Buying A House with Imperfect Credit
If your credit score is keeping you from pursuing your dreams of owning your own home, this article is for you. Though having good credit will make buying a home easier, anyone with a checkered financial history can still purchase a home. It will be a bit more challenging, but you can find financing and buy the home of your dreams even if your credit score is less than perfect. The world of real estate may seem a little intimidating at first, but the systems that are in place are founded on equal opportunity. In order to make the system work in your favor you'll have to make sure your credit report is accurate, find a co-signer, and plan to refinance down the road.
Did you know that mistakes on credit reports are quite common? It's true. In fact, in 2016 alone, consumers made over forty thousand complaints to the Consumer Financial Protection Bureau regarding inaccurate credit reporting. Go through your credit report with a magnifying glass to make sure everything is accurate and up-to-date. Anything wrong on your credit report can contribute to a low score, making it harder for you to secure a loan. If you find an error in your report, you can always contact your credit agency and have these issues resolved. It might seem like a wild goose-chase, but taking the time to make sure your report is accurate is important. Even minor inaccuracies on your credit report can have a big impact on your score.
If your score is still too low to qualify for a loan, see if a member of your family with a higher credit score can co-sign on a loan with you. Even people with decent credit use a co-signer because it can reduce interest rates. Over the course of the loan, securing a competitive interest rate can save you tens of thousands of dollars in interest. Co-signers are agreeing to the legal responsibility for your debt in case you cannot pay off the loan yourself. Make sure your co-signer understands this before seeing your lender. Though a co-signer is a fail-safe, you should always make sure you're able to afford the mortgage on your own.
So you've made sure your credit score is accurate and a co-signer is not in the cards? Don't give up on being a homeowner just yet. Chances are you can still get a high interest loan and refinance in the future. A refinance is like pressing the restart button on your loan and if your credit score is better during the refinance, then your interest rates can drop. Take some time to improve your credit score before then, like lowering your total credit card debt, paying all of your bills on time, or looking into credit consolidation options. It might seem like a long shot at first, but your dream home is still within reach with these steps.