If buying a house is one of your short-term goals, you may experience problems getting a loan if you have bad credit; however, you do not have to let this stop you from buying a house. Getting a mortgage loan is the most common option to use for buying a house, but it is not the only option. There are other methods you could use, and here are some of the options you could look into.
Find a seller that will let you take over the existing mortgage
There are times when people purchase homes by taking over the existing mortgages on the houses. To do this, you will need to find a person that is willing to do this, and the person's lender must also agree to it. This is not the easiest option you have to buy a house, but it can work well if you can find a seller and lender willing to do this.
Normally when this happens, the buyer will simply take over the same loan as the seller has. This includes the same principle balance, payment amount, and interest rate. Sellers will typically only do this if they really need to get out of the house loan they have. They may be close to foreclosing on the loan, or they might be experiencing a financial hardship that is preventing them from being able to make the payments.
Buy a house on a rent-to-own basis
Buying a house on a rent-to-own basis is often referred to as buying a house on contract. With this option, you can pay the owner a down payment and monthly payments in exchange for the house. The seller will keep the loan in his or her name and must make the payments on the loan, but you will have to make payments to the seller. In a sense, the seller in this situation is acting like a lender.
Typically, you will need to find a loan within a certain amount of time, such as five years, and your new loan will pay off the existing loan. The seller will then receive the profit on the deal, which will be the difference between the amount of money you get the loan for and the amount owed on the existing loan.
Look into loans that are designed for people with bad credit
There are also programs designed for people with bad credit that offer ways to buy homes despite the poor credit ratings they have, and this might be worthwhile for you to look into. The best way to do this is by contacting a mortgage broker to work with. The broker will help you find options that are available for you.
If you really want to buy a house and cannot get approved for a loan, you may want to consider using one of these options. To learn more about these options and other alternative methods for buying a house, contact a real estate agent today.