Profile picture for ptaggart4

I'd like to buy a house-tired of renting, but poor credit. Is there any way I can find a home?

Are there any lease w/option to buy programs, for sale by owner that could help me purchase a hame with poor credit?  I would be a first time home buyer. I would also like to stay in the neighborhood that I currently live in.(Williamsville/Clarence)
  • April 23 2009 - US
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Answers (6)

The million dollar question is what is your exact credit score?  Even if the score is slightly low you still have options to get your score increased in a short period of time.  Get your credit in order then buy a house. I would forget the lease option.  Put together a plan and be patient. 
  • September 23 2013
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I will try to be brief - imo -  forget a lease w/ an option to own.

You stand to lose your upfront "option"  money, along with any overage you pay over and above the normal rent amount (contrary to what you may think, - lease w/ an option to buy doesn't mean you simply pay rent and if you decide to buy the house at the end of the lease all that rent is applied to the purchase price).......it doesn't work that way.

If your credit is poor and you do not qualify NOW for a loan - you better make sure you'd qualify later on or say goodbye to that upfront money.
You LOSE it if you do not buy the home for ANY reason!

Oh, and....... do you have a down payment and savings over and above a down payment??
If the answer is no.....you're not ready to buy....work on your credit scores.......rent until you have savings and can qualify for a loan.
That way you will have a full selection of homes from which to choose - you won't with a rent/option deal.

Good luck.....

Lots of other pitfalls for a buyer......the seller has the upper hand........get legal advice before entering into any such agreement.
  • September 21 2013
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Let me clarify something said about land contracts here.  A due on sale in a mortgage does NOT mean the seller has no legal authority to sell; it just means IF the lender finds out, they have the option to call it due.  Having closed over 700 land sale contracts over 23 years, I've seen it happen ONCE, and that was because the seller called up the lender and pushed the issue.

More common issue is that seller does not pay his underlying loan, which can wipe out the buyer's interest if the lender with that underlying loan forecloses it.

Simple solution: use a third party escrow company to collect payments from buyer and make directly to seller.

  • September 21 2013
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If you do a landsale contract make sure the seller has the legal ability to do so.  Most mortgage lenders no longer allow wraparound mortgages.  Has a little something to do with a savings and loan thing that caused a market crash and recession in 1992.  
So here's the way it works.  Seller has a loan for 6% on a home.  You want to buy it on contract for 8%.  You think to yourself great I got the home bought just 359 payments to go.  

36 payments later you find out the seller had no legal authority to sell the home on contract.  The seller has not paid the first mortgage in ... 18 months.  You get evicted and your money is gone.  Down payments gone.  Xtra money on interest and principle is gone.  

Most importantly, the seller is probably gone.  You have to find them and hope the is blood to be squeezed out of the beet. 

Even if the seller in this example does not default on payment, the vast majority of mortgage contracts allow the mortgage lender to make the note due  and payable in 30 days in the event they find out the home has been improperly sold.
  • April 26 2009
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Profile picture for wetdawgs
Lease with option to buy are all at the discretion of the owner.   Therefore, looking in craiglist and the local papers are the best place to find those options.  (I know in my area, a major metro area, they are very rare.  Most sellers want to move on and need their money out of the house.)

Usually with lease to option to buy, a down payment is required up front and monthly rent is higher than a normal rent because part of it (only part of it) is being credited towards the purchase price.   The purchase price is agree upon up front, as well as the time when you have to obtain conventional financing.    Very few "lease option to buy" situations actually culminate in purchase of a house, and are more expensive (in general) than renting.

Therefore, if you are tired of renting the more traditional way is to work to repair your credit, save up a down payment, then start looking.
  • April 25 2009
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Your best bet would be to search your local classifieds (newspaper or online)

If you do find something...you need to have a plan and goals on fixing your credit, whatever the problems are. I've seen time and time again where people get a rent2own or land contract and think that is it. You still need to fix your credit because the owner is going to set a date in which you actually buy it by obtaining a traditional mortgage. Also, if you do get into one, make the payments on time by check...keep the canceled checks as your proof of payment.

Just some tips...Good luck
  • April 23 2009
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