How to Buy a Home When You Can't Get Approved for Financing

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By 530shasta
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Buy a Home When You Can't Get Approved for Financing

Due to the recent financial fiasco it is becoming harder for home buyers to get approved for conventional financing as banks' lending practices are ever changing. What do you do if you still want to buy?

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

Vision
The ability to negotiate
Creative thinking
A down payment

Step 1

Look for homes that offer (OWC)owner financing AKA seller financing. Owner Carry-What this means is the owner of the property has agreed to accept payments (just like a bank would)over a period of determined time. With this type of transaction a real estate attorney is usually involved, however the terms are more flexible and easier to negotiate- because you are dealing with a person, not a bank.
Step 2

Lease option- With a lease option you are essentially renting with the "option" to purchase. How this usually works is you pay rent to the owner who agrees to apply some of your monthly payment to your down- payment. When the fund reach a pre-determined amount then you have the option of purchasing. With a lease option you will normally be payment about 1/4 more than you would if you were just paying rent.
Step 3

Fix your credit- A lot of lending agencies will work with clients to get their credit scores high enough to qualify for a mortgage. Some lenders have a department that deals with credit repair and analyzes exactly what it is that you need to do, like for example which credit accounts are hurting your FICO score the most and they will walk you through the process of fixing it. They will then be able to do what is known as a Rapid Re-score- which basically cuts down on time waiting for credit bureaus to respond and update your report.
Step 4

Tenants in common- Buy the home with another party that has a higher credit rating. Maybe a sibling or parent. You could even buy with more than one person to qualify, maybe you are a bachelor and can't afford to buy on your own, but would like to purchase as an investment, as do your other roommates. Each of the (3) parties would own 33% of the interest in the property.