Why it’s time to jump into the housing market – even if you have so-so credit

There is something truly special about owning your own home. It’s YOURS. A badge of honor to wear as a celebration of how hard you work to provide for those you love.

(Yes… there are plenty of arguments for NOT buying a home, especially if you live in certain cities like in this article)

But, for the sake of THIS article, we are going to focus on why NOW may be the perfect time for someone with less-than-perfect credit to jump into the housing market with both feet.

Bye-bye Mr. Moneybags

Back after the housing market crash, cash-rich investors flooded local markets buying up houses for cash. This was a problem for two reasons. One, they bought up all the houses in the price range first-time home buyers and lower-income families would also want. Two, they outcompeted better qualified buyers because they were paying in CASH. What seller would turn that down?

Well, now that housing prices are returning closer to where they were before the crash, those cash investors are leaving the scene to look for better deals elsewhere. In fact, cash-only home purchases are back to their typical national average of about 25% compared to a high if nearly 42% right after the housing bust.

Sure, we are paying more for the houses, but at least there are more to choose from! With more available inventory, lenders are more likely to approve buyers with lackluster credit – especially if you have yourself prepared to prove you can afford the home.

FHA Interest Rates Are LOW, LOW, LOW

FHA loans have typically been a great way for challenged buyers to achieve home ownership. They are often a little more expensive over the course of the loan, but what do you expect? If you are a high-risk borrower, you should plan on paying more for your loan.

The good news is that the interest rates on a 30-year fixed FHA loan are down around 3.5%, a full interest point lower than just 1 year ago.

FHA rates

FHA loan programs are designed for borrowers who have only 3 – 5% to contribute to a down payment and have credit scores in the high 500’s into the 600’s. With rates like they are today, FHA borrowers have about 12% more buying power, allowing them to afford more house for their money.

If you want to find an approved FHA lender near you, go to the online FHA Lender List.

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Some Lenders May Look at More than Your Credit Score

To paint the best picture of your ability to pay a mortgage, make sure you have all your financial papers in order. Get copies of your pay stubs for the last 3 – 6 months, a copy of your last two tax returns with your W-2s, 3 months of bank statements, and summaries of your utility and rent payments going back at least a year.

Lenders that are experienced in working with borrowers with less than perfect credit will be more likely to look at more than just your credit score to determine your credit worthiness and likelihood you can successfully pay the mortgage.

Awesome People Want to Help You Succeed

In doing the research for this article, we learned about a group called Operation Hope. They are advocates of financial dignity and education for children and adults. One of their special outreaches is to help first-time homebuyers qualify for mortgages. They have offices in 30 cities across the United States. Find the one closest to you by clicking the “find a Hope city” link at the top of their homepage.

If you are a veteran, on active duty, a reservist, on the National Guard, or (in some cases) a surviving spouse, you can apply for a mortgage through the Veterans Administration. There are programs requiring no down payment and VA loans do not require you to have mortgage insurance. To find a VA approved lender, visit the VA’s online lender database.

Some credit-challenged people are fortunate enough to have a relative to cosign a mortgage with them. If YOU are one of the lucky ones, just remember that if you default, you will tank Grandma’s or Uncle Joe’s credit too. Never ask for a cosigner unless you are determined to make your payments on time, come hell or high water.

If your credit score is a real issue, and you want to do something about it that, reach out to us! We will help you decide if qualified credit restoration will help improve your score. In many cases it will – sometimes as much as 200 points in just a few months. It is often surprising for people to learn just how many errors and inaccuracies there are on their credit files bringing their scores down.


If you have any questions, please give us a call at 770-952-5168 or contact us online.

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Other articles that may interest you:
3 Instant Credit Score Fixes
Why The Credit Reporting System is Flawed
Starting a Business When You Have Bad Credit

This information is intended for informational and educational purposes only and not as legal advice. If you have concerns about your credit report, harassment, identity theft, illegal collections activity, garnishments, or property liens, you should consult an attorney who specializes in consumer rights and defense.

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