There are obstacles to homeownership that range from mental blocks to very real barriers.  Many people simply do not believe they can own a home.  We get inquires every day from individuals that want to know where to begin the homeownership process as well as what their chances are of getting a home loan.  It’s important to understand that homeownership doesn’t happen overnight.  First, you need to mentally prepare yourself for a somewhat extensive process accompanied by examinations that may try your patience.  Next, you need to make sure that you’re in the best financial shape that you can possibly be in.  However, even if you’re not in great financial shape right now, it doesn’t mean that you cannot become a homeowner.  You may have more financial conditioning to do but if you are willing to be disciplined with your finances and stay dedicated to the dream of homeownership, you will become a part of the approximately 64% of Americans that own their very own home.

Credit.  You need to ask yourself (because it will be the first question from a mortgage lender or bank), do I have good income, debts, assets, and credit?

Not sure?  This is an honest answer from many people.  According to the Consumer Finance Protection Bureau, you could be a part of approximately 45 million Americans that are impossible to score, or completely invisible, by credit scoring agencies.  If you have little to no credit or very old credit, it is possible you are in this group.  Below is a list of credit sources that could help (re)establish your credit score when applying for a home loan:

  • Open a bank account if you don’t already have one
  • Apply for gas or retail credit cards (pay them off, or pay more than the minimum payment, on time)
  • Present other credit sources such as 12 consecutive months of canceled checks to show timely payments for rent, insurance, daycare, private school, buy-here pay-here, rent-to-own, utilities, cell phones and internet/cable.

Okay, so you’re sure you have poor credit.  Then you are part of a group of approximately 1 out of 3 Americans that have less than a 600 credit score.  Poor credit issues can negatively affect your score for 7 years or more.  Do not be discouraged.  More effort will be needed to get you to homeownership but it’s not impossible.  Credit repair should never cost a lot of money and no one can magically fix your negative credit rating overnight.  HUD has housing counselors across the country that are able to help you for a small or fair fee or, in many cases, for free (based on your financial situation).  By clicking on the link below, you can start the search for a local HUD housing counselor that will help you not only repair your credit but also become an informed and empowered homebuyer.

HUD Housing Counselors – https://nfs/c07/h02/mnt/173009/domains/

Services can include:

  • Fair Housing Pre-Purchase Education Workshops
  • Financial Management/Budget Counseling
  • Financial, Budgeting, and Credit Workshops
  • Home Improvement and Rehabilitation Counseling
  • Mortgage Delinquency and Default Resolution Counseling
  • Non-Delinquency Post-Purchase Workshops
  • Pre-Purchase Counseling
  • Pre-Purchase Homebuyer Education Workshops
  • Predatory Lending Education Workshops
  • Rental Housing Counseling
  • Rental Housing Workshops
  • Resolving/Preventing Mortgage Delinquency Workshops
  • Services for Homeless Counseling

Please note: You should always be sure to consult with a bank or lender about what exact loan qualifications they will require from you.