Buying A Home
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
what do you think?
My husband and I are renting right now and the owners want to sell the house. So we want to try to get a mortgage but have poor credit from bad choices during college. We are trying to pay it off but it is taking longer than we thought. Is it possible to get any kind of mortgage with poor credit?
We are going to meet with a mortgage company to talk about this too but Ii was wondering if anyone had any experience with this?
Re: what do you think?
Being approved for a mortgage is decided based on a combo of credit score, income/employment, current debts, and down payment. If you have few current debts, a good enough income and a large enough down payment, you may still be able to qualify for a mortgage with a poor credit score. It is all relative though-banks have discretion over how low of a score they are willing to accept. Also, you may have to accept a higher interest rate to compensate for the added risk the bank will see in taking you on. The best thing to do is to take all of your info to the bank and see what they say.
Do you have a down payment ready? How is your debt to income ratio (I see you say you are currently paying something off)? Can you truly afford the house when you factor in taxes, upkeep expenses, utilities, etc.?
How low is "low"?
The lowest I've seen, and I'm talking you have to have some pretty good compensating factors to get this approved (steady job, good down payment, good assets) is 580. Anything below and it'll be really difficult to find anyone willing to give you a mortgage. My credit is bad from some mistakes I made in my early twenties, and luckily we qualify on just my husband's income/credit alone, but we've been slowly bringing mine back up by paying off my debts, some of them dropping off and getting me on my husband's credit card. It's a slow and tedious process but it's nice seeing that number creep up.
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If you want to purchase the house you are currently renting, perhaps you could talk to the owners about doing a lease-purchase, owner finance, etc. with you. Depends on what their scenario is but a lease-purchase type agreement might give you another year or two to get all of your debt/credit straightened out.
FIrst I would worry about the ability to get a mortgage without a downpayment/closing cost savings (just inferring since you said paying off debt is taking longer than expected). That's going to be hard to find a lender to give you a mortgage based on the combination of the low score and little savings.
Seondly, do you really want to buy THIS house because you could see yourself living there for 5, 10, or more years or just because the owner wants to sell? It's a big investment and you need to be sure that you want this house before going through with it.