Buying a house with bad credit

Submitted by strifex316 on Sun, 05/04/2008 - 21:14
Forums
Credit repair

I would like to buy a house later this year but I have a credit score of 545 and only about 5-6000 to put down. I have about 6k in debt and 2 small collections. Is it possible for me to buy a house by November? Thanks!

fireyone

Yes I believe it is possible. try first to pay off those two small collections. Showing you paid them will look good on you along with having a down payment. Paying these debts will also give your score a little bump up. Good Luck.

Mon, 05/05/2008 - 22:48 Permalink
sdchargers_63

Yeah..i would say you probably could. It's usually easier to finance something, that you have collateral for ( collateral would be your house). have you talked to different banks/finance institutions about % rates?

Tue, 05/06/2008 - 11:37 Permalink
george

I too think that it would not be much of a problem. As you are purchasing a house, it will itself serve as a guarantor.

Tue, 05/06/2008 - 11:46 Permalink
Swoosh (not verified)

Just keep in mind that the higher you can get your score before then (over 600 if at all possible) is REALLY going to help you. Right now, everyone is saying yes, you can get a house, but with the foreclosure mess right now, mortgage lenders are cracking down on those with less than perfect credit, and you will pay a premium (9+ plus interest) with a score like that. Don't mean to discourage you, but just something to keep in mind.

Thu, 05/08/2008 - 18:44 Permalink
Justin

I think that Swoosh is correct. You should first pay off your existing debt and then go for another one. This will also help you in improving your credit score.

Fri, 05/09/2008 - 08:17 Permalink
Anonymous (not verified)

Thanks for the advice everyone! I haven't spoken with a lender yet but that will be my next step after I pay off my collections. Does anyone know if going through consumer credit counseling ( the non-profit kind, not the repair services) makes any difference to lenders?

Sat, 05/10/2008 - 20:00 Permalink
Morningstar

No new credit will be extended to you while you are in the plan. However, when you complete the program, your score should rise.

Sun, 05/11/2008 - 04:19 Permalink
george

Hi guest

Morningstar is correct. Going for a debt management plan or a credit counseling service does not affect your credit report. The credit score rises only if you make a consistent debt repayment of the entire debt amount.

Mon, 05/12/2008 - 10:40 Permalink
Katsarov

Hi, You
You need at least 580 mid scores and you are qualif. for a FHA loan on 5.5 interest and .5 % insurance with only 3% down. Now, the scores from MyFico are the closest to the lenders calculators scores. For sure dont purchase your scores from trans union site or their providers cuz they always show higher and you will be badly surprised apling for a loan. If your coll. are in the last one year and you paid them off it will increase your fico with at least 30 scores so it will put you really close to what you need. make sure that before you pay them you have in written from the CAs, that they will remove the coll. from your report. After that go on fico simulator to see how much you need to pay towards your credit cards to raise your scores with another 5 to 10 more. And.....enjoy your new home. Remember, no lender will give you less than killing rates under 580 fico

Thu, 05/15/2008 - 17:53 Permalink
Katsarov

Hi, You
You need at least 580 mid scores and you are qualif. for a FHA loan on 5.5 interest and .5 % insurance with only 3% down. Now, the scores from MyFico are the closest to the lenders calculators scores. For sure dont purchase your scores from trans union site or their providers cuz they always show higher and you will be badly surprised apling for a loan. If your coll. are in the last one year and you paid them off it will increase your fico with at least 30 scores so it will put you really close to what you need. make sure that before you pay them you have in written from the CAs, that they will remove the coll. from your report. After that go on fico simulator to see how much you need to pay towards your credit cards to raise your scores with another 5 to 10 more. And.....enjoy your new home. Remember, no lender will give you less than killing rates under 580 fico

Thu, 05/15/2008 - 17:57 Permalink
anthony

Hi strifex316

I think you can try the way as Katsarov suggested. It is really a good suggestion and I hope will help you to increase your score which will enable you to get a loan from FHA to purchase your house.

Fri, 05/16/2008 - 05:05 Permalink
CMBV22

Another thing that you need to remember is to beware of your debt/ income ratio. If a bank sees that you will have more then 30 ir 40% of your income consumed by your new and current debt they will also give you less favorable terms on a loan. So be carful about taking out any debt consolidation loans.

Sat, 05/17/2008 - 10:21 Permalink
imready (not verified)

Please help me.......I have a credit score of 585 and my student loans went into default. I have been renting a home for a year that I want to buy. I have paid on time every month. I'm ready to buy my house but I don't know if It's possible under my situation. The govt. takes my income tax return for the past 5 years. I am ateacher so I have steady income. I make about 40,000 a year. Is it possible?

Sat, 10/18/2008 - 02:10 Permalink
Credit Solution

The best for you is concetrate in you credit try to improve it first and then apply for a loan.

Sat, 10/18/2008 - 23:25 Permalink