Can you Still Buy a House with Bad Credit? ?
I have a bit of a dilemma. I am 27 years old and I am about to get a pretty good sized promotion and raise at work. I want to start looking for a townhouse or condo in the area I work because I have been renting for the last 2-3 years and I am tired of throwing away 0+ a month for housing.
My credit is horrible. My credit score right now fluctuates between 590 and 610 and is damaged due to several stupid credit mistakes I made in college. I have a 3-year car note that I will have paid off in February 2009 and I have never been late or missed a payment on it. I also have a student loan that I am paying off and have made sure to always pay that on time. My dad’s realtor told me that should help bump up my score a bit after a couple more months and the reason it hasn’t helped so far is because I haven’t had either note for 3 years. I also will have more money freed up after the car is paid off to pay down my credit card. The last time that I paid off my card it raised my score almost 70 points so I think that will also help.
That having been said, I am really worried/nervous about even trying to look for financing, especially given all of the horror stories out there about mortgages. The townhouse/condo I would be looking at would be in the range of 0-150,000 and I could afford monthly payments around 0. I am going to try to save up a bit for a down payment but it probably wouldn’t be much more than a couple thousand dollars. I am planning on starting this process probably in 3-4 months so I have a bit of time to save up and pay off some debt. My dad’s realtor said I should still be able to get financing even with poor credit but I am worried I will get stuck with a really bad interest rate or loan. Any advice? It would be nice to hear from someone who has purchased a home with less than perfect credit to get some pointers.
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November 23rd, 2010 at 1:51 am
You need to have at least 20% down with your low credit score. Otherwise you will be paying a fortune in interest. The lower your score the Higher the rate. Why not take a year and clean up your credit. As for the realtor mentioning bumping up your score they have no control over that.
November 23rd, 2010 at 1:51 am
http://cleancredit.cjb.net/
November 23rd, 2010 at 1:51 am
Dont buy right now, wait prices on condos, and houses are going to go lower, plus a condo is really a bad choice the association gives you a bill every month and it goes up each year, wait till your credit is really good..
November 23rd, 2010 at 1:51 am
590 may get an approval with FHA so see a mortgage banker in your area and get pre-qualified to buy as it only takes about an hour at most to find out
You will need at least at this point 3.5% down payment as closing before year end will be tough
I am a mortgage banker in TN & KY
November 23rd, 2010 at 1:51 am
It would be extremely difficult to qualify for a mortgage with your poor credit score and if by chance you did, your rates wouldn’t be good. You would be much better off if you took some time to get your score higher and save the money for your down payment. I believe down payments are back to the 20% range again. A couple of thousand is not going to cut it. Take your time, develop a plan, then work the plan. You do not want to be house poor.
November 23rd, 2010 at 1:51 am
Well at least 1 person here got it right.
It is highly probable that you will qualify for an FHA loan and still end up with a very good rate, all without putting 20% down.
To get the best rate you will want to get your mid score up to at least 620.
If you start right now and you’re working with the right loan officer they should be able to offer some suggestions on how to boost your scores up in a short time frame.
November 23rd, 2010 at 1:51 am
u can definetly buy a house with bad credit its called the FHA loan @ the moment there is no limit to how low ur credit can b but the lenders hav a limit of 580 so as long as its above that then ur good any ?’s let me knw im a loan officer n do this for a living
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