Think Your Credit Score Is Too Low To Buy A House? Maybe Not
When it comes to your credit score, how low is too low? The number you really need to buy a house.
We all know that when it comes to buying a house, there are a few things we need, like a down payment and a good enough credit score to qualify for a loan. But what does a "good enough credit score" really mean? Does your credit history have to be impeccable? Can you have a couple of boo-boos? And, if you do have issues on your report, how much of a hit will you take?
Your credit score is "a number, roughly between 300 and 850, that summarizes a consumers creditworthiness," said Bankrate. "The higher the score, the more able and willing a consumer is to repay a loan, lenders believe. The best mortgage rates and terms go to borrowers with credit scores of 740 and higher."
But most of us cant measure up to that number. Thankfully, we dont have to. Theres room for lower scores - even really low scores - depending on the type of loan youre applying for, with a number of other factors your income and work history, the amount of your down payment, the state of the economy thrown in. Knowing where the bottom is will help you figure out how to proceed.
The advantage to a Federal Housing Administration FHA loan for many buyers is the low down payment. You may need only 3.5 down to purchase a home with this type of loan, which is backed by the government. But, youll need a minimum 580 credit score if youre only planning to put 3.5 down. Cant meet that benchmark? Youll need more cash up front.
"If your credit score is below 580, however, you arent necessarily excluded from FHA loan eligibility," said the FHA. "Applicants with lower credit scores will have to put down a 10 percent down payment if they want to qualify for a loan."
For FHA loans, your credit score can be as low as 500. But, "Those with credit scores between 500 and 579 are limited to 90 percent LTV," which leaves a lot of people out of luck.
The issue with FHA loans for many buyers: That pesky private mortgage insurance PMI, which can add several hundred dollars to the monthly payment and is "required any time you put less than 20 down on a conventional loan," said My Mortgage Insider.
If you have a larger down payment, you may be able to avoid paying PMI by going with another type of loan - but only if you have the credit score. "To qualify for a conventional mortgage, a borrower generally needs a minimum credit score of 680 and at least 5 percent down," said Bankrate. "Many lenders require at least 10 percent down."
There may be more wiggle room in that credit score if you can come up with more money for a higher down payment. But, if its too low, youll likely be pointed right back to FHA loans. On the other end, a higher score will get you the best possible interest rates.
Have a credit score below 500? Youre officially in the "bad credit" zone. But, you may still be a candidate for a loan, even if you cant qualify by FHA standards, by going with a subprime mortgage. The word "subprime" still sends shivers down the spines of many people because loans extended to what many industry professionals considered to be unqualified applicants were largely blamed for the last housing crash. Accordingly, many of these opportunities dried up in the aftermath.
Today, though, subprime mortgages are available. Keep in mind that minimum credit scores will depend on the individual loan and lender, and each borrowers unique set of financial circumstances. And, youll pay for the privilege of being extended a loan with higher rates and/or fees.
"Subprime mortgage lenders mostly use collateral like equity earned when considering a refinance or a more significant down-payment when talking about a purchase money transaction," said First Time Home Financing.
Private Money Lenders
If all other avenues fail, you may still be able to get a loan with your bad credit from a private money lender. These are individuals with money to spend who are looking for investments. Because your low credit score makes you risky, youll be charged more for your loan.
"Your personal credit is usually a smaller factor in these types of loans. However, you should know that the interest rate on these loans is much higher - in the range of 10-15," said First Time Home Financing. "If you really have bad credit, this could be your only option for the time being."
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3 Ways To Make Your Tiny Backyard Feel Like A Resort With A Small Pool
No room for a pool? Thats what you think. The tiny home may be all the rage, but it has nothing on tiny pools. Perfect for yards with less than ample space, a mini pool can give you everything you want, even if you dont have acres of land to build it on.
"You dont have to have a big backyard to fit in a pool - and if younbsp;donbsp;have a big backyard, the pool doesnt have to take up the entire thing," said Apartment Therapy.
Choose from these three main types of small pools for inspiration.
"If you are looking to have a luxurious backyard but have a limited space to work with, you might be in the market for a Spool," said Klein Custom Pools. "A Spool, or a Cocktail Pool, is a small swimming pool design created as a solution to having a >
This spool may be short on size, but certainly not on >
Trying to figure out how to design a courtyard area that could feel less than hospitable thanks to the tall brick walls? Decking that runs up the walls, lush landscaping, and the cleverly located and shaped spool turn this small yard into a showstopper.
In this desert backyard, the curved shape of the spool breaks up the straight lines, the extended steps provide a place to >
A narrow yard gets the tropical treatment. This small pool proves that getting creative with shapes and textures can help overcome a lack of depth in your outdoor area.
This lap pool is beautiful to look at and also provides function for those who want to do more than cool off. Its compact size also leaves plenty of patio space to enjoy.
This lap pool "runs the length of the house and also functions as a showcase water feature," said HGTV.
Even a postage stamp of a yard can become an outdoor oasis. Here, the raised platform provides a resort-like spot for enjoying the view onto the lap pool. Tropical landscaping, bamboo fencing, and a dark stain complete the look.
If youre not looking to actually go for a swim, you may have other options open to you by building a plunge pool.
"A plunge pool is a small, shallow pool built for the purpose of lounging, wading, and cooling off instead of for swimming and exercising," said The Spruce. "Some homeowners prefer them because of their lower costs, smaller sizes, easier maintenance, andnbsp;reduced water requirements. Since newer homes tend to be built on smaller lots, a plunge pool is a space-saving option."
While it may look like a hot tub, a plunge pool is typically kept at a lower temperature that makes it a refreshing option in warm climates. And, you an easily build one into a deck, like in this home.
Photo by blazemakoidarchitecture - Look for beach >
Think creatively to make great use of space and materials. "What to do when space is tight? The clever folks at Claytonamp;Little Architects in Austin, Texas, took a highway concrete box culvert, cast a PVC insert, plastered the exterior, tiled the waterline andnbsp;voilanbsp;ndash; a compact but dazzling plunge pool," said Ocean Home.
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Three Big Things Homebuyers Are On The Look-Out For
As a seller, you have a lot more control in pleasing buyers than you think. If you start the selling process by learning what buyers really want, you can prepare your home to come as close to their dreams as possible.
Here are the five biggest turn-ons for homebuyers and what you can do to please buyers.
You only get one chance to make a first impression. Your home should sell to the buyer from the curb. Thats how important curb appeal is. Your buyer should be so impressed, so charmed, so delighted that they want to leap out of the car and run inside.
How do you create curb appeal? Show attention to detail. Your home has to be prettier, cleaner and in better condition than its neighbors.
Start with sweeping the drive, walkway, and porch or entry of dirt and debris. Get rid of leggy bushes, wilted flowers and broken tree limbs. Plant fresh flowers in the front garden or in containers at the entry.
Power-wash the exterior and hand-wash the windows. Touch up paint around the windows, if needed. Paint the front door a fresh, modern color. Replace the door hardware and porch sconces.
The number one reason why people buy homes is to have more room. Whether theyre moving from an apartment or moving up from the home they have, they want to have plenty of space to do the things they enjoy.
If you have a large home, youre golden, but that doesnt mean youve got it made. You can ruin a buyers first impression with too much clutter, so make sure to keep your home picked up so your buyer can see your homes features clearly and easily.
What if you dont have a lot of space? Plan to do some storing and staging. Rent a storage unit and put away all out of season clothes, toys, and home decorations and accessories. Clean off all tables and countertops so you have only the minimum of things your need to operate your home. Empty closets of anything that is "stored" and move it to the storage unit. The small expense youll pay in storage fees youll more than make back from your buyers offer.
Theres a reason why first-time buyers and singles tend to buy older homes - theyre more affordable than buying new. So unless your buyer is a building contractor, chances are they want a home thats as updated as possible.
You may not be interested in putting in a new kitchen in order to sell your home, but you can do a few things to make buyers happy. Replace the most dated features - countertops, cabinet pulls, or appliances.
Bathrooms are so personal that they can easily turn buyers off. Invest in new towels, bathmats and a shower curtain. Throw out slimey soaps and limp ragged bath sponges. Replace with liquid shower and bath products. You can take all the new stuff with you to the next home.
Painting is expected by buyers, but dont repaint the same colors that you chose 10 years ago. Pick an updated neutral like a warm grey instead of beige. Be sure to choose a color that will complement the architecture and flooring in your home.
Keep in mind that the typical home purchased in 2013 was 1,860 square feet and built in 1996, so homebuyers arent expecting your home to be a mansion, nor do they expect it to be new, but they do expect to see pride of ownership. The more tweaks, updates and repairs that you perform, the more confident your buyers will be that theyre choosing the right home.
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