Best 6 Tips How To Buy A House With Challenged Credit in Lawrenceville

When you start on your journey to homeownership in Lawrenceville, Ga. you will have to pay attention to your credit score. Your credit score is a very important number; it represents how you handle money. The higher your credit score, the more likely you are to make your payments on time and the more likely lenders are to approve you for loans. An Excellent Credit score is over 720; a good credit score is between 620 and 679; a fair credit score is between 580 and 619; poor credit is 579 and lower. Here are 6 ways to buy a house with bad credit in Lawrenceville, Georgia.

Improve Your Credit

First, you need to know your credit score. Request a copy of your credit report from all three bureaus. Double-check that all information is correct and make sure to dispute any errors with the respective bureau. If you have any accounts in collections, try to negotiate with the debt collectors to work out how much it would be to delete the collection account. A paid collection account that stays on your record works against you. Make sure you keep up on your payments because lenders like to see that you have no late payments for at least the past 12 months. This helps show them that you will continue to make payments on time. A low debt to income ratio will also convince a lender that you are able to handle the additional mortgage payment. Pay down credit cards as much as possible, preferably to maintain a 30% utilization ratio or better. This usually indicates that you are using your credit lines responsibly.

Make A Large Down Payment

If you make a larger down payment than required, it will cut down on the total principle of the loan. The less money you borrow, the more likely the lender is to accept your application. With a large down payment, good payment history, and low utilization ratio, a lender may not place quite as much weight on your less than perfect credit score, but that all depends solely on the lender.

Private Lender

You may also seek financing from unconventional sources. A different way to buy a house with bad credit in Lawrenceville, Georgia is to secure a private loan. You may have a family member or friend that can provide the funding for your house and you can make a private arrangement for repayment. You should still draw up a mortgage agreement and follow it to make sure you do not ruin any relationships over unpaid money.

You may also find a property owner that believes in you and is willing to take a chance and provide an Owner Financing situation. This usually means the current owner will keep the deed in their name until you finish repaying the loan.

Co-Signer

Another way to buy a house with bad credit would be to obtain a co-signer. Having a co-signer with a better credit score than yours will significantly increase your chances of obtaining a more traditional mortgage. This may lead to a slightly increased interest rate, but probably not any higher than if you had secured the loan with your own credit. This gives the lender someone else to fall back on to receive payments in case you default on the loan. When you involve a family member to help you to buy a home you should do everything in your power to make your payments on-time so their credit will be protected.

FHA Loan

The most popular way to buy a house with bad credit in Lawrenceville, Ga. is the Federal Housing Administration loan. This is backed by the government and has much more lenient terms than traditional private loans. The minimum credit score to qualify for an FHA loan is 500. This score requires a 10% down payment. If your credit score is 580 or higher, only a 3.5% down payment is required. The FHA loan also requires a stable employment history and a debt to income ratio of less than 43%. 

Rent To Own Homes

Rent To Own Homes provides a opportunity for people with less than perfect credit to get on the road to home ownership. Our rent to own homes program starts with an income that will match the income necessay to buy a home in Lawerenceville Georgia. You can find a home in a great area with the exclusive right to buy that home during the time of the lease. The smart thing to do is take the time during the lease to improve your credit and save a substantial down payment to buy the home you are leasing and loving. Rent to own homes is a great way to start your homeownership journey. 

Call Fresh Start Home Sales at 678-337-1165 or send us a message to discuss these 5 ways to buy a house with bad credit in Lawrenceville .

Fresh Start Home Sales

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