Now That's the Home for You

Homeownership comes with many benefits but when you don't have the credit to get financing from a bank for a mortgage, it can make the purchase process very difficult. Fortunately, with some creative resources and thinking outside of the box of traditional mortgages, you can get into and purchase a home. Here are some no-credit financing options for you to consider as you look for a home to buy.

Check For Seller Financing

Not every buyer can get a new mortgage from their bank for a home purchase, and some sellers want to sell their homes as an investment to earn interest. With this scenario, you come into a position where a seller is open to finance the purchase of their property to you as the buyer who does not have a bank loan. When a seller owns enough equity in their home or their home is paid off and free and clear against liens, they can create a new mortgage and act as the bank in the sales transaction. You as the seller would make payments to the seller under the terms of your mortgage agreement with them and can move into the home and will own the home just as you would in a bank-financed purchase.

Just be sure you arrange for a deed to be recorded for the property to be in your name and a mortgage note agreement written up that you and the seller sign. The agreement will outline the terms of the mortgage, which include the interest rate, payment amount, and term of the loan. The seller may wish to write up a mortgage for five years, for example, with a balloon payment due at the end, which you could refinance into a new mortgage and pay off the balloon payment.

Shop For a Lease Option

Another option to buy a house without being able to get a traditional loan is to look for a home for sale under a lease option. This is a rent-to-own situation in which you pay rent payments and later date in which you can buy the home.

Often, a portion of the rent payments will go toward your eventual purchase, and you will agree upon a purchase price for the home at the beginning of the arrangement. This allows you to prepare your credit over the period of time you are renting the property, but you still have a vested interest in the home as you make payments toward its purchase price.

Then, be aware that many sellers will require you to make a down payment, referred to as a lease consideration in the lease option agreement. This payment is held by the seller and you forfeit it if you end up not buying the home later on.