Buying your first home is a great investment in your future. But if you have bad credit, buying the home of your dreams can seem out of reach. That doesn’t mean it is. You just need to know where to start and how to make your application as strong as possible.
10 Tips to Make Buying Your First Home with Bad Credit Easy
Buying your first home with bad credit is possible. Here are a few proven tips to help make it easier.
1. Know Your Credit Score
If you think your credit score is on the low end, find out exactly where you stand. You can check your credit score for free online.
2. Shop Around for Loans
Different lenders will view your credit different ways. This means you’ll need to shop around. Get quotes from at least three lenders and choose the one that offers you the best loan terms and interest rate.
3. Start Paying Down Existing Debt
The more debt you have, the harder it will be to qualify for a loan. Start paying off your existing debt as much as you can before buying your first home. This will boost your credit score over time.
4. Look for Homes You Can Afford
When you’re buying your first home, look at properties you can truly afford. This means you might not get the home of your dreams, but you’ll keep your budget intact.
5. Make a Larger Down Payment
If you can, make a larger down payment on the loan. The more you pay upfront, the stronger your loan application will be.
6. Choose the Right Type of Loan
There are loans for first-time buyers with less than perfect credit. Talk to your mortgage broker about those options.
7. Be Ready for Higher Interest Rates
Bad credit means lenders will have less confidence in your application. Be ready for higher interest rates on each loan you apply for.
8. Look for Ways to Boost Your Income
Find ways to increase your income before you apply. The more you make, the better your debt-to-income ratio will be.
9. Consider Waiting
There’s no shame in waiting until your credit score improves. Pay off your debt and only buy when you’re ready.
10. Consolidate Your Debt
If you have too much debt and struggle to keep up with payments, consolidate it. This will give you a lower interest rate and makes paying your debt down simpler.
Get Started Buying Your First Home Now
Are you thinking of buying your first home with bad credit? Contact our team today to learn more about your options.