Buying a home can be stressful. There are so many factors to consider and getting a mortgage is not an easy process. If you have bad credit, it’s even more difficult to get approved for a loan or find an affordable home for sale. Even if you have established credit, buying a home will be challenging. Many homes require prospective buyers to have 20% down payment, which can be difficult to save, especially if you’re a first time home buyer. https://www.myhousesellsfast.org/ has helped numerous homeowners sell their properties quickly and efficiently.
Here are financing options for homebuyers with bad credit.
Down Payment Assistance Programs
There are many federal and state programs that offer down payment assistance for those who qualify. These are usually administered by state housing finance agencies (Shelters) and the Federal Housing Administration. They provide money to homebuyers to help them meet the down payment requirement and pay closing costs. Down payment assistance is usually for a specific maximum period of time, which can range from 1-3 years. In some states, there is no time limit at all for the assistance. You can find the program details and requirements for down payment assistance programs in your state by going to the HUD.gov website.
Second Mortgage
The second mortgage allows you to use money that you already have to buy a house. It is said, “You don’t have to be first in line, but you must be last in line.” The terms of the second mortgage can be relatively simple or complex depending on your situation, but it will require a cash out arrangement. This means that you buy a house with one mortgage and make payments to the lender. The lender then proceeds to close on the house, sells it at auction and uses the proceeds to pay off the first mortgage.
Owner’s/Home Lender’s Mortgage Loan
The owner/home lender’s mortgage loan can be a great way for those home buyers not eligible for conventional financing or even those borrowers with bad credit to be able to purchase a home. The down payment on this loan is 10%, which is low compared to the 20% conventional loan. The lender would structure the loan with the payments for you as part of your mortgage. You would have to pay extra money to the lender on a monthly basis, which can offset most or all of your mortgage interest and help you save significantly on your monthly housing costs.