Mortgage companies have helped many people buy a home with bad reputation in new years. However, many programs that were used in the past are no longer available or have tightened their requirements. Compared to mortgages for people with good credit, those for people who want to buy a home with bad reputation require:
- Larger down payments
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- Higher interest rates
- Sometimes (often?) very high up front fees (points)
This has always been the case to a more or lesser degree. The big change recently is that with the rate of foreclosures increasing, lenders are classifying more prospective home owners as "bad risks" and contribution them only sub-prime mortgage programs. And some lenders that specialize in mortgages for people who wanted to buy a home with bad reputation have curtailed their operations or gone out of company all together.
So what are your options? Can you still buy a home?
Yes, you can. It just may take you a little longer to clean up your reputation and heighten your reputation score. This can take months, or years, depending upon your particular situation.
Or, you can start to think like an investor and be in your new home in a matter of weeks, not years. Many investors started investing in real estate because they were broke, had a lot of bills and bad reputation and needed a source of income. They still buy homes with bad reputation or honestly with no reputation at all. They don't have to qualify for a home loan or worry about the lenders paperwork at all. You can do this too.
I am not suggesting that you take up a new vocation as a real estate investor. I am simply suggesting that you can use the same methods that investors use to buy your own home with bad reputation and in fact you can buy your home with no reputation at all.
Investors use many creative ways to buy real estate. Three of the ways they do this that can be used by virtually anything are:
- Having the distributor carry the financing.
- Buying the home subject To The Existing Financing (Subject 2 or Sub-2).
- Leasing the home with an option to buy at a later date.
To use any of these methods you need to deal only with homes for sale by owners (Fsbos).
Seller Financing
You can sometimes buy a home on a ageement from the distributor and have them carry the financing. They may do this for several reasons. A retired person may be wanting to down size to a smaller home and may like the extra monthly wage your payment would provide. The home might have been on the shop awhile and the distributor may be feeling desperate. There may be a characteristic of the home that takes a special person to appreciate so offers have been slow coming in. You will never know if the distributor is willing to carry the financing unless you ask.
Buying subject 2
In buying your home subject 2, you will make the payments to the mortgage company but the current owner remains on the contract. The big quiz, again is "Why on earth would the distributor agree to this?".
The sellers that agree to this are those that are facing bankruptcy and/or foreclosure. By you stepping in and taking over the payments, the distributor is able to hold their reputation rating. And often, you will be able to give them some money up front so they can walk away and get a fresh start.
Lease Options
This business transaction permits you to lease the home for a period of, usually, in the middle of one and three years. You have the option to purchase the home during the lease period at a price that is agreed to in the beginning. This gives you time to heighten your reputation so you can qualify for a approved mortgage. There are benefits to both the buyer and distributor in this arrangement.
Summary
The forgoing is a very simplified explanation of these programs. Each recipe contains pitfalls for the unwary home buyer. But they are used every day by savvy investors to buy real estate without qualifying. You too can buy a home with bad reputation and without qualifying for a mortgage by using one of these methods. A recommended source from which you can "steal" the professionals secrets is "Get Paid To Buy Houses." More facts can also be found on the authors web site.
3 Ways To Buy A Home With Bad credit
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