Profile picture for user6527252

Can I buy with bad credit?

I "retired" and moved to Chicago at 27 last year. I spent my retirement while I was trying to find a new job and have fallen into some hefty debt (more than $5,000, less than $10,000). I am renting and my lease renews on 7/1. I start my new job at $72,000 a year but my credit is in total shambles as a result of my "retirement" period while trying to find additional work. Given my income, can I qualify for a mortgage at a higher rate and once I've paid my debts down, refinance for a lesser value? I'm interested in buying a 1-3 bedroom, dog friendly condo in the Edgewater area of Chicago. It seems like a much better idea to buy than to go through this process of renting and never saving for a down payment. Any guidance is appreciated.
  • March 11 2014 - Chicago
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Answers (10)

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Profile picture for Ofe Polack
I am sorry about the problems you have experienced, hopefully they are behind you and now you have a bright future ahead.

I suggest that you should try to contact at least 3 mortgage brokers and discuss your situation.  Without knowing all the details of your debt, I probably will suggest that it would suit you best to rent for a while until you are able to clear your debt, then your interest rate will be better.

In any event, may the best thing happen for you today or tomorrow!  God bless you!
  • March 12 2014
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FHA allows for lower credit scores.It is possible to purchase a home even if you have a low credit score. The basic requirement will be that  you must demonstrate that you have had no late payments in the last 12-months. Re-established credit is key to being able to purchase. The credit requirements are less strict with FHA compared to Conventional and it is typical for people starting over to use FHA.

Very hard to say what is best for you because I have not seen your credit report. You are allowed a free credit report each year because of the Fair Credit Reporting Act. You should get a report from each major reporting bureau and share this information with three loan officers. With proper guidance, you should be advised as to all your options or what needs to be done in order to have adequate credit for a loan approval.

The "Good News" is that several lenders are now offering new loan programs for those with less than perfect credit.
  • April 22 2014
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Profile picture for John Steeby
This is something I hear quite a bit. As a licensed real estate instructor and practitioner over the last 18 years, I've seen the market change dramatically.

And the recent change in the federal underwriting standards have made it a challenge for even well qualifies purchasers.

You best bet for success is to speak with a lender now. Even if you can not make the purchase in the short term, a good lender should be able to counsel you on what actions you will need to take to insure a mortgage in the future.

Anything is possible. Happy house hunting!
  • April 05 2014
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Profile picture for Evelyn S. Fred
Check with a lender, he/she can tell you what steps you need to take to either qualify now or later.  I recommend you call [deleted by Zillow moderator. Please see our Good Neighbor Policy for posting guidelines]
Good luck!        
  • March 13 2014
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It depends, how bad is your credit exactly? Do you happen to know your exact scores? If they are at least above 580, then you have a chance at obtaining a loan. Some lenders can go as low as 580 when it comes to mortgages. If you are below 580, then you may want to spend some time fixing your credit. The simplest way to fix your credit is to pay off your taxes and revolving credit balance on time. There are also other important financial factors such as debt, income, expenses, assets, employment, down payment, as well as credit. The best thing for you to do is to speak with a knowledgeable lender to see if you can get started on financing a new home. If you need additional assistance, feel free to reach out. Good luck!

  • March 12 2014
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Depending on your score, it may be possible to buy now.Our lenders work with credit scores as low as 550.  It would be a good idea to have your credit reviewed now so that you fix what is needed and so you  will be ready when your lease is up in July.

If you would like more information, please click on my logo and I would be happy to help.


Best regards

Patty Harrison

  • March 12 2014
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I have sold a few units in Edgewater ..in fact in the Edgewater Glen area which has the nicest stuff and there is good value in that hood.  The lenders are looking for good rental history, 2 years of steady income, scores above 625 and debt ratios or often referred to as the back end of less than 40% DTI..this is a guide line and there is no point in doing anything until you let a good lender who I recommend run your credit and take your application and give you a pre approval.  do not go on line and I would stick with a broker over a bank . do your leg work by coming to my office and getting set up.  I am in Lincoln park
  • March 12 2014
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Reach out to a lender they are the best people to help you with this.
  • March 12 2014
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Profile picture for user6527252
Let me start my new job (3/21) and then I'll reach out to you. Thanks man!
  • March 11 2014
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Profile picture for Matt Laricy
There is only one way to find out. That is to speak to a lender. Let me know if you need some contact info. Thanks! 
  • March 11 2014
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