Buying A House With A Low Credit Score

If your credit problem isn't too serious, you may still be able to get a traditional loan. First, you should correct any errors on your credit report, and challenge any entries you think shouldn't be there. This is your legal right. If you can get it changed, then once those changes are reflected in your credit score, you may be able to apply again and get a loan for that home.

You also can go only to lenders who hold their own loans "in house." This means they don't sell them into the secondary market, which means the loans don't have to meet certain requirements. A bank which holds its own loans can make their own rules (to an extent). Ask around to see if some of your local banks or credit unions keep mortgage loans in their own portfolio. Few do these days, but some still do. It pays to ask.

A more creative way to overcome bad credit is to buy a house with another person. This isn't only for married couples. Any two people can buy a home together, and the lender will look at both credit histories. It might be tricky to buy a house with a friend, but it can be better for both compared to renting. For example, you might have a down payment, and your friend could have good credit. You could agree to sell the home five years later to recover your down payment and each of your respective shares of the equity that is built up from appreciation and the paying down of the loan.

Seller financing is another way to buy when you can't get a loan because of bad credit. Some homes have sold without credit checks and even with nothing down by sellers who financed the purchase. Their motivation is usually to get a higher price and/or to sell a problem property, but this doesn't rule out a good opportunity for you. When sellers don't offer terms, find out if they own their houses free and clear. If so, you could make an offer that involves payments to the owner rather than getting a loan from the bank.

Jumbo Loans for Larger Home Loans

In some real estate markets, a house in the $400,000 range may be considered a starter home. So the million dollar question is, "Why is it that a home loan in the mid $400's is considered a Jumbo Mortgage Loan?"

While most of us see the term "jumbo" as relative, Fannie Mae and Freddie Mac, two government sponsored mortgage entities, have their own opinions. Each year, a new "conforming loan limit" is published by these organizations.

The conforming loan limit is the maximum loan size eligible for purchase by either Fannie Mae or Freddie Mac, who purchase the underlying securities from mortgage originators. Those funds are then reinvested in new mortgages, and the flow-of-funds cycle continues.

The conforming loan limit, or "Jumbo Loan amount" is set every January. The current conforming loan limit is $417,000.

When a loan amount is higher than the conforming limit, it becomes a Jumbo Loan, or non-conforming loan, with slightly higher interest rates.

Jumbo Loans, compared with historically low mortgage rates, can bring greater flexibility for some home buyers to purchase the house they want and make the payment they want.

With interest rates so low, consumer interest in Jumbo Loans is very high. If you are looking at homes that wouild cause you to secure one of these "jumbo loans", talk to a mortgage expert to see if you qualify to get your jumbo loan with a low or no down payment. There are more options out there than most people understand, so it's important to talk with a professional in the industry before you start your home search.

If you have questions about jumbo loans, or any area pertaining to home loans, mortgages, or home buying, contact us. If we don't have the answers you're looking for, we'll find them for you, guaranteed. Just use the "comment" link below to send us your questions.

Is Anywhere Totally Safe from Disasters?

This is a question worth answering no matter where you live. People in some parts of the country are highly susceptible to hurricanes, while others face virtually no risk from them. Some live with the risk of earthquakes, others do not.

Recent flooding that swamped parts of the Midwest, including Indiana, Wisconsin and Iowa, caught many property owners unprotected. Only 1 percent of all Indiana homeowners have flood insurance. Wisconsin reports even less than that. People generally pass on federally backed flood coverage because they don't realize it falls outside standard home insurance or they underestimate the risk.

Wisconsin Insurance Commissioner Sean Dilweg expects damages from flooding that passed through his state to top $100 million. But of the 2 million households statewide, only about 13,600 had flood insurance policies.

A lack of flood insurance isn't limited to the Midwest. The National Flood Insurance Program estimates that only half the property owners were insured when hurricanes Katrina and Rita tore up the Gulf Coast in 2005. The program paid $15 billion to those who did have coverage during what it deems the costliest storm season on record.

Being in the early stages of the 2008 Hurricane Season, and in the aftermath of the unusual flooding in the midwest, NOW might be a great time for EVERYONE to check their homeowner's coverage. After disaster strikes is too late.

Leave us any comment you might have about this subject by clicking on the "comment" link below. As always, your email address will never be published on this blog, even though you need it to post your comment. We'd love to hear from you.

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Saving Big on Food

Is your grocery bill eating you alive? With soaring gas prices everywhere, here are some tips that may shave your bill by 20 percent or more and give you more at the end of the month for other things, hopefully not just pumping those food savings into your gas tank.  (Video run 1:15) 

We'll have more money saving tips for you throughout the next few weeks.