First Time Buyer Home Loans

Getting a traditional mortgage loan has only gotten harder since the mortgage crash several years ago. 

Credit score requirements are higher, down payment amounts are higher and underwriting guidelines are much stricter about income and debt.

If you have been working on improving your credit scores but still can’t qualify because the lenders raised the bar on you, then consider doing what this young lady did.

This is a true story but I’m going to call this young lady Maria (not her real name) to protect her privacy. 

Maria had been struggling to get her debt paid off and to improve her credit scores since her divorce a few years ago.  She had a young son to support as well as herself.

Her son would need to start to school next year and she wanted to get into a neighborhood with a better school system for him to attend.  Her credit scores were not yet where they needed to be to qualify for a traditional mortgage loan.

She began to look for homes for sale by owner and asking them if they were willing to do a lease option for a year or two until she could get her credit scores where they needed to be.

After much seaching she was able to find a seller who was not only willing to do a lease option but would hold a mortgage on the property for two years and amortized over a 30 year period.  This would not only allow her to have time to improve her credit rating but would give her the opportunity to take advantage of the first time home buyer tax credit.

Because the loan was amoterized over 30 years the payments were just a little bit more than she had been paying in rent for their apartment.  And the house was in a much nicer neighborhood and in a good school district for her son.

She much refi the mortgage by the end of two years but that should give her plenty of time to get her credit rating in good standing so she can qualify for a mortgage from a traditional lender.

These opportunities are not necessarily easy to find but this is proof that they are out there.  Sometimes, you have to suggest, or sell,  this scenario to the seller yourself. You may have to make a lot of calls but in the end it can be worth it while you can still buy a house for a good price.

It would be good to get a copy of your own credit report and take that with you to talk with the owners.  You can point out the things that you have corrected and what you are doing to correct anything that is still holding your credit scores back.

Show them that you mean business when it comes to improving your credit scores and that you will be able to refinance your mortagage with them at the end of the one or two year term.