The average cost of a home in the United States is about $250,000.
If you’re like the average American, you don’t have the funds to buy a house in cash. Thankfully, you can secure a mortgage and become a homeowner.
But then, not everyone qualifies for a mortgage. If you don’t meet credit and income requirements, for example, it’s possible that most lenders will reject your application.
So, does having bad credit or a very low budget mean you can’t reach your dream to own a home? Well, not quite.
In this article, we’re fleshing out the home buying process when your credit isn’t in the right place.
Let’s get into it!
Know Your Exact Credit Situation
A good number of credit-active consumers don’t know much about the state of their credit history. You see, it’s not just enough to know that your credit is poor, bad, good, or excellent. You need to know your exact credit score.
This is because not all bad credit is the same. Different lenders treat credit scores differently.
For instance, a bad credit score is typically anything between 580 and 670. It’s possible to find a lender who considers a credit score of 650 acceptable for mortgage applications.
As such, get a copy of your credit report and study it. If there are any errors, be sure to file a complaint with the credit bureau that issued it.
Set a Reasonable Budget for Buying a House
We all aspire to own and live in million-dollar mansions. The hard truth, though, is such properties are out of the reach of the average person.
When your credit score is bad, it’s prudent to set a reasonable budget for buying a house. This isn’t the time to start looking for homes that cost way above the median cost of a home. You need a cheap home. You’re more likely to get approved for a mortgage when the money that you’re seeking is on the lower side.
Find Ideal Lenders/Home Sellers
Mortgage lenders aren’t created equal. Some have more lenient requirements than others.
When you have bad credit and a low budget, you want to find a mortgage lender that has built a reputation of serving customers with bad credit. This increases your chances of getting approved and keeps you away from making applications to lenders who wouldn’t otherwise approve your application.
There are also private companies that sell homes to people with a credit history like yours. URB Chicago is a good example. They’ll finance your purchase with a small down payment and offer your low monthly installments.
The Home Buying Process Shouldn’t Be Difficult When You Have Bad Credit
Having bad credit isn’t an ideal situation to be in, but it shouldn’t prevent you from doing what you want to do. The home buying process will be tricky, no doubt, but with the right information, you can successfully become a homeowner.
Need more helpful tips and insights about homeownership? Keep reading our blog!