Most people do not have hundreds of thousands of dollars sitting around. Consequently, most people need to obtain real estate financing in order to purchase a house. Unfortunately, buying a house is complicated by itself. Real estate financing is an entire world all together.
When applying for real estate financing, it pays to have a handle on your own money and credit situation. The very first thing you must do is to obtain a copy of your credit report with credit scores. Having poor credit doesn’t necessarily disqualify you from obtaining real estate financing. However, you need to know where you stand so you can proceed the correct way. If you have reasonably good credit, which means that you haven’t been more than 30 days late on one or two of your bills in the past year, you have a good shot at being approved for a conventional or a government (FHA) mortgage. These mortgages will afford you the lowest rates, fees, and payments. The higher your credit score, the better the terms you will receive.
If you have some minor blemishes on your credit, such as a couple of 60-day late payments and a collection or two, you might still be able to qualify for a conventional mortgage, but it will require a lot of explaining. More likely, you will qualify for a “sub-prime” mortgage. Sub-prime real estate lenders take on more risk because they specialize in lending to people with challenged credit. Because of the increased risk, they charge higher rates and fees. This translates into higher payments, more cash out of your pocket, and having to purchase a more affordable home.
If you have major blemishes on your credit, qualifying for real estate financing will be more difficult, but not impossible. A bankruptcy, for example, will disqualify you from a conventional mortgage if the bankruptcy has been discharged for less than two years. However, even with a recent bankruptcy, you can still qualify for sub prime real estate financing. If your bankruptcy has been discharged for more than two years and you have rebuilt your credit during those two years, you can qualify for a conventional mortgage. Even with a bankruptcy, you can obtain a mortgage at the same rates and fees as someone who has had absolutely pristine credit their entire lives. Once you have a handle on your credit, you can apply for a mortgage and have a reasonable confidence that you’ll be approved.
You should get a pre-approval for a mortgage before you shop for a house. By doing so, you’ll know exactly how much real estate you can afford so you’re not wasting your time shopping outside of your price range. You will also have a better chance of having your offer accepted by the seller and can greatly shorten the entire home buying process.
Once you have your financing approved, you are ready to start looking for your dream home. Give Full Potential Real Estate a call to put that dream in motion. We have worked with buyers in North and South Carolina to find their dream home.
Cheryl from Full Potential Real Estate has been more than helpful to us. We are looking to relocate from 3 states away which is not an easy task. Cheryl has taken the time to be our eyes and ears and take us on virtual tours of homes we have been interested in. We would definitely recommend Cheryl to anyone interested in purchasing real estate in the Myrtle Beach and surrounding areas.
Full Potential Real Estate, LLC
Myrtle Beach, SC 29577