Is Home Ownership Possible with Bad Credit?
Steps Towards Mortgage Approval
Check Your Credit Report
If you find any errors on your credit report, no matter how small, contact the credit bureau to dispute the entry. The bureau will investigate your claim and give the creditor 30 days to either confirm the account is valid, or remove it from your report.
Get Your Credit Score
What Does My Credit Score Mean?
Credit Score Boosting Tips
Past collection accounts, even if they’ve been paid off can bring your credit score down. Contact the creditor and ask if you can pay to have the collection removed from your credit report altogether. If you can, you’ll see an increase in your score almost immediately.
The amount of outstanding unsecured debt that you have can have a serious impact on your ability to get a home loan. Debt settlement companies like Debt Blue can help you negotiate a fair settlement for these debts so that you can get your financial life back on track.
Final Steps to Mortgage Approval
Determine Your Budget
Generally, you’ll be required to provide a down payment that is equal to 20% of your home’s value. The larger the down payment, the lower the loan amount, which makes it less risky for the lender.
This includes items such as appraisal fees, title insurance, and property taxes. In general, you can expect to pay between 3% and 5% of a home’s value in closing costs. In some cases, closing costs can be included in the loan amount, however, this is not always the case.
You’ll also want to consider moving expenses. Professional movers can be expensive, but they’ll do the heavy lifting for you. You can save money doing it yourself, but you’ll still incur costs if you rent a truck, and buy packing materials.
Gas, electric, water, sewer, trash, internet, and cable TV are all essential utilities. Getting connected may require a security deposit. Set aside enough funds to ensure that you’re able to get your utilities turned on before your move-in date so you’re comfortable.
An often overlooked expense is furnishing a new home. Those few pieces from your apartment aren’t going to be enough to make your home comfortable. At a minimum, you’ll need the essentials like a bed, some living room furniture and a table and chairs.
So What's the Verdict?
Just because you’ve experienced credit issues in the past, it doesn’t mean you can’t buy your own home. It’s a bit more of a challenge, there’s no denying that, but with a little help, you can be on your way to home ownership. It all begins with repairing your credit so that you’re not considered a risk by lenders. Contact us at Debt Blue to discuss ways that you can reduce your debt load, improve your credit history, and increase your credit score.