purchasing a condo with poor credit

Asked by Terrie, Chalfont, PA Fri Jul 13, 2007

I would like to purchase a condo, however I don't have real good credit fair-to poor

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Kaye Thomas, Agent, Manhattan Beach, CA
Fri Jul 13, 2007
Terrie- Lenders are being very cautious about buyers who do not have great credit.. You might have a chance if you have money that can be used for a down payment and if you have a good reason about why your credit is not good.. ie an illness, divorce, you were laid off from work.. However if your credit is poor because of late payments etc then this may not be the time to buy.
What I would suggest is that instead of trying to buy now you sit down with a lender and discuss your credit history. Find out what you need to do to bump up your credit score and then do it. It might take you 6 months to a year but it will save you money in the long run and the possibility of a foreclosure because you got into something you were not quite ready to purchase. I hope this helps..
0 votes
Sasha, Agent, WA,
Sun Sep 9, 2007
Dear Terrie, a couple of points:

1. You may want to learn more about FHA (Federal Housing Administration) loans. With FHA loans, the FHA insures your mortgage - in other words, the government pays the lender if you don't. Because the government will cover the debt if you default, lenders are willing to extend FHA loans to buyers with lower credit scores, the down payment requirements are lower, and the interest rate you will be charged will be fair (close to the market rate that someone with better credit would get). The official site to learn about FHA is here: http://www.hud.gov/offices/hsg/sfh/fharesourcectr.cfm. However, I prefer this non-official site because it is more user friendly: http://www.fharesearchcenter.com/
2. In this age of foreclosures, your credit score is the only way a bank knows how likely you are to repay the loan that it makes to you. Getting a loan is getting harder and harder for people with low credit scores. If you have some time, take a few months and learn about how to get your score up. http://www.bankrate.com is a wonderful resource for consumers looking to learn about credit, and here is a link to their article on improving credit scores:
http://www.bankrate.com/brm/news/credit-scoring/20040128a1.asp. Be very careful about so-called "credit repair" companies. Some of them are just scams.
3. Be wary of predatory lenders who may be looking to take advantage of you - they can sell you loans that seem reasonable now but have payments, fees, penalties, and interest rates that will soar in a few years. Use a reputable bank, or if you use a mortgage broker, make sure he or she has references.
4. Remember that you should shop around for a loan. Call a few different lenders and compare rates.
5. Remember that every time someone checks your credit in order to verify your credit score, your credit score goes down (just a little)! So know your credit score in advance and ask "Based on my credit score of x, what loan products do you have for me?" Only when you have decided on a lender should you let them verify your score. However, don't worry too much if several lenders check your credit in a 30 day period, because that "hit" to your credit score only counts against you one time over 30 days (in other words if 3 banks verify your credit report within 30 days, it only counts against you once).
Good luck!
1 vote
Kevin Boer, , Palo Alto, CA
Sat Jul 14, 2007
Lenders are indeed getting more cautious about making loans these days. Having said that, it's not as if the finance spigot has been turned completely off. Talk to a good mortgage broker for some advice, part of which may well involve finding ways to improve your credit score.
1 vote
Gita Bantwal, Agent, Jamison, PA
Mon Feb 23, 2009
Terrie, You asked this question in 2007. Hopefully you have straightened out your credit.But this answer is for oyhers who do not have good credit. You can get free credit report once a year from the three credit reporting agencies. Get the reports and work on improving your credit. You can sit down with aloan officer who can help you so that you can buy a home in the future. They are getting stricter. and the rates depend on credit scores.
Web Reference:  http://www.gitabantwal.com
0 votes
Bruce Lynn, Agent, Coppell, TX
Sat Jul 14, 2007
The best place to start then is with a lender. You can start where you bank or contact any of us for a good lender referral. Let them get you prequalified so you can see what your payments might be, how much down payment you might need (if any) and let them walk you through the various fees and closing costs. Sometimes your credit might not be as bad as you imagine. Sometimes they might tell you to wait and improve your credit so you can buy at a lower interest rate or with a lower downpayment. Good luck with the purchase.
Web Reference:  http://www.teamlynn.com
0 votes
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