How to Buy a House in Arizona with Bad Credit as a First Time Home Buyer

Property values are on the rise, but you can still find plenty of affordable houses for sale in Arizona. There are even options available for first time home buyers. However, if you have bad credit, you may be worried about getting approved for a loan.

Luckily, your status as a first time home buyer with bad credit doesn’t necessarily disqualify you as a mortgage candidate. You’ll just need to know all of the facts, be willing to explore different options, and maintain realistic expectations.

Top _3_ Tips for First Time Home Buyers with Bad Credit in Arizona

Once you’ve determined that you want to purchase a home, the first thing you should do is check your credit reports and credit score. For certain types of home loans (like FHA loans), a minimum credit score is required, so you’ll want to know where you stand. Checking your credit reports will also give you an opportunity to make sure they don’t contain errors that might be pulling down your credit score. Just go to www.annualcreditreport.com to request copies of your credit report from TransUnion, Equifax, and Experian. If you haven’t checked your credit reports in a while this should not cost you anything. Under the Fair and Accurate Credit Transactions Act (FACTA), you’re entitled to a free copy of your credit report from each of the major credit reporting bureaus every 12 months.

Second, look for opportunities to improve your credit score before applying for a home loan. For example, if you have high credit card balances, paying them down might give your score a boost. It’s also a good idea to get current with all of your bills because all types of late payments can hurt your credit score. If you are planning to apply for a housing loan in the near future, try to avoid new credit card applications. Every time a creditor pulls your credit, it can lower your credit score.

Finally, you should consider the benefits of an FHA loan. This type of mortgage is insured by the Federal Housing Administration. The borrower actually pays for this mortgage insurance, which protects the lender from taking a major loss if the borrower defaults on the loan. The greatest thing about FHA loans is that they’re available for consumers with bad credit. How bad? Typically, a home buyer will need to have at least a 580 credit score in order to qualify. However, it’s possible to get approved with a lower credit score if you’re willing to put down a larger down payment.   But take heart.  In Arizona, there are programs that can assist you with down payment grants.

Here are some other reasons why first time home buyers in Arizona with bad credit should take a good look at FHA loans:

• Those with a credit score of 580 or higher may only have to provide 3.5 percent of a house’s selling price as a down payment.
• Closing costs might be covered by an FHA loan, but if these fees are rolled into the loan, the interest rate might go up.
• The cost of mortgage insurance is reasonably low, with an upfront premium of 1.75 percent of the loan amount.
• The FHA allows home buyers to borrow money to cover both structural and nonstructural repairs.
• FHA loans come with built-in protections for borrowers who experience a financial hardship while paying off their mortgage.
• Because FHA loans are insured, they’re often offered with competitive interest rates, even for bad credit buyers.

It’s possible for a first time home buyer with bad credit to get a non-FHA loan, but they will most likely end up with a much higher interest rate. They may also be asked to come up with a sizeable down payment in order to get a lender to approve them.

Why Credit Repair Should Happen First

Purchasing your first home requires a huge financial commitment, so you’ll want get the best possible loan terms. In order to do this, you’ll need to make sure that your credit reports are free of the kinds of mistakes that can unfairly deduct points from your credit score. While you can repair your credit yourself, getting legal assistance can make the process faster and less frustrating. This is where Credit Repair Lawyers can help, and our services are FREE to Arizona consumers.

The Free and Legal way to Get Better Credit

Don’t let errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in cases that are settled. This is why our clients pay nothing for the work we do.

Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (248) 353-2882 or contact us on our Contact Us page.