If you have poor credit and you are looking at the prospect of home ownership, you are probably worried about what kind of difficulties you face. While you should be a little concerned, it is probably best to approach the circumstance as more of a challenge than as a difficulty. While it might not be that hard to land a mortgage, be aware that you are going to face higher interest rates and higher fees than the usual buyer. Unfortunately, you have a poor credit rating and that means more risk to a potential lender, so your mortgage will cost more.Check Your Credit ReportAccept the challenge. You may not be as bad off as you thought. As a first time home buyer with poor credit, you should start doing things so that you can get the best possible financing. Indeed, you cannot improve your credit rating overnight, but you can start to fix it. As part of the challenge, remember that just a point or two of difference in your interest rate can mean thousands or even tens of thousands of dollars over the duration of your mortgage.So, the first thing you want to do is pull your credit histories from all the primary credit assessors – Experian, TransUnion, Equifax. The cost is minimal and can be done online. Examine them carefully. If you are like most consumers, you will find errors. Write explanations of each error and demand that they be removed from your history. More often than not you will see those bad marks disappear; the effort is worth it. If you feel uneasy writing these letters, get a friend or family member who writes well or who may have some experience in the finance niche to help you. Do not go to the expense of having a lawyer do this. A decently articulate letter should suffice.Look for a Flexible SellerRight now, those looking to sell their homes are having the property sit on the market for months without prospects. Use this to your advantage. First off, many sellers will appreciate the fact that you are a first-time buyer. They have been there themselves. They may even be a bit sympathetic that you have poor credit. They may have been there themselves. Look for sales termed as Owner Carried Mortgage, Owner Financing, or Contract For Sale. With these sort of sales you will be making payments to the owner rather than to a financial institution such as a bank or credit union. Thus, you can avoid a lot of the regular loan hassles and expenses such as lenders fees. Also, your interest rates, in spite of your poor credit, could be close to market rates.Creativity CountsAs in the example above, a number of creative options exist to help you achieve home ownership. One of those would be Lease With Option to Buy. Sign a one-year lease under this option and prove to the landlord that you are a good risk by making timely lease payments. You might bring this up to any landlord who is leasing property that suits your fancy. Other options can be discovered just by looking in the classified section of a newspaper local to where you want to live. You may be pleasantly surprised at deals you might find with an owner eager to sell.Accept the ChallengeJust remember, being a prospective homeowner with poor credit is not so much a difficulty as it is a challenge. Look around. Keep your nose to the wind. Work on improving your credit score. Remember that right now the housing market is ruled by buyers. Even with poor credit, home ownership can become a reality.
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