If you’re trying to buy a home, you’re preapproved, and you’ve been making offers, but you keep losing out because you have multiple offers, here are some things you need to consider. 1st things 1st, this is provided that your loan is fully intact, that you are well qualified and that the loan essentially is guaranteed. Once that element is in place it becomes a function of you in your cache and what you must work with or, lack thereof. Perhaps the real estate agent selling you to the terms of the buyer or selling you to the terms of the seller. It’s not a function of changing the loan program.
When it comes to buying a home, you generally need to have credit, cash, and income in order to support the mortgage payment. The lender needs to determine that you’re a worthy credit risk.
Here’s what you need to know if you don’t have credit:
The simple answer is no, you cannot purchase a house if you don’t have credit. There are some lenders out there that will advertise that they can help you buy a house with alternative forms of credit. You would be best encouraged to call up that mortgage company and ask them how many specific loans they have closed using alternative forms of credit. In other words, don’t believe everything you hear. If you don’t have credit that’s OK everyone has to start somewhere.
However, what it might mean is you having to take less than perfect terms. In other words, let’s say you don’t have any credit and you want to be able to buy a house. When we say no credit, we mean you have literally nothing. What you should do is go to your local bank offer them cash and get what’s called a cash secured credit card. You give them $200 cash; you get a $200 line of credit. If you don’t repay the debt, they get to keep your money as collateral. After you have a card like this, about 60 days later you can apply for a traditional credit card. The interest-rate that you will pay is going to be probably early 20+ percent but that’s OK because the idea is if you use the credit card and paid off in full and do that for another 3 to 4 months. By now you should’ve at least built yourself a credit score if you have a clean payment history. The other thing you can do is if you are renting, you can ask the landlord to report your rent history on your credit report. This also will help. One Factor against this whole scenario is that a factor of good credit is age of credit accounts that will be working against you. The last thing that you might want to consider doing if you need it would be to get a vehicle loan. A vehicle loan will contain a very high interest-rate and a monthly payment hopefully that’s going to be in alignment with your income, but this will help build your credit score. Obviously, this will also be something you’ll have to make sure to weigh into your financial budget if you buy a house in the future with your income and proposed mortgage payment. We’re not there yet though, the main thing right now we’re trying to do is helping you get your credit score up. By getting your credit score up you can put yourself in that position to qualify for a mortgage so long as you have a down payment and income needed. To purchase a house, you need at least a 3.5% down payment if your credit score is low to average.
Everyone must start somewhere and by putting the things in place to start creating yourself a credit score you can be on your way to pursuing the high-ticket home purchase when it financially makes sense to do so. If possible do not carry monthly debt other than the car payment which will radically build your credit score. Do you want that car payment by the way as low as possible? Taking to consideration is $200 a month for example on the car payment is going to be equivalent to about $20-$25,000 in spending power might not be significant but then it could be depending on what your income is. You’ll want to take that into consideration when determining when the right time to purchase a house is.
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