| For many people obtaining mortgage loans for bad | | | | Rent-to-own real estate contracts can be beneficial to |
| credit is the final option available for buying a house. | | | | buyers with bad credit. Homeowners offering |
| Before entering into a high-interest home loan, | | | | lease-to-own homes typically require buyers to provide |
| borrowers should take time to conduct research and | | | | a down payment of at least 10-percent of the |
| comparison shop mortgage lenders. In some cases, | | | | purchase price. A portion of rent money is contributed |
| borrowers should work toward improving their credit | | | | toward the purchase of the home. On average, |
| scores before applying for a mortgage loan. | | | | buyers contribute between 10- and 50-percent of |
| In addition to comparing mortgage loans for bad credit, | | | | monthly rent payments towards the home purchase. |
| borrowers should investigate home buying alternatives | | | | Lease-to-own home buying contracts typically last |
| and creative finance options. These can include: | | | | between two and five years. Buyers can sometimes |
| entering into rent-to-own contracts or seller carry back | | | | lock-in the purchase price when establishing the |
| trust deeds; applying for home buying grants and | | | | contract. However, most sellers require buyers to |
| government sponsored real estate buying programs; | | | | purchase the home at market value once the |
| or borrowing funds from a hard money lender. | | | | rent-to-own contract expires. All contributed funds are |
| Presently, one well-liked option for buying houses with | | | | deducted from the asking price. |
| poor credit is Home Path Mortgage. Available through | | | | Rent-to-own contracts should be drafted by a real |
| Fannie Mae, this program focuses on offering bank | | | | estate lawyer and include legalese which protects both |
| owned foreclosure houses at substantially discounted | | | | buyers and sellers in the event of contract default. |
| rates. Additionally, HomePath offers a low down | | | | Buyers generally lose all vested monies if they default |
| payment requirement of 3-percent. | | | | on the contract. Therefore, careful consideration should |
| Buyers of Fannie Mae foreclosure homes through the | | | | be given when entering into this type of home buying |
| Home Path Mortgage program can obtain down | | | | option. |
| payment assistance from outside sources. These can | | | | Home buyers who have previously entered into |
| include: government grants, personal loans from family | | | | foreclosure or filed bankruptcy often find it extremely |
| or friends, and monetary contributions from employers | | | | difficult to qualify for any type of home loan financing. |
| or charity groups. | | | | The only option available might be hard money loans |
| Home buyers and real estate investors can apply for | | | | obtained through private investors. |
| Neighborhood Stabilization Program grants offered | | | | Hard money lender real estate loans are expensive |
| through the Department of Housing and Urban | | | | and should only be used as a last resort. Hard money |
| Development. NSP grants are available to purchase | | | | loans are intended for short term use and borrowers |
| bank owned properties located in areas hit hard by | | | | should strive to refinance mortgages within 12 to 18 |
| foreclosure. Applicants must submit NSP grant | | | | months. Most hard money lenders require down |
| applications to designated agents. To review program | | | | payments between 30- and 50-percent. Lenders must |
| details and obtain a list of NSP providers, visit | | | | abide by usury laws; however, interest rates can soar |
| HudNSPhelp.info. | | | | upwards of 25-percent. |