General Question

sammibabi6's avatar

Is it worth looking into a foreclosure house if you don't have good credit ?

Asked by sammibabi6 (150points) July 14th, 2009

Our lease is up at the end of August, and I didn’t know if it was possible to look into a foreclosure house or just stick with renting apartments or house. . ..

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7 Answers

cwilbur's avatar

If your lease is up at the end of August, you’re probably too late to find a house to move into by September 1st. If everything goes perfectly smoothly and as quickly as possible, it still takes a solid month to deal with all the paperwork involved in buying a house. And if you’re looking at a foreclosure situation, things will not go smoothly or as quickly as possible.

This is probably the best market to buy a house in that we’ll see for a while: interest rates are low, and there are a lot of people trying to sell. So it might be worth your while to start the process and meanwhile see if you can get a one-month extension to your lease. Your landlord might be willing.

There are loan programs (most significantly FHA guaranteed loans) that are available to people even with less-than-perfect credit. The cutoff for those loans is usually around a FICO score of 620, and the evaluation is based more on your employment history, your income, and your income-to-debt ratio than it is on your credit rating. You’ll still need at least 3.5% down, though – the days of no-money-down home loans ended with the credit crunch.

PupnTaco's avatar

If your credit is poor, you won’t be able to get a loan for a foreclosure or any other property. Standards are the same regardless of the source of the property for sale.

sammibabi6's avatar

@PupnTaco I have the money just not the credit. . .

cwilbur's avatar

@sammibabi6: if you have 20% to put down, many mortgage lenders won’t even bother to look at your credit rating. If you have 3.5% to put down, you can look for an FHA loan, which has different credit requirements than generic mortgages.

(But if you do have 20% to put down, why is your credit rating so bad in the first place?)

sammibabi6's avatar

@cwilbur my credit is bad because i was young and stupid a couple years ago and wasn’t responsible and got a credit card. . .

PupnTaco's avatar

If you have cash to pay for the house free & clear, great. But if it’s just a large down payment or the monthly mortgage you’re talking about, you’ll still need to meet standards for a loan.

ABoyNamedBoobs03's avatar

@sammibabi6 going through the same thing right now man. I’m still surprised I even got student loans, I was a dumbass with my money when I was 18 and it’s really biting me now.

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