Want To Buy A Home, But Don'T Have Good Credit? Know Your Options

Posted on: 29 September 2020

Do you want to stop renting and buy a home, but you don't have the credit to get a conventional loan? If so, know that you have some options that can get you into a home.

Hire A Credit Repair Service

One method that can help you buy a home is to repair your credit. This is often done by hiring a company that will review your credit report and let you know how it can be fixed. They'll start by finding things on your credit report that are simply inaccurate, which could include debts that you've already paid off or debts that are incorrect. The credit repair service can also dispute items on your credit report to help get them removed. This will involve having the repair service write letters to creditors that are difficult to respond to, with the hope that charges are removed from your credit report. While credit repair services can put you in the right direction of actually fixing your credit, be aware that they do cost money and it can take a while to get the job done.

Use A Co-Signer

If you do not have good credit and want to get in a home as soon as possible, then you have the option to use a co-signer. This person basically takes on the risks if you were to default on the mortgage, but you are the one that makes all of the payments. The mortgage lender will consider the co-signers credit history in addition to your own, which will help determine if you are approved based on the combination of both credit histories. 

A co-signer needs to be someone that trusts you to pay the loan, which is usually why it is a close family member for most people. However, be aware that your co-signer is subjected to the same lending limits as if the loan was their own. Lenders will consider how much debt the co-signer currently has, and factoring your loan as if it was their own. If they have too much debt, you may not be able to use them as a co-signer.

Find A Rent-To-Own Home

You also have the option to find a home that is rent-to-own. You'll need to be a little less picky about the home you are buying, but it will give you the option to have a portion of your monthly payments go toward purchasing the home. You'll have time to fix your credit, but b taking the first steps towards owning your own home. The only downside is that you will lose any of those home payments if you back out of the agreement and decide to break the deal. If you're looking for a home, speak to a professional about no credit financing options.