You want to buy a home, but you don’t fit the mold. Maybe your income is too low or the house is too expensive. You may own your own business. Credit problems or a shortage of cash for a down payment could stand in your way.There are many ways around problems like yours. We’ve collected a few solutions here.
Just starting out?
Do your research: This is a great time to be buying your first home. Lenders and government agencies are working overtime to help you clear that first hurdle — the down payment. Some programs help first-time buyers qualify for as little as 3 percent down. Check out an overview of these programs and an analysis of the pros and cons. Some institutions offer their own programs. For a list of state agencies that may be able to answer your questions, click here.
Clean it up: Your ability to get a loan rests largely on a network of credit reporting agencies. This credit report often is a critical factor in credit scoring systems that lenders use to issue mortgages. So, if you’re considering buying a home, it’s a good idea to check your credit report to find out where you stand — and make sure it’s correct. If you can’t resolve all the problems, be sure you understand what less-than-perfect credit means.
Ready to apply? Perservere: Sometimes it’s not a question of getting turned down. It’s just that the loan you applied for may not be the loan you are ultimately approved for. The mortgage lender may offer a different program or a counter offer. Or the lender may grant the loan, but with certain conditions to be met before closing. Consider these solutions. If you are buying a condo or looking for a no-documentation loan, you may have additional hurdles.
Still worried about qualifying? Consider subprime borrowing: The bad credit problem traps plenty of people, but a booming business among so-called “subprime” lenders means money likely will be available. Read this in-depth look at the subprime market and check out lenders who offer these subprime loans. After a few years of establishing good credit under a subprime loan, you can refinance with a conventional loan, too.
Don’t give up on that dream home: If the home you have your heart set on costs more than a certain limit, it qualifies as a “jumbo” loan and the rate will be higher. In 2002, jumbo loans begin at $300,700. The amount changes yearly. You may qualify in most respects for that fancy home, but be short on cash because you are selling another home. You may want to look for a “bridge loan” to span the gap between the two transactions. But, experts advise caution on these costly loans. There are other more exotic solutions, one of which involves using stocks and bonds as collateral. Be sure to check Bankrate.com’s jumbo mortgage rates before locking in.
Do you have concerns not addressed here? Let us know what they are and we will try to help you find the answers. Submit your questions here.