There are times when an individual’s credit rating doesn’t match their intentions.  When a borrower has met with the unexpected in life such as a divorce, medical bills, job losses or poor money management it can wreak havoc on their opportunities to get financing.  This can deter many individuals, especially when wanting to obtain a mortgage, discouraged.  The thought is that people with poor credit will never achieve homeownership however this is not necessarily the case.  People seeking home ownership with less than perfect credit should work with a mortgage broker to search out non-traditional methods and more creative financing to obtain a home loan.

The first step that people with poor credit should do when considering the possibilities of a future home purchase is to start to take steps to improve their credit.  A lengthy history of delinquent payments isn’t a good thing but the change in those habits can be.  A change in the habits you have with your bill paying can help creditors see that you are working towards change.  Start by resolving to pay down debt to less than thirty percent of your available credit line.  Don’t apply for more credit, pay creditors on time and eventually you will start to improve your credit score.

Mortgage lenders will want to see that you have history making a payment for housing.  It may make sense to rent for two years to establish a housing payment history.  During that time make sure that the payment for your rent is paid for on time, every month.  An occasional late car payment or credit card payment could be overlooked but it is crucial that mortgage lenders see your ability to pay housing consecutively for at least two years prior to receiving a mortgage.

During the time you are renting, work to save money for a down payment.  The larger the down payment on the home the more vested lenders will view you.  A solid down payment for a first time home buyer is twenty percent even though there are mortgage options that don’t require this large of a down payment it helps those with poor credit.

Another feasible option for homeowners with imperfect credit is to find a lease option that can lead into the possibility of ownership.  Motivated sellers can often be talked into a purchase agreement with an unconventional twist.  If you find the right seller you can even work in a deal where they use the money paid on leasing as payment towards the home.

A mortgage broker is the first individual that most individuals with poor credit should speak with before even thinking about looking for a home to buy.  Loan brokers have seen it all, more than your credit situation is not unique.