Five ways to buy a home with imperfect credit

Nancy Schrimpf Coldwell Banker Village PropertiesSpecial to the Village News

FALLBROOK – Maybe the Great Recession left you with more than unpleasant memories. Maybe you have a short sale or a foreclosure in your recent past, have tarnished credit, or are a first-time buyer struggling to come up with a 20 percent down payment. Although these conditions make buying a home more complicated, they do not necessarily make home ownership impossible.

Consider these five ways to buy a home even if you have some skeletons in your credit closet.

1. Check into government sponsored loan options such as USDA, FHA or VA loans.

If you are a first time buyer and there is just no way you are going to be able to come up with 20 percent down, don't despair. There are several options that will allow you to buy with a small down payment or no down payment at all.

If you've served your country, you most likely qualify for a VA loan, which can mean home ownership with no money down. If you are looking at buying in a rural area, such as Fallbrook or Bonsall, you may be entitled to a USDA loan which encourages homeowners to buy in rural areas by offering up to 100 percent financing.

If you are a first time home owner, you may be able to tap into an FHA loan for as little as 3 percent down. Be sure and discuss all these possibilities with your lender, which very conveniently brings us to the next point.

1. Talk to an honorable, experienced lender who can best address your specific needs.

No realtor is good at everything. I will never, ever, ever be the right agent for you if you are selling a home in Alaska. No lender is good at everything, either, but odds are your realtor can point you to the lender that is best for you.

Are you super busy and stressed and need someone to handle all the chaos and drama of a home loan while you focus on making the income that you will need to pay off that loan? I have a lender for that. Do you need some truly creative problem-solving to help you through an unusual home-buying situation that is more square peg-round hole than many banks like? I have a lender for that as well. I'm sure your realtor does also.

1. Seek out sellers who will carry.

This isn't about sellers hauling your stuff, although that would be nice, too. This is about sellers who can and will finance some or most of the purchase price on a home so you needn't apply for a traditional mortgage.

Right now there are at least three homes for sale in my area that have a 'Seller will carry' option. One of those listings is mine and my seller's exact words were this, "I don't want money problems to keep someone who needs this home from buying this home."

Are you self-employed or newly-employed? Do you have 20-25 percent to put down but not enough income history to qualify for a loan? Look for a seller who will carry.

1. Have explanations for the hard times that hit.

If you had a documented job loss, divorce, medical emergency or a death in the family, you may be eligible to buy a home again despite a relatively recent short-sale or foreclosure.

Lenders look much more favorably on someone who lost a home due to tragedy than they do on people who default for other reasons. Bring any and all documentation that proves your credit skeleton was caused by an unavoidable event, not a lifestyle of living beyond your mean, to your lender and see what he or she can do for you.

1. Manage your expectations.

If you are just getting into the real estate market, or getting into the real estate market again, remember the old baseball adage 'a walk is as good as a hit'. You probably won't experience the real estate equivalent of shattering the field lights with a game winning grand slam on your first at bat, so make peace with that reality.

Instead, aim to find a home that is likely to appreciate and let your next home (or the home after that) be the one that makes your toes tingle. Home plate may still be several swings away, but you'll be closer than you were before you started.

Questions may be directed to Coldwell Banker Village Properties at (760) 728-8000 or Nancy Schrimpf directly at (760) 717-2307.