August 26, 2011

Can You Buy a Home With Bad Credit?

If you have a bad credit history, you can still buy a home, but you will pay a lot more for it than a buyer with a good credit rating. Seven years is the legal limit between bankruptcy filings, but your credit can be adversely affected for ten years. This elusive dream can be yours even with bad credit, but you must research all available options concerning obstacles you may encounter.

A bad credit secured loan and a bad credit unsecured loan are the two types of loans available for those with a bad credit history. A secured loan requires assets, which means that for most an unsecured loan is the way to go for someone with a bad credit history. It is difficult to get one of these loans because banks are wary of people with a bad credit history.The determining factor in your ability to secure a loan with bad credit will be your ability to repay it.

A lease option may be just the thing for you. The property owner agrees to allow you to live in the home as if you were the owner in the case of this type of agreement. As soon as you qualify for a home loan within the agreed time period indicated in the contract, which is usually a year or two, you can buy the home at the originally negotiated price. You can repair your damaged credit with this kind of agreement because you are leasing the home with an option to buy it.

A lease option offers other benefits as well. There are no contacts or hassles with landlords, and you can do renovations on the home, if you want to. It is also true that you can earn equity in the home as its value appreciates, since you are only bound to buy the house for the original negotiated price. By doing this today, you are locking into tomorrow's market price

Credit cards are the best way to build credit, but be careful with them. Make payments promptly every month; it will not go unnoticed. If your credit is so bad that you can't get a card, you can apply for a secured credit card at a bank. This entails putting a deposit on the card, which becomes the card's credit limit, which is $500 or $1,000 dollars. After about a year of good use, this card becomes a normal credit card and you are refunded your deposit.

Looking for your dream home in Colorado, but can't decide if you want to buy real estate in Erie Pennsylvania or purchase Golden real estate? You may consider letting a real estate agent help you in your property search.