There are any number of reasons that you could end up with poor credit and not all of them come from being lazy or cheap. A bad accident or illness, hospitalization, the loss of a job or bad choices in a your younger years could all be the basis for having bad credit in your adult years. The events might have happened years ago and the you may have since repaired their ailing credit; however that stain remains and makes future purchases difficult. Now that you're older and wiser you find that you want a new home. Can you buy a new home with your bad credit? The easiest way to own a home with poor credit is to try your best to get your credit back on track.
If you can pay 2% less on the mortgage loan interest rate, you will be saving over $70,000 throughout the years. The first thing is to order a free credit report and to go over it with a fine tooth comb. If you find any disputes that you want to take up with creditors, dig up your receipts, and write some letters trying to straighten out whatever is being falsely claimed. The law states that the credit agency will have to address the dispute within 14 days or they will have to remove the disputed item completely.
After all of your disputes have been settled, you should insist that there be a new (and corrected) report sent out to all of the creditors who have received your report in the last six months. The process of having the corrections sent out is laborious, but it could mean a greater chance of you owning your own home, so be persistent. One way to own a home with bad credit is to go straight to the source. Many homeowners are willing to sell you a home under a selling finance agreement. This agreement provides a "contract" that allows you to make payments to the actual seller instead of making payments to a bank.
Another option when buying through a seller, especially if a down payment is not an option, is to find a seller that is offering a lease-to-buy option. When you do a lease option, you will have to work out the math ahead of time to determine how much rent is going for a down payment, and after a certain period of time, how much credit you are going to end up with. You can dramatically raise your credit score by owning a home and making timely payments. Eventually there will come a time come when you want to refinance your house. Doing this can lower your payments and a good credit rating can improve your chances more than 95%. This might enable you to make some money too and pay off some other debts.
Most homeowners will refinance the house to do exactly that. On the other hand, owning a home while you have a low credit score might make your interest rates a little higher than most. Becoming a homeowner is a gratifying decision, but it can also be a taxing one.
Make sure that you don't become overzealous when trying to pick out a house to purchase. Don't try to live beyond your means, especially when your credit is less than ideal. Buy a house that is big enough for what you need, but cost efficient enough that you don't find yourself in greater financial strain.
John Edmond runs Credit Card Debt where you can read many more articles on credit card debt and for the latest information on credit reports checkout the blog.