California is a beautiful place to live There is no doubt about that. But, to live in California you must pay the price, which is sky high real estate prices. Renting, as opposed to buying in California, can save a little bit of money. However, renting has the disadvantage of not building any equity. As home prices in California continue to rise, you may want to be a homeowner and take advantage of the home appreciation factor. If you're going to be paying a lot of money to live in California anyway, you might as well be making some money on top of it too, right?
Now, if you have bad credit and are trying to get a home loan for California home prices, this may seem like an impossible situation. Home prices are high and if you already have poor credit, the fact that you need to be approved for such a high loan amount can be an added difficulty when trying to get a home loan.
However, there is hope. There are so many programs available today to help people with recent bankruptcys, collections and even foreclosures, obtain mortgage financing. There are nationwide mortgage service companies that can either approve you directly or get you in touch with a lender who can approve you.
Here are some suggestions of things you can do to aggressively help yourself get qualified for a mortgage loan in California, with a bad credit history:
1. Pull your credit and review it - Pulling your own credit will not negatively affect your credit score like having someone else pull it will. For a list of the links to the three major credit bureaus, click on the link at the bottom of this article. Look over your credit history and make sure that everything is reporting accurately. Sometimes, something as small as an account being reported as currently being due as opposed to being included in a past bankruptcy can be the difference of 10-15 or more added points to your credit score.
Make sure every account that is closed is reported as being closed. Make sure that every account that was reported in a bankruptcy is reported that way, and not being reported as money still owed. If you have small collection accounts, try to pay them off and then fax confirmation that the account was paid off to the major credit bureaus so that they can adjust your credit report right away. Editing this information on your credit report is easier than ever today because all three major credit bureaus now make it possible to dispute and inaccuracies online. You could pull all three reports, dispute all inaccuracies and be done in less than an hour now. Just a few years ago, it used to take hours or days to fill out all the necessary paperwork.
2. Find a seller who is motivated to pay closing costs or carryback a percentage of the loan - If you find a seller who is really motivated to work with you, that may help you get approved with a lender. If the seller can pay your closing costs, this can free up that money so that you may have a small down payment. If the seller is willing to carryback a percentage of the loan then the loan-to-value may be low enough that the lender may consider that as good as a down payment. If the seller is motivated to work with you, they may be willing to work through a down payment assistance program to help you make a down payment. It is illegal for a seller to give you the down payment for their house, but through down payment assistance programs like Neighborhood Gold and the Nehemiah program, it is totally legal.
3. Borrow or ask for a gift from relatives toward a down payment - After you have financed the house, you can usually take out a 2nd or 3rd mortgage up to the full value of your house, and then you would be able to repay the relatives. Keep in mind that if you intend the money to be as a loan only from the relatives, you would need to disclose that to the lender before you close. Lenders usually have regulations about where the down payment is coming from and if you are not honest, it could be considered defrauding a lender.
To view our list of recommended bad credit mortgage lenders who can service California, click on this link: www.abcloanguide.com/lessthanperfectcredit.shtml.
Here is the link for the list of the 3 Major Credit Bureaus: www.abcloanguide.com/credithelp.shtml
This article was posted on April 02, 2005
