Home Buying in Jones Valley>Question Details

Denae Beasley, Renter in Birmingham, AL

WITH POOR CREDIT CAN YOU BUY A HOUSE OR RENT TO OWN A HOUSE

Asked by Denae Beasley, Birmingham, AL Mon May 3, 2010

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Depends--just how poor is your credit--currently FHA loans do require a minimum credit score of 620 and 3.5% down--there may be some lenders willing to work with a lesser score, however the interest rate may be higher--as far as renting to own--that will depend on the seller/owner--If you haven't done so yet--visit with any qualified loan officer(s) first, see exactly what your budget can handle and check your credit score--their scoring is different--your loan officer may offer suggestions on how to best improve your credit in the speediest time. In the meantime, do pay all bills on time, dispute old negatives, keep credit cards below 50%, pay off old debt, pay down debt, etc.
0 votes Thank Flag Link Mon May 3, 2010
You can enter into a rent-to-own (or lease-option) agreement . . . if the owner agrees to it.

You can also buy a house regardless of credit if there's owner financing and the owner agrees to it.

One point a lot of people here on Trulia will raise is: What is your credit? You should go to a lender or mortgage broker and really determine what your credit is.

And that's good advice. There are different criteria for different types of loans. "Poor credit" means different things to different people.

However, assuming your credit isn't good enough to qualify for a traditional loan (that appeared to be the basis for your question), then you have to use non-traditional or creative financing. And that includes lease-option/rent-to-own homes. However, understand that the owner still cares about your credit. He/she just doesn't have the same standards as a traditional lender might.

Understand, too, that at some point you'll have to go out and get conventional financing. Many/most rent-to-own homes are for periods of 1-5 years . . . more typically 2-3 years. After that point, the owner will want his/her money. That 2-3 year time frame gives you enough time to clean up your credit, build up some savings, and position yourself to buy. Then you go out and get a mortgage for the remainder owed, and the seller receives his full payment.

Hope that helps.
1 vote Thank Flag Link Mon May 3, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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Denae if you are still looking to buy a home, please contact me. I have information on a program that may be able to help you. Call me at 205-514-5177 or email me at listorbuywithbrown@gmail.com.
0 votes Thank Flag Link Wed Jul 14, 2010
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