How to Buy a Home With Bad Credit

Lots of people are dealing with bad credit. (No judgments here!)

You could have credit issues for a wide variety of reasons:

Maybe you made some bad decisions…

Maybe you were just unlucky…

Or maybe your credit report has errors that you don’t know about— a recent study shows that 1 in 4 Americans have had issues with their credit report.

Image courtesy of digitalart at FreeDigitalPhotos.net

Image courtesy of digitalart at FreeDigitalPhotos.net

But it’s not impossible to buy a home with bad credit — maybe tougher than normal, but it can be done. Here’s how:

1) Know your score.

First, you need to know where you stand in the credit world. Find someone you trust who can “pull” your credit. (I don’t usually recommend those “free credit check” websites — they usually require a subscription.)

Once you see what’s on your credit report, it might just mean paying off some credit cards or a medical bill — which could be the difference in qualifying for a mortgage.

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“37% of American adults admit they don’t know their credit score.”

(Source: FINRA Investor Education Foundation, Sallie Mae,
TransUnion, Experian, U.S. Department of Housing;
http://www.statisticbrain.com/credit-score-statistics/)

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2) Find a loan officer.

If you already know someone in the business, great. If not, chances are a friend or colleague knows a mortgage loan professional who can help. (I’m happy to refer you to one of my trusted colleagues.)

You definitely need a hard-working pro who you can trust. Their main responsibility is helping you find which loan programs and amounts that you qualify for and fit your budget.

3) Develop your plan of action.

If your credit issues need serious work and you don’t qualify for a mortgage loan right away, you might have to postpone your house purchase — but not forever.

Now that you know what your credit issues are, you can work towards paying off old debts and getting them removed from your credit report.

Also, there may be sellers who will consider working with you by way of asking for a larger down payment. This could require a multi-month plan to save cash for your down payment.

4) Think before you budget.

We’d all like a big mansion for the price of an efficiency apartment. But in reality, it’s crucial to look for a house that fits your budget.

That doesn’t mean you can’t have a nice house in a good neighborhood with exemplary schools and a beautiful park. It just means you need to ask yourself some very important questions:

  • How much of a down payment can you afford?
  • How much of a total monthly payment can you afford?
  • What kind of term loan would you like (how many years — 15, 30, etc.)?
  • What interest rate can you qualify for?
  • What’s your loan-to-value ratio? (Divide mortgage loan amount by the fair market of the home value.)
    Ex.: A $150,000 loan on a home appraised at $200,000 = an LTV of 75%.
    Note: Most mortgage loans with an LTV that’s more than 80% require private mortgage insurance.
  • What can you afford to pay in yearly property taxes?
  • What can you afford to pay for yearly property insurance?

Try the “How Much Can You Afford?” calculator from “Freddie Mac” here.

(Freddie Mac is the Federal Home Loan Mortgage Corporation.)

Bad credit? Mediocre credit? Good credit? Excellent credit? Whatever your score, I know how to help you find your next home.

Call me at 267.566.3448 or email me at shannon.rubin1@gmail.com today!

© 2013 by Shannon Rubin.

Choosing the Right Mortgage Lender

(This post is Part 1 of my “Mortgage Lender” blog series. Coming up in my next blog: “Working With Your Mortgage Lender.”)

Image courtesy of fotographic1980 at FreeDigitalPhotos.net

Image courtesy of fotographic1980 at FreeDigitalPhotos.net


One of the most important decisions you’ll make as a home buyer is choosing the right mortgage lender. It’s really the first major step in your decision to buy!

If you have the full cash amount to pay for a house, you don’t need a mortgage. But most people need to get financing — and what you really need is a reputable mortgage company and a loan officer you can trust.

This is your home we’re talking about, and the big monthly bill you’re about to start paying for years to come. You deserve to work with someone who’s “got your back!”


MAKE SURE IT’S THE RIGHT PERSON

A good starting place is getting referrals from the people you trust the most — your family, friends and colleagues. Get some names of mortgage lenders they’ve worked with — chances are, if they really enjoyed working with them, they still have their card and contact information handy.

Then, check out the company and loan officer online. Search their names and look for any reviews of their services, because many people like to share their experiences — both good and bad — online for others to learn from.


“WHAT CAN YOU DO FOR ME?”

Whether it’s on the phone or at an in-person meeting, the best way to get to know your loan officer is to ”interview” them. Here are some questions to ask:

  • “Will you walk me through this process?
    Real estate transactions can be very complicated. You need someone who will take the time to explain all the terminology and details.
  • “Do you have a lot of clients?”
    You also don’t want to be treated like a number. Obviously, you’re not their only client — but you do matter and deserve to be treated well.
  • “Are you reachable?”
    A good loan officer is responsive. They’ll take your calls, respond to your emails and answer all your questions in a timely manner.
  • “Can you deliver on your promises?”
    Your loan officer needs to meet deadlines and back up what they promise — especially when it comes to locking in your mortgage rate. And there should never be any hidden fees or “oops, I forgot to mention this fee!”

And finally, get referrals from other satisfied customers. If they’re good at what they do, they should have plenty!


ASK ME

If you have a question about mortgages or choosing a mortgage lender, let me know!

I’m a REALTOR® who also worked as a loan officer in the mortgage industry — and I can help point you in the right direction.


Are you ready to start the homebuying process? Call 267.566.3448 or email me at shannon.rubin1@gmail.com right now!

© 2013 by Shannon Rubin.

Image courtesy of fotographic1980 at FreeDigitalPhotos.net

Home Buying Tips: What You WANT vs. What You NEED

First, I’d like to wish you a happy and healthy New Year!
Now, on to the blog:

Being realistic is one of the biggest problems facing potential homebuyers. Many people dream of owning a mansion with every possible feature and amenity.

But unless you have an unlimited budget, you might have to give up a few of those dream features. What it really comes down to is figuring out which things are WANTS — and which things are NEEDS.

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It’s helpful to ask yourself:

Where Do I NEED To Live?
We all know the old adage: “Location, Location, Location.” But most people need to live near work, or at least near major roads that make commuting easier. And if you have children, an area with good schools, culture, sports and activities is a “must-have” for you.

What Kind Of Home Do I NEED?
Sure, a 10-bedroom, 8-bathroom mansion with an indoor pool would be great. But do you (or anyone except The Brady Bunch) need all that? A few things you DO need: to know your minimum number of beds, baths and square feet; a list of locations to consider; and a good idea of what you can afford. (A pre-approval letter from a mortgage lender is a great start.)

Which Amenities & Features Do I NEED?
You need to think about what’s not negotiable for your day-to-day life. If you need a home office (a den, study or a spare bedroom), put that on the list. If a double oven is a must because you host lots of dinner parties, put that on the list. But as cool as it might be to have a heated, indoor, Olympic-sized pool, you probably don’t need it unless you’re training for the 2016 Summer Games.

Please remember: the better you are at identifying your WANTS — but focusing on NEEDS — the faster you’ll find the home that meets your needs and your budget.

You WANT and NEED a real estate agent who takes the time to help you make the best possible decision. I’m that kind of REALTOR® — so contact me at 267.566.3448 or email me at shannon.rubin1@gmail.com today!

 

© 2013 by Shannon Rubin.