Is it possible to get a mortgage loan credit with bad credit? A lot of people really want to know because they’re in that situation. Let’s talk about it!
If someone wanted to buy a property or invest in real estate but they had bad credit, do you think it’s still possible that they could get a mortgage loan credit and still buy a property? No? Is it tough?
3 Different Mortgage loan credit strategies
1. Find a high volume broker
All right let’s jump into the meat and potatoes on the subject. First thing, you have three different strategies. Here’s the first one. You’ve got to work with a loan broker or a mortgage officer that is brokering out to many different banks and is doing high volume. Let’s talk about why. If you go directly to a bank and I you walk into the bank, they’re always going to want to offer you and prequalify you for some type of loan. But the bottom line is that’s just one bank and not all banks are the same, they weren’t all created equal and they have different rules.
So, I recommend everyone going to a broker that works with twenty – thirty – forty – fifty different banks. They’re not going to work with that many unless they’re a serious operation doing high volume. So you may want to ask how many hundreds of millions of dollars worth of real estate do you broker out each year. If they give you a funny look like: are you crazy? that’s a lot of volume! That’s not your loan officer likely that can find the right option for you. Because there are banks out there that work with people that do have better poor credit.
2. Fix your credit score
Second thing I want to talk about is what do you do if you have bad credit to actually get it fixed? How important do you think credit it’s? How long you think it would take to fix your credit? Eight years? A week? How do you fix that credit? This strategy really comes down to doing some credit maintenance. Sometimes we’ve got hiccups, sometimes we’re late on a payment and then all of a sudden we say: “Hey, I got to get serious about qualifying for a mortgage.” Even if you’re using your credit to buy a lot of real estate the way I have in the past. You’re going to need to do maintenance.
Whether you call it repair or maintenance, it’s good to find a company out there that you can trust.
This is not one of those things where less is more. You’re not looking for the cheapest program. You’re looking for a company that has been in business for a really long time, has worked with thousands of clients. And keyword is attorney. If an attorneys involved it’s more of a legitimate program and what they’re doing is they’re using a nice little strategy.
What they do is they’re going to challenge the inquiries. For example, I remember that one time I was trying to qualify for a mortgage, and I found out that my credit had dropped in the last 90 days by 50 points. I was alarmed! When I found out why, it’s because that last couple of months I had been shopping at The Gap or J.C. Penney’s or wherever. And they kept offering me that seductive 10 percent discount, if I’d use the in-store credit card to play for it. Well, I didn’t know that every time I was getting that discount to save a few bucks that I was actually putting out an inquiry and that would temporarily drop my credit.
So the credit repair company I worked with they challenge the inquiries. By law, if you send a challenge letter to whatever company did the inquiry, if they don’t report back within a short timeframe with the response and whether the inquiry was legitimate or not. Then they have to drop it by law, because the credit bureau has to report that. And that’s really good news for you because most companies are not set up to take those requests seriously. So they just kind of fall by the wayside. I actually saw my 50 point drop go back up 80 points on my credit got stronger. OK find a good credit repair company.
3. Seller financing
But here’s the third thing if you find a broker that doesn’t have a bank that can give you an option and a credit repair is going to take too long for your needs. Then your third resort is to do sellar financing. A seller financing is basically where someone else already has the house that you want. Instead of selling it, they’re actually willing to finance you the house. Now that’s really neat because they’re not a bank and they’ve got different criteria. They might ask for a little bit of a different down payment. They might ask for a higher payment. Seller financing is an amazing strategy for actually walking into the house that you want.
How do you find these? What you do as you go through the paper, find the house that you want, typically seller- financed are not represented by realtors. So if you have a “For Sale By Owner” you could call them up and say: “hey, I’m not in a position to buy your house, but would you rent it to me or would you do a lease option, and and work with me until I could buy it in a couple years because I’m doing a couple of things with my credit?” And there’s a lot of people out there that are willing to do that. And guess what, you just negotiated yourself right past the bank by using the person that has the mortgage, has the bank. And boom, you’re right in your house!
Get yourself represented on title
Now here’s the hidden strategy with this really great deal, that if you seller finance yourself into a deal. You want to negotiate it where they’ll actually put you on title. Because if you’re represented on title for at least two years. Then after two years you can actually refinance onto the house. Now, think about that. You basically back-doored yourself into a super easy program that most banks will do. Because if they see you’ve been on title for two years, then they’re going to say: “well, why wouldn’t we let them refinance”.
And qualifying for a refinance is way easier than qualifying for a purchase.
So what’s the big moral the story? Listen, if you’ve got bad credit, you’ve got options for getting mortgage loan credit. You can get into real estate and you don’t have to wait. If you need to wait or feel like that would be the best option for you then just focus on doing some credit making, some credit repair and stick with that. That’s the key, real estate done correctly is a long term play. Getting into a home and having that slice of the American dream is really key. So, stick with it!