Buying a home for the first time is probably the most exciting experience for any investor. A first time homebuyer enjoys the benefits of never having to pay rent and creating a long-term investment vehicle.
Bad Credit Influences your Chances of Buying a Home
The problem though is that it has become increasingly difficult for a first time homebuyer with bad credit to get a home loan. With the poor economy, lenders are less likely to help those with bad credit. At the same time, lenders who used to lend to those with bad credit may have folded.
Options for a First Time Home Buyer with Bad Credit to Get a Home Loan
Not all is lost though for those with bad credit. There are two ways that a first time homebuyer with bad credit can get a home loan:
- Get FHA loans
- Buy a home through a lease option
FHA Home Loans for Those with Bad Credit
If you are buying a home for the first time, FHA loans are the best option. Find a mortgage company that offers these government funded programs. You are likely to qualify and get better interest rates.
Lease Options for First Time Home Buyers
Find a home seller who is willing to lease the house to you as you build your credit. Most agreements allow you to use all or most of your rent payments towards a down payment for the home. It also allows you to improve your credit during the lease period.
Build your Bad Credit and Get Insurance
It is also prudent to get life insurance if you are getting a home loan. This only makes good financial sense since you want to make sure your family does not lose the home after you are gone. So take some time off and get term life insurance quote.
Tags: bad credit, first time home buyer, home loan