when your credit is bad.
4. Know your credit – get a hold of your credit report so you know exactly where you stand in regards to your credit history.
5. Be patient!

It takes a year, maybe two to improve your credit. This is a longer process, but it’s well worth it. If you simply can’t bring yourself to wait, then you can start looking for some bad credit mortgage lenders. There are still a few of them around, but they’ve stopped tossing out subprime mortgages like candy. You are going to have to show you are an ideal candidate – specifically, you are going to either need to show that you can well afford to take out a high interest mortgage. So yes, buying a house with bad credit is still possible, but it’s a lot lot harder than it was.