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It can be difficult for a person to procure a mortgage for buying a house. However, there are ways through which you can get a mortgage. FHA loans, Rent to buy schemes are a few to name. If you have a bad credit history and are planning to buy a new house then it can prove to be a difficult task. Earlier it was easy to get a mortgage, but now with new reformed rules getting a mortgage is very difficult for a person with a bad credit history. There are many ways through which you can get a mortgage for purchasing the house. The first condition is to raise your credit score. Make sure that you pay off all outstanding loans as soon as possible and pay all your bills on time. There are many government loans that you can avail. Federal Housing Administration has no minimum score to apply for the loan but the down payment would be determined by your credit score.
Given below are some of the ways of buying a house with a bad credit score.
• There are many owners and schemes that present the option of rent to buy. Under this scheme the apartment you rent will be owned by you once you have established good credit score. Until you attain good credit the rent you pay will be counted as your installments for the house. The rent in this case would be high but it will eventually help you as you won’t get under the burden of paying huge amount of money as down payment.
• Another way to buy a house is to opt for seller financing. This is one of the best methods through which you can own a house. Due to bad credit score, banks will deny you the loan, so you can go to a seller who will finance you for buying the house. The money will be recovered in the form of monthly installments. However, you will be required to pay an amount of money as down payment . You can also negotiate the down payment amount with the seller.
• One can also opt for Federal Housing Administration (FHA) loans. These are government backed loan. They do not require a minimum credit score to apply for mortgage, however, your credit score will decide the down payment amount required for the loan.
When you apply for loan, apart from checking your credit score, bank also checks other factors like your income and assets.
If you have high monthly income, the chances of you getting an approval for the loan are high.
Roma Amino is a personal finance freelance writer. She guides people about personal home loans and financial problems. She loves the reading books. She has written various articles on Finance, personal loan and tax calculation. For the more information on buying a own house you can refer this howbuyahouse.com.