What To Know When Buying Your First Home With Bad Credit

I was young and in love. I started having real visions of where I wanted my life to be ten, twenty years from now. We both wanted a home, but unfortunately neither of us had good credit. Actually, my credit score was pretty bad, and all I had heard throughout my brief adult life was that you needed a good credit score to get a mortgage to pay for a home. I certainly wasn't in any position to buy a home without a loan, so I had to find someone who knew how to buy your first home with bad credit.

How we figured things out

Together we sat down and started doing some research on if it was even possible. Here are some tips on buying your first home with bad credit that we learned.

• Payday loans. These are loans that do not affect your credit score unless you don’t repay them. They are great for quick cash in the event of unexpected situations.

• ​Brokers. A broker might be able to match you with a lender that regularly works with bad credit loans. Mortgage brokers usually know a variety of mortgage lending companies and banks. They often can find a match for people from all credit backgrounds.

• ​Find someone to cosign. Find someone who has good credit. Most people choose a family member, friend or acquaintance. The cosigner agrees to take on the responsibility of the loan if you cannot make the payments. Because your name is on the mortgage your credit score will improve dramatically simply by making the payments on time. Then you will be able to look for loans without a cosigner.

• ​Offer collateral. This is property you can offer a lender as a form of down payment towards getting a loan. Homes are the most common form of collateral but people often use their cars as collateral to get loans, and businesses will sometimes use their machines or expensive equipment to get business loans. Collateral will give a lender confidence the loan will be repaid in full.

Being young we didn't have much in the way to offer for collateral, though that may have been our first choice otherwise. Buying our first home with bad credit was going to take some creativity. We looked a bit deeper into payday loans and tried to think of a way to possibly take out a loan, and also work with a broker to find a lending company that works with people with low credit scores.

Putting my plan to work

My plan was to get a payday loan and use that to help pay off a bad credit mortgage. I learned that payday loans are short term and are made strictly based on your ability to repay the loan. My fiance would do the same thing, and together we’d get a temporary boost in our initial investment power. Credit reports are generally not checked in this situation either, and unless we didn't pay back the loan, it wouldn't affect our credit score.

We were able to find a great broker through a website called www.real-estate-yogi.com. He had helped much first time home buyers find loans in the past, and it wasn’t long till we were negotiating some prices on our first home. If you want some great advice and need to find a real estate agent, visit real-estate-yogi.com today, or call them for a free consultation at 1-800-987-1397.