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Buying a home with bad credit in Florida

Buying a home with bad credit in Florida

Buying a home in Florida is your long standing dream. But you do not have good credit score to approach a lender for a mortgage loan. Property prices in Florida are also quite expensive, making it very difficult for common people to even think of homeownership. However, there are ways in which it is possible for an individual with bad credit to realize his dream of ownership. There are many programs being run by the government to help people in buying a home in Florida. It is possible to become a homeowner if you qualify for one of these programs.

Save large amount of money to pay as down payment

Just like your GPA that is looked at by every college before granting admission to a student, all lenders take a close look at the credit report of the applicant before deciding to approve a mortgage loan. One way of overcoming the hurdle of bad credit score is to save enough money to pay for the down payment. If you are paying a size-able amount as down payment, lenders may accept your application as it lowers their risk of a default. You already own substantial equity in the property you are buying to reassure the lender that you will be able to repay the remaining amount in easy installments. Large down payment lowers LTV ratio and makes lenders comfortable about your prospects.

If you do not have enough savings in your bank account and you also have a bad credit score, your only option of buying a home in Florida lies through government programs.

FHA Loans

These are mortgage loans that are partly secured by FHA. Their main aim is to help people with little money and bad credit in realizing their dreams of homeownership. Under these loans, people with low credit scores can buy a home with as small as 3.5% down payment. FHA loans are applicable in Florida as well as other states of the country.  You can also buy a mobile home in Florida with the help of FHA loan. If you are a first time homebuyer, FHA loans are the best option for you if you do not have sufficient savings and also have a poor credit score. Low down payment requirements of these loans make it possible for a common man to dream of his own home. Also, FHA loans are flexible when it comes to choosing different types of properties as your home in Florida.

You need to have a credit score of 580 or higher to be eligible for low down payment features of a FHA loan. But it is possible to still qualify for FHA loan if your credit score hovers below this mark. You need to put forward a down payment of 10% of the value of the property to secure FHA loan in such a case.

USDA Loans

USDA Loans are another option for a Florida citizen to become a homeowner. This special program has been initiated by the federal government to help families buy homes in rural areas. These loans are available for people with poor credit and little down payment to help them realize their dreams of homeownership. The property should be located in a designated rural area in one of the counties included in the program and its value should not exceed the limit specified in the program.

VA Loans

If you are an active duty or even a retired member of the armed forces, you need not worry about down payment or high interest rates to buy a home in Florida. VA loans are easily available to veterans and active duty personnel from armed forces and they are guaranteed by the Department of Veteran Affairs. VA loans have no requirements in terms of credit scores and you can secure a VA mortgage loan with a poor credit score.

Option of rent to own

This is a wonderful way to become a homeowner if you do not have a good credit score and also do not have large amount of money in your bank to pay as down payment. Obviously you cannot a lender to give you mortgage loan. You need to find a homeowner who is motivated to sell but cannot sell his home through traditional route because of one or the other reasons. You can reside in the home as a tenant and promise to buy the home after a specified period of time. You agree to pay a higher rent every month, a part of which goes towards payment of the value of the home. Rent to own arrangement gives you time to improve your credit and arrange financing in future to pay to the owner to buy the property.


Make a family member or friend with good credit score to become a co-signer

If you have a poor credit score, your application for a home loan can be rejected by a lender. But if you can rope in a family member or a close friend with excellent credit score to become a so-signer on your application, it is possible to avail a mortgage loan and become a homeowner in Florida. In such a case, the credit of your co-signer can take a beating if you are not regular with your repayments. On the other hand, you can hope to improve your own credit score by paying your monthly repayments on time. Soon, you can become eligible for a more favorable program with low down payment and low mortgage rates.

Bad credit on account of bankruptcy If you have filed for a bankruptcy in recent past, it could have a severe negative impact on your credit. In Florida, you may have to wait for a long time before you can apply for a mortgage loan after filing bankruptcy. But VA and FHA loans have very generous waiting periods for those who have a poor credit after filing bankruptcy. You can secure a loan under these programs to buy a new home for your family after 2 years of filing a bankruptcy.






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    March 9, 2016 at 1:52 am

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