Home Buying in Seattle>Question Details

Lanny Poffo, Home Buyer in Seattle, WA

how to buy a home with a large down payment (25-50%), but abysmal credit?

Asked by Lanny Poffo, Seattle, WA Sun Sep 30, 2007

I have the resources to pay a large amount in down payment for the cost of a home (25-50%) but have abysmal credit. Imagine about the worst credit record you can think of, tax leans, years of unpaid bills, etc.... But do have the resources to pay a large down payment up front, and have a good work/income history. Are there any options available to buy a home? Especially in the "hot" housing market of Seattle?

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22
I am surprised at some of the answers given. Any good agent can get you financed with a large down payment even with bad credit. The ones that say you should get owner financed or lease to own must be new in the business and not have many contacts or experience. Money down talks ! Fine a good agent and he or she will arrange a new home for you and get you financed. You pay 40% or 50% down and your in the home so fast it will make your head spin. If your agens says, I don't know, move on and get an agent that can.
1 vote Thank Flag Link Thu Feb 3, 2011
Of all the answers thus far yours is the best.. Even if I'm willing to sacrifice a little larger interest rate, as I could only put down 15-20% in order to have a confortable amount in the bank.. Is this possible?
Flag Sat Mar 9, 2013
There's nothing wrong with seller financing. Although it's true that some sellers sell their properties with seller financing terms that take advantage of "desperate buyers", all sellers don't necessarily negotiate their deals like that. Some sellers use seller financing for tax purposes; they only have to pay taxes on whatever they received. Some sellers use seller financing, because they get a higher ROI than they'd get had they taken the cash and deposited their profit into a savings/checking account or had they invested that profit into the stock market.

The main reason why many sellers opt for seller financing--especially now--is that doing so opens their property to a larger pool of buyers. Some lenders are asking for ridiculous terms. Most investors I know (myself included) are unwilling to fork over more than 20% for a down-payment. Seller's typically don't ask for as much for a down-payment.

Lanny, whether you opt for seller or conventional financing, you'll need to understand the terms of your loan. Just as you could--and I'd argue that you should--negotiate on your terms for conventional financing, you can also negotiate on your terms for seller financing. Basically, the seller becomes the lender for seller financing, and basically everything else is pretty much the same.
1 vote Thank Flag Link Wed Feb 11, 2009
Yes you can finance with a 40% down payment with bad credit. It is done like a home equity type loan. I know you will pay UP THE WAZOO for it but if you buy cheap and pay off quick it will be a great deal for people with bad credit. I looked at what the realtor wrote on getting owner financing DONT DO IT,Here is the reason why it will be at possible decent % rate but you will PAY MORE THEN MARKET FOR HOME here is the reason, owner could not sell it for anything so financed it himself to get a desperate buyer for his over priced unit. This is my suggestion by CHEAP FORCLOSED OR SHORT SALE put 40% down and 12% interest but pay off quick and in the process you repair your credit and own your place out right. I bought a condo in miami for $55,000 from bank, owners in building are selling simmilar units for $90,000 and many will offer owner financing so do the math! P.S I paid off unit in 9 months! Never owner finance cause you will always pay much more then market price. Moral of story by cheap pay high interest and pay off quick!
1 vote Thank Flag Link Tue Feb 10, 2009
Lanny:

I agree with Ms. Carr. If you can wait to buy for just a short time, I would suggest paying off/down as much of the bad credit as possible and still having at least 20% of the purchase price for your down payment.

Also, do get a loan officer involved now. They can help you repair your credit quicker than you can alone.
1 vote Thank Flag Link Mon Oct 1, 2007
LANNY,
THERE ARE ALWAYS OPTIONS AVAILABLE TO PEOPLE IN THESE SITUATIONS, I STRONGLY SUGGEST THAT YOU MEET WITH A LENDER JUST TO REALLY SEE EXACTLY WHERE YOU SIT WITH THE CREDIT ISSUES ETC. AND THEN TALK ABOUT THE OPTIONS. MY FIRST CONCERN THOUGH IS THAT YOUR CREDIT RECORD WILL CONTINUE TO HAUNT YOU IF YOU DO NOT DO SOME TYPE OF DAMAGE CONTROL. ESPECIALLY TAX LIENS, THOSE WILL CONTINUE TO PERPETUATE AND WILL MOST LIKELY HAVE INTEREST PENALTIES THAT MIGHT CONTINUE TO GROW. IF YOU DO NOTHING ELSE AT LEAST TAKE CARE OF THE TAX LIEN, AS IT COULD COME BACK AND ATTACH TO ANY HOME YOU PURCHASE. THE BEST ADVICE IS TO REPAIR YOUR CREDIT AS BEST YOU CAN, BUT IF YOU CANNOT THERE ARE MANY OPTIONS. HAVE YOU CHECKED INTO ALL THE OPTIONS OF REPAYMENT PLANS, BANKRUPTCY, ETC.? YOU REALLY NEED TO MEET WITH A PROFESSIONAL ON THIS ONE AND WEIGH OUT YOUR OPTIONS. I SUGGEST TALKING TO A FEW DIFFERENT LENDERS TO SEE WHAT THEIR THOUGHTS ARE. I WISH YOU THE BEST, IF YOU HAVE THAT KIND OF DOWN PAYMENT YOU CAN REGAIN YOUR CREDIT AND EVENTUALLY GET INTO YOUR OWN HOME.
1 vote Thank Flag Link Sun Sep 30, 2007
I have a 5% and 10% down option....program allows you time to fix your credit. Up to 6 years

Single family homes (no condos/units); owner occupied only
? Previous bankruptcies, foreclosures and short sales are OK! (1 day out, no seasoning!)
? 24 month Bank statements OK! (income sources/cash flow verified)
? No seasoning of down payment! it can be gifted or borrowed, even cash from a friend or family member

Ask me about our Mortgage Alternative Program.

Bill@pcmtg.net 253-232-5843
0 votes Thank Flag Link Thu Mar 27, 2014
I may be able to help you out as long as you have 10% down and can show the ability to afford the monthly payment.

bill@pcmtg.net or 253-232-5843
0 votes Thank Flag Link Thu Feb 27, 2014
I'm trying to buy a 165k home for me and my family I have bad credit from medical bills I have 100kto put down you know any lenders I could go with that would finance the rest since ill have so much equity in the property off the bat
Flag Wed Mar 5, 2014
Hello Lanny, that is a tough situation. I hope you are buying an owner occupied home as a non-owner occupied home could be very spendy.
We are are 100% portfolio lender(local community bank) which means we do not sell our loans(our own money and guidelines). As other lenders, we are a classic 4-C lender. We look at your character(credit), your capital(cash reserves/investments/retirement), the collateral(the type of the property and how much you are putting down, and your "capacity" to repay. We look at all those charateristics but we can make exceptions to these guidelines. Critical will be your credit explanation letter and how much of your delinquent credit is currently haunting you. A large down payment is a huge compensating factor but depending on your credit letter, we still may not be a good fit. Please contact us for futher details and perhaps furthur lending options.
0 votes Thank Flag Link Wed Oct 16, 2013
Hi Lanny Poffo

A reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM) is a relatively new product. A reverse mortgage provides unique benefits for its target market: someone over 62 who lives in his/her primary residence, who has substantial equity in his/her home, and who has little or no income. A reverse mortgage is a loan against the equity in your home that you don't need to pay back for as long as you live in the home. If an individual is a senior citizen and does not intend on moving out of his or her home for some time, a reverse mortgage may be an option worth considering. Eligibility is set by the Federal Government; The Federal Housing Authority FHA tells HECM lenders how much they can lend you, based on your age and your home's value. However, the up front costs and bank fees can be very high.To know more search

http://www.reversemortgagelendersdirect.com/washington-rever…
http://www.reversemortgagelendersdirect.com/reverse-mortgage…
http://www.reversemortgagelendersdirect.com/reverse-mortgage…
http://www.reversemortgagelendersdirect.com/reverse-mortgage-faq/
http://www.reversemortgagelendersdirect.com/hecm-saver-how-d…
0 votes Thank Flag Link Mon Oct 14, 2013
Good afternoon Lanny,

We see many credit reports with low credit scores (anything less than 620), and often many scores in the 500's. This is BAD credit. If you are one of the folks affected by this terrible economy, you have a low credit score and you have a dream of buying a home, here's some simple advice for you.

It is unlikely you could be approved for mortgage financing with that credit score at this time.

Beware of any mortgage professionals promising you an approval with such a low score. Wait on buying a home. I recommend you take the time to resolve your credit issues.

First, settle any outstanding debt. If you owe money on collection accounts, charge-offs and/or judgments, make payment arrangements and get these accounts paid promptly.

Next, begin rebuilding your credit. If you have current accounts with good payment histories, or even some previous late-payment-blemishes, make sure you continue to pay those accounts on time. If you do not have any existing credit accounts then you'll need to establish several in order to create a viable credit history.

I have found that CONSUMER ACTION is an excellent resource for objective advice on all things credit related. You'll find free and sincere advice on everything from settling collection accounts to rebuilding credit to building credit from scratch on their website.
http://www.consumer-action.org/

Beware of anyone offering to "repair" your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE.
http://www.consumer.ftc.gov/articles/0058-credit-repair-how-…

The best way to buy a home is to have a decent credit history combined with sufficient Income and Assets for a home purchase.

The best way to have a decent credit history is to settle negative outstanding obligations and pay all your bills on time for at least two years.

Trevor Curran
NMLS #40140

*If you thought my answer was helpful, please give me a “Thumbs Up” or “Best Answer.” Thanks!
0 votes Thank Flag Link Mon May 13, 2013
Seller financing may be your only option. I don't believe the housing market will rebound overnight. Save your money and work on your credit.
0 votes Thank Flag Link Fri Dec 28, 2012
You can enter into a lease option. You won't need to put all that money down, rather sit on it until closing. Find a home that is a perfect fit, lock in a sale price today, work on your credit with a specialist and loan officer, pay off debts and exercise your option in a year or two (depending on your repair time needed). We work with hundreds of investors that will help you on the road to homeownership. Don't give anyone a big chunk of your money until it's time to exercise. We can get you moved in for $5000 plus first month's rent! kassrose@gmail.com
Web Reference: http://www.nwrenters.com
0 votes Thank Flag Link Thu Feb 19, 2009
I would suggest looking for seller financing homes. Also, a lot of lenders will work on your credit with you.....usually takes 4-6 months to get your credit cleaned up enough to be back up and in the running again.
0 votes Thank Flag Link Wed Oct 17, 2007
repair your credit first. buy later.
0 votes Thank Flag Link Wed Oct 17, 2007
Hi Lanny, see if you can buy the home under a corporation. Good luck.
0 votes Thank Flag Link Tue Oct 16, 2007
Look for houses advertised with seller financing or a contact for deed or rent to own. If the seller has 25% or more of the price of the home up front they should be willing to take a chance on you. If you don't pay, they kick you out and keep your deposit. Builders seem more willing to do this then sellers with existing homes.
0 votes Thank Flag Link Tue Oct 16, 2007
The challenge will be that if any creditors place liens on your newly acquired property, your equity will quickly vanish. A property owner w/ little equity is higher risk. They dont' stand to lose as much if they lose the property. A lender will look at the possibility of you losing your equity due to liens or outstanding payments. If those are cleared, and you don't have current past due debt, the large down payment will likely secure you a mortgage, but at a higher interest rate.
0 votes Thank Flag Link Tue Oct 16, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Wachovia has a division, call World Savings, that may be able to handle a transaction like this. A good, resourceful mortgage broker can most likely find other lenders that would be interested in just such a mortgage.
0 votes Thank Flag Link Tue Oct 16, 2007
Do you get a "paycheck" or are you self employed? Loan programs are changing on a daily basis, unfortunately. You may ask your loan officer for a stated income loan-these were originally designed for self employed borrowers and have different lending parameters. I also agree that seller financing may be the best option. Another option may be a lease option while you are cleaning up your credit. A good loan officer (not a credit repair company) will be able to give you some good direction. You may also want to check with a company like ARCS.
0 votes Thank Flag Link Tue Oct 16, 2007
Seller financing may be the best option, but you will likely overpay for the house a bit.
0 votes Thank Flag Link Sun Sep 30, 2007
There are lenders out there that will overlook a less than desirable credit score if you have a hefty down payment. Wachovia comes to mind. Find a mortgage broker you can trust to help you. You may want to think about using some of that money to get your bills current.
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Sun Sep 30, 2007
Cindi Hagley,…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
Have you paid off your debt? If you have and some time has elapsed, you may find that your credit score has improved. Discuss it with a reputable mortgage person who can give you some guidance.
0 votes Thank Flag Link Sun Sep 30, 2007
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