Can A Buyer With Past Credit Problems Buy A House?

December 11, 2011 in Home Buying Process

Elkhart County Home Buyers who have credit problems can make it harder to qualify, but it’s quite possible for Buyers with poor credit to obtain home loans.

Anyone who has had a financial problem – whether it was a matter of late credit payments, delinquent tax, or even a judgment that was filed – should expect this data to be a factor when applying for a mortgage.

How critical a factor? Minor lapses will probably have little or no effect; however, buyers with serious problems may still qualify for a loan but may have to pay a higher rate of interest or provide a larger down payment.

These are three steps that a person with past credit problems should take before applying for a loan.  First, request a credit profile from one of three major credit reporting agencies.  In fact, it’s best to request a report form all three, since not all creditors report information to the same agencies.  TRW will furnish a complimentary copy once a year on request at (800) 392-1122 or (800) 682-7654. Equifax (800) 685-1111 and Trans Union (312) 408-1050 or (800) 851-2674 will also furnish reports for a nominal charge.

Second, the Buyer should optimize his or her credit profile by citing prompt payment of rent, utilities, and other bills not reported on the credit profiles.  The buyer should also be prepared to provide candid explanations for late payments to the loan officer.  This is important because problems not reported by the buyer but discovered by the lender will reflect unfavorably.

Many lenders are understanding about one-time problems such as the loss of a job, a medical emergency, etc.  Buyers with patterns of delinquest payments might want to consider adding six months or a year of flawless credit to their track record before pursuing their home-buying plans.  Discuss this with Evelyn Johnston, REALTOR with Elkhart County Subdivisions.  She can offer excellent suggestions.

So remember, if you are thinking about purchasing a home but are worried about your past finanacial record, don’t give up.  There are solutions, such as lenders and sales professionals, who are in business to help.

Buyers