Buying A Home With Bad Credit

Realistically, most individuals will be unable to buy a home with bad credit. The question is what denotes bad credit and what can be done to improve your credit situation to facilitate the purchase of a home. Getting qualified for a mortgage is a complicated process with many variables which are considered when approving an individual. By understanding what is involved when qualifying for a mortgage you can take steps to clean up your credit and hopefully get approved to buy a home.

Qualifying for a mortgage isn't just about a certain credit score from the credit bureau but includes additional specifications such as length of employment the amount down. Normally a credit score below 550 will make obtaining a mortgage difficult as these individuals are considered significant financial risks. But what exactly is making the score as low as it is? Is it an outstanding legal judgment that was subsequently paid off but hasn't been removed from the credit bureaus? Or is it repeated numerous late payments made to multiple credit cards? The type of black marks which appear on your credit report will determine what you need to do next. Fortunately the credit reporting agencies provide a challenge process which will allow you to report any inaccuracies to get them removed from your credit report. If however the low score is a result of missed or late payments then that is something that can only be corrected with time.

Speaking with a financial institution for mortgage pre-qualification can help in determining what needs to be done regarding your current credit situation. The loan officer should be able to provide limited guidance by telling you what is holding up your approval. If they say make consistent on-time credit card payments for 6 to 12 months to improve your credit score and then come back then this valuable insight is a course of action which should be followed. If however a bankruptcy appears on your credit reports within the last 3 to 5 years it may be next to impossible to qualify for a mortgage at any point in the near future. Most lenders understand losing a job or unexpected medical bills because it is in their best interest to lend money. However, they are always wary of significant financial risk by lending to individuals with a history of bad decision making.

Buying a home with bad credit is a possibility but the question is how bad is the credit and how proactive is the individual in correcting mistakes of the past. Working to get your credit back on track and show prospective mortgage lenders you're serious about being a responsible property owner will go a long way to getting you qualified for a mortgage. Being turned down isn't the worst thing to happen if you ask why and take steps to fix what is preventing you from purchasing a home. Also, the more money you are able to make as a down payment means the less money is needed for a mortgage loan which could make it easier to purchase a home. Speak with professionals such as a loan officer or a real estate agent to get a road map for what needs to be done to buy a home with bad credit.