Thinking about How to Buy a House with Bad Credit in Canada? Well, you will absolutely agree with me that:
Home buying via a reputable real estate agency is a dream for many, but not everyone has the perfect credit score to bring this dream to life.
So how do you buy a house even though your credit score is pretty bad?
The good news is that there are simple ways home buyers with bad credit can also secure a house when they need one most.
In this Post, therefore, you will discover How to Buy a House with Bad Credit. In fact, these 11 tips are insanely actionable that the Kenmorris team always recommend them.
As a bonus too, we have added simple takeaway tips on how to improve your credit score quickly.
Let’s dive right into itthe:
How To Buy A House With Bad Credit And No Money Down
#1. Start Saving Now
While you may not expect us to say this, it is actually a wise counsel if you really want to be a landlord. Begin to pay yourself at least 20% of whatever you earn as salary.
#2. Discover RRSP Programs
RRSP is Registered Retirement Saving Plan, and it is a retirement savings plan that you establish, and to which you or your spouse contribute. The RRSP programs are usually established at places of work.
#3. Investigate First Time Incentive Plan
This is usually a shared equity mortgage where the government offers you financing to help you reduce your monthly mortgage payment.
#4. Research Lenders
There are many lenders who may be willing to help you finance your dream home.
Looking around your area and searching online are good ways to start narrowing.
With the right knowledge, you’ll not only find a lender who will approve your bad credit mortgage application but also a realtor to help guide you through this process.
#5. Look for bad credit home loans
Bad credit home loans offer you a chance to own a home with varying levels of down payment.
There may be many bad credit home loans in your area. All you need is to identify them and make an application.
You can ask friends or colleagues for recommendations or contact a local real estate broker for a reliable option.
#6. Look for a co-signer
If you can’t get approved for a mortgage on your own, consider applying with someone else who has a good credit score.
You might consider asking a friend or family member with a good credit score to co-sign for you.
A co-signer can help you buy a house if your credit score is too low, but a co-signer becomes equally responsible for the entire debt.
#7. Confirm your qualification for down payment assistance
You can also buy a house with bad credit if you are qualified for down payment assistance.
Not everyone is eligible, but many more people will be able to buy a house with bad credit if they find out they qualify for this option.
To confirm whether you are eligible for down payment assistance in your area, visit www.downpaymentresource.com.
#8. Compare different lenders
Banks are not the only lenders anymore. The real estate market has evolved over the years and has opened up more options for borrowers.
Fortunately, there is a lot of competition in the marketplace.
It means that the opportunities for people with damaged credit to secure a mortgage loan are better than they have ever been.
There are hundreds of lenders out there competing for your business, so you’ll want to do your research and make comparisons before settling with one.
#9. Offer a larger down payment
Buying a house with bad credit and 20% down payment (depending on how much the house costs) is one important step in buying a house with bad credit that we highly recommend.
With a substantial down payment, buyers with a bad credit score can overcome even the biggest hurdles on the road to homeownership.
Without a substantial down payment, many lenders won’t even look at your loan application.
#10. Consider A Rental Income First
Tips To Improving Your Credit Score
Your credit score is the tool lenders use to decide how likely they will be repaid on time if they grant you a credit card or loan.
Therefore, a good credit score is an important factor in your financial life and is the major factor that is considered when you apply for a mortgage to finance your home.
While it is possible to buy a house with bad credit, good credit, however, makes the process easier and helps you to get the best mortgage deals.
1. Check your credit report for free
A mistake on your credit report could be hurting your credit.
Protect your score and build it up by correcting errors on your credit reports.
Visit www.annualcreditreport.com to check your credit report for free and see what you need to do to improve it.
2. Pay bills on time
Late payments can hurt your credit score and stay on your credit report for up to seven years, so paying on time is the key to a good score.
If you’ve missed a payment, you must act fast.
Call the creditor immediately and ask if they would be considered not reporting a missed payment from your account in the future.
3. Ask for higher credit limits
When you make a purchase and your credit limit increases, while your balance stays the same, you lower your credit utilization ratio, helping your score.
One of the easiest ways to increase your credit limit is by adding more years of positive credit experience to your credit history.
4. Limit your hard inquiries request
There are two types of inquiries that can be made into your credit history, soft and hard inquiries.
A soft inquiry refers to checking your credit by yourself, your employer, bank checks, etc. This type of check does not harm your credit score.
A hard inquiry, on the other hand, refers to an application for a new credit card, an auto loan, a mortgage, etc. which can, in the long run, damage your credit score.
5. Forward Changed Address To Creditors
Whenever yo move away from your current address, make sure to send the new address to your creditors. Do not occasion a reason to see you as insincere or fraudulent.
How To Buy A House With Bad Credit canada – Bottom Line
If you are struggling to purchase a home because of your credit history, all hope is not lost.
Understanding what you are looking for and the price range you can afford helps determine how to buy a house with bad credit.
Now that you know how to buy that dream house even with a bad credit score, feel free to share with us in the comment box below which of the 10 tips you will execute first and why. You can also freely discuss your housing challenges with us too for a professional guide.