Even with Bad Credit, Buying a Home is Possible It is no secret that housing loans have become more difficult to obtain every since the housing crash. If you hope to get your loan easily, you need to have excellent credit, a low debt-to-income ratio, a large down payment and a steady source of income.
Still, does this mean you can’t get a home loan if you do not have all of these things to offer? Fortunately for those with bad credit due to bankruptcy or foreclosure, it is still possible to get a home loan. To make your dream of homeownership a reality, however, you will need to take certain steps to show potential lenders that you are a serious buyer who is prepared to handle the responsibility of homeownership.
So, how can you prove that you are ready to buy a home, even if your credit score is less than ideal? One way to accomplish this goal, suggests Realtor Brian Kinkade, is to "Start saving money for a down payment. The more money you have saved for a down payment, the more likely you are to be approved for a loan." You can also improve your chances of getting a loan if you take steps to highlight the reasons you are a good candidate for a loan despite your bad credit score. For example, even if you do not have a large amount of cash to use toward a down payment, you may have other assets that you can show to the loan officer. These include investments such as whole life insurance, your 401 (k) and other retirement accounts. By showing that you have other assets available, you let the lender know you have other sources of money to help make ends meet if you get into a bind.
If you have been working for the same company for five years or longer, this can also help you with getting a loan. If you receive regular pay raises or bonuses, you should also point this out to the loan officer. This will help the loan officer see that you should continue to have the funds available to pay for your home loan as well as increases in expenditure, such as increased utilities and property taxes. If you lived in your current residence for three years or more, this can also help with getting approved for a loan despite bad credit. Not only does this show that you are not a flight risk, but it also shows a general commitment to the community. You can also increase your chances for getting approved by showing that you were never late on your rent payments or other obligations. By providing the loan officer with proof, such as canceled checks or bank statements showing regular payments, you will go a long way toward demonstrating that you are less of risk than your credit score indicates.
About the Author – Ted Whitt is a Realtor who writes for myagenthandbook.com in his spare time.