Do you want to buy a home but lack the credit? Some people mistakenly think that their lack of credit puts them in a position of not being able to qualify for a home. There are a few options for individuals in this predicament. The following are a few options that could make your dream of home ownership a reality.
Lease to Own
This is an arrangement that you may be able to negotiate with a homeowner. It involves making payments on a home with the option to buy it. Ensure that you understand the terms of the lease and the obligations you have to meet to qualify to buy. This arrangement works for some people because the property owner can decide who they want to lease to and may not consider credit as a primary factor.
Alternate Credit Proof
Perhaps you have types of credit that are not reported to credit bureaus. Rent receipts, checking accounts in good standing, and utility bills are examples of proof of alternate credit that could be considered. Some lenders may not accept this type of proof, but others may go through the process of verifying the documents and considering them as proof of existing credit.
Perhaps you are in the odd situation where you have the income to afford a home but having no credit is posing as a stumbling block. This is something that sometimes affects recent college graduates. It can also happen when someone receives a lump sum of money from being an insurance beneficiary, winning the lottery, or receiving a settlement. If either of these occurs, you can try to get a guarantor to sign on your behalf. Guarantors serve similar roles as cosigners. They agree to be responsible for the debt if you default on the loan.
Even if you have enough money to pay for a home in cash, making a large down payment and getting a guarantor for a portion of the home is ideal. This is because you would be able to establish some credit by making monthly mortgage payments. After some of your contractual obligations are met and a history of payments are made, it is possible for the guarantor's name to be removed from the mortgage.
A mortgage company is a good resource to use for more information about buying homes with no credit. They can also help you to determine other ways to get no credit financing housing or ways to establish credit. For more information, contact companies like SWE Homes.