Just because you’ve had some less than stellar luck in the credit department shouldn’t mean you can’t own a home.
If you’re adamant about becoming a homeowner and your credit score isn’t your friend, here are some tips to take into consideration when on the road to homeownership:
- Take advantage of any government perks for first-time home buyers.Ask your realtor to point you in the direction of any low-interest loans or grants available to those buying real estate for the first time. Check on both federal and provincial incentives. There are many people today with poor credit ratings or who have had to declare bankruptcy. There are ways to overcome the obstacles if you’re a first time home buyer.
- Planning and discipline.If you’re credit-challenged, you will have to become patient, disciplined and plan carefully when it comes to buying your first home. If you have declared bankruptcy, you will have to wait at least two years after being discharged from the bankruptcy or a consumer proposal. You will have to be employed with a provable, steady income.
- Uninsured or private lenderLooking into unconventional mortgages may be another option available to first-time home buyers. Uninsured or private lenders will require at least a 25 per cent down payment.
- Higher interest rate.If you’re prepared to pay a higher interest rate than the current prime, your chances may be better for homeownership. Mortgage loans are based on the risk of the purchaser. Lenders will usually look at your personal situation and if you’re fully employed with a steady income. If you can prove you’ve been paying your bills on time, that will be taken into consideration as well.
- Re-establish your credit.Lenders want to see atonement for past credit sins. The best way of doing that is to re-establish your credit. This can consist of credit card payments, car payments, or any other loan payments made on time and consistently. You might want to think about getting a secured credit card from a major bank.
- Take it easy.Don’t be in a hurry. Take time to re-establish your credit. Stash away all the money you can for a down payment and make sure to create an emergency fund should you find yourself in a money crunch again. The goal is to make yourself appealing again to lenders. Do everything you can to show you’re on the right track.