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How to Make Home-Buying Easier with Bad Credit

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Buying a Home with Bad Credit

home ownership

Having bad credit does make it harder to acquire a home, but not impossible. In today's economy, there are many options to turn to when faced with this problem. Keep reading to learn 5 methods to learn how to buy a home with bad credit-

  1. Check Your Credit Score   

The first thing any potential buyer wants to do is check your FICO credit score. There are hundreds of tools online such as Credit Sesame, or Credit Karma that allow you to check your credit score for free. No need to sign up or enter any credit card information.

There are three different credit scores, one for each credit bureau. Mortgage lenders use the median credit score to determine how eligible you are. The higher and lower scores are not used.

  1. Fix Credit Errors

If you notice any errors or areas of concerns you can dispute almost anything with the three credit bureaus. Things such as old addresses, or account information. You want to make sure everything is up to date and accurate.

  1. Get Pre-Approved

Finding FHA- approved lenders to work with will be your first step. These loans are offered to those with bad to no credit. Though to note not all lenders are the same and they can set their own credit requirements. It is good to reach out to know if they can work with your score.

After finding a lender that can work with you, you need to get pre-approved with a pre-approval letter. To become pre-approved your loan officer will need to pull your credit and verify your income and bank documents.

  1. Shop Around 

Getting rates from different lenders allows you to find the best deal and match possible. It is recommended to talk to at least three different lenders.

Multiple inquiries to your credit score can hurt your credit score making many people shopping for the best mortgage rate hesitant to shop around. However, FICO allows for a 30-day “Rate Shopping” window where multiple inquiries will just count as just one. Foreclosure properties can also be a great way to find a good deal.

  1. Get Assistance 

If you are a first-time home buyer with low to middle income, then you may qualify for housing assistance programs. These programs help with the costs of getting your first home and can make the path to achieving home ownership that much easier. You can for state programs through the HUD website.

Checking your local city or community’s website can also lead to other housing assistance programs available. You will usually have to meet certain requirements and guidelines and take a home ownership education class.

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