I have bad credit which accrued around the time I was 18. What are my options on buying a home?
What will the bank say to me and what are the chances of doing a land contract?
Answer:
You can get financed, it's just that you might need a more sizeable down payment. If your credit score is below, say 640, you will also end up with a higher rate. If it's below 500, you probably won't get financed at all. Try using a mortgage company (ie: mortgage broker) because they will have multiple lending sources, whereas a bank has only their own products.
But, it will really depend on what's showing on your credit report. Keep in mind that past credit problems (ie: paid off bad debts) are one thing, and current credit problems (current outstanding debts) are another. If there are accounts being reported that show outstanding balances, you need to get them cleared up somehow. For staters, try writing to the credit bureaus and tell them that they are mistakes, or have already been paid off. It works sometimes. Your good rental history will definitley be counted as credit to the extent that you can verify it. Usually no more than 24 months is necessary. Canceled checks are preferred. Also, try to have some other good credit history to show that can balance off some of the old stuff. You will also need to show that you've already got your down payment, and then some ("cash reserves"), to show that you aren't wiped out after the closing.
The land contract is a good idea, but that's up to the seller to accept. In that situation, he becomes the bank, and allows you to pay him over time.
Go ahead and try and then deal with the outcome.
FICO Scores Are They So Important for Getting a Mortgage
By: Joy Cagil
Not knowing your net worth, your salary or the price of the home, I am guessing that you should make an attempt at getting it, but don't be discouraged. Life still goes on, and who knows, you may win the lottery one day.
Darn near anyone can get a loan nowadays. (My mom does SEC compliance audits on mortgages.)
She says she sees people with bankruptcies and forclosures getting financing. Didn't used to be that way.
If you had asked 10-15 years ago, we'd probably have to tell you you're screwed, wait a while, no one will lend money to you.
Now, they will.the question is, do you have any business borrowing it? Do they have any business lending it to you?
Also, you will pay through the nose in interest if your credit is crappy.
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