He never had any. He didn't trust banks and he didn't believe in credit cards. But he never missed a payment nor was he even late. He soon learned, however, that he would have to become a member of the real and modern world. Sure you can navigate through life without is but it's so much easier if you don't have to.
If you do this well, what is stopping you from opening a bank account? It's safer then keeping your money at home, plus there is a small amount of interest you will gain.
While you are opening your account, ask for a linked credit card as well in order to establish credit. You might not be able to get a loan now,but you will after credit has been established.
As far as being able to find a home within your budget, to expand your search, I also suggest you look into NACA, as if you are not in a huge rush to buy a home, they will be perfect because you go through education courses as well as be able help you with lower-than-market interest rates for financing and no mortgage insurance - both which will lower the monthly payment/increasing your purchasing power. Information on NACA:
http://nidonline.org/education/resources_for_homeowners.html & http://www.nw.org/network/consumers/buying-first-home.asp also has very helpful information for first time homebuyers & homeowners which I feel you should be familiar with.
The reason that "credit" is bring brought up, is that it's also another important factor when qualifying for a mortgage, and in general people who do not have bank accounts tend not to have a lot of or any credit. However not having regular forms of credit, called traditional credit, isn't always a show-stopper to being able to qualify for a mortgage. Like has been mentioned, if you have forms of alternative, or non-traditional credit, then that can be used as a substitute for the traditional credit (car loans, credit cards, student loans, etc.). I explain what non-traditional credit is, how much non-traditional credit is needed to be considered sufficient, and how to verify non-traditional credit all in the "web reference" below.
I don't know why you don't have one but for your own sake if you ever want to be a homeowner you need to open one. But even that won't garner you any instantaneous results. You will need to establish a track record for at least 6 months to a year.
Without a bank account I assume you don't have any credit cards or even credit for that matter as most credit cards are usually linked to a bank account somehow. When you open your bank account deposit at least $500 in a secured savings account. Then apply for a credit card from that bank and use the secured savings account as collateral for your credit card. Be sure to interview the bank before opening an account to make sure that they would go along with this plan.
Then start using that card with the intention of paying it off every month on time for at least six months to a year. By this time you've had a chance to built a little credit history, establish a "balanced" bank account and hopefully keep adding to your savings account, thereby increasing your credit limits and even applying for some additional credit cards, using them and paying them off on time.
Lastly, I would go with a bank that offers home mortgages from the get go. This will make it a lot easier to qualify for a home mortgage since you will already have a proven track record with them. You may also want to consider a late model Factory Built home in a resident owned community with plenty of amenities for your children. They are single family detached and usually have a little yard and provide you and your family with a little space around you. There are several such communities around the Sylmar area. Good luck.
Minimum credit score at or above 580 are eligible for maximum 97.5% Loan to Value for FHA financing (3.5% down-payments required with purchases).
* Minimum credit score between 500 and 579 are restricted to 90% Loan to Value for FHA finance options (10% down-payment required).
* Minimum credit score of less than 500 are not eligible for FHA- mortgage loans insured by the government.
* FHA borrowers with a non-traditional credit history or insufficient credit are eligible for maximum financing if they otherwise meet FHA guidelines.
I've provided a link for more info on some of the local dpa programs. If you have any other questions and/or concerns, please feel free to contact me.
My recommendation would be to meet with a lender who can guide you in the right direction. Someone who knows all the city and down payment assistance programs. The Southland Regional Association of Realtors is holding a Homebuying Seminar on Saturday, September 17, 2011 from 10 am to 12 pm. You will benefit from attending.
Please do not hesitate to contact me if you need any additional help or information.
Dilbeck Real Estate
FHA and Hud recognizes that some borrowers may not have yet established a credit history. For those borrowers, and those who do not use traditional credit, the lender will try and develop a credit history from utility payment records, rental payments, automobile insurance payments, cell phone service payments, or other means. This is called non-traditional credit. They may even suggest you open a secured credit card account.
A bank account can be opened at any time, its never too late. 2 months of bank statements will be required.
You may be closer than you think to buying your first home.
You have to start papertrails. Without a bank account...where does the money go? Obviously don't answer that in public, here. But you need to build a record of credit. So get a couple small credit cards, use them and keep the balance below 50%. Get a bank account and consistently put money in the account. Any money used for a home purchase has to show where it's been...unless you can go in and pay cash for a home entirely.....
It sounds like you are in good shape. I would find a good lender and make a plan....in about 6 months, you should be able to build the file up to make some moves.
Good luck to you,