3 Tips For Buying A Home With No Credit
Posted on: 31 July 2018
Buying a home is a major financial decision. For many people, purchasing a home is something that also requires financing. There are a variety of lenders to choose from who will take a look at your financial history and income in order to determine how much they are willing to lend to you. While many who are looking to purchase a home have a credit score and a lengthy financial history for lenders to look at, others may be going into a home purchase with little to no credit history. If you have no credit, here are three tips for purchasing a home.
Shop Around
If you are looking to purchase a home but have no credit, there are a few lenders who may be willing to work with you. However, you may have to shop around in order to find one. Smaller lenders and credit unions may be willing to offer you a mortgage even if you have no credit history. Many will also look at your payment history for things like rent and utilities when determining whether or not to approve you for a loan. A mortgage broker may also be able to help you find a lender if you are in this situation. Mortgage brokers act as middlemen between you and lenders. They do charge a loan origination fee, which is typically between 1 and 2 percent of the value of the loan.
Save Up For A Down Payment
If you are looking for a mortgage but have no credit history, a larger down payment may increase your odds of being approved. A larger down payment reduces the loan-to-value ratio and shows lenders that you are serious about purchasing a home. Having a down payment of 20 percent or more may be a good strategy in this situation. A larger down payment will also allow you to avoid having to pay for private mortgage insurance.
Consider Other Options
When it comes to buying homes with no credit, sometimes you may need to think outside the box. Some landlords offer lease-to-own homes where a portion of your rent goes toward a down payment on the home and after a certain amount of time your landlord sells it to you. If you have enough cash, you may want to consider making an all-cash offer on any homes that you are interested in. Often homeowners will accept lower offers if they are cash offers.
If you are looking to buy a home with no credit, it can be difficult, but it is possible. Some lenders like SWE Homes offer no credit financing. However, you may need to shop around. Saving up for a down payment and considering alternative options for buying a home can also ensure that you are able to own your own home even without a credit history.
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