How to buy a house with terrible credit — and no money down
The shocking secret of how to buy without qualifying and without getting on the hook for a loan
People are shocked when they hear how they can buy a house with little or no money down, even if they have a foreclosure on their record. But it's true.
Best of all, no qualifying. No new loans. No credit investigations. You settle quickly and move in as a homeowner.
Sounds far-fetched? It's not. Here's how you do it.
The key is to find motivated sellers. And, to find a house you can afford. Don't jump from the frying pan into the fire. Make sure you can pay the payments and include taxes and insurance in your budgeting calculations.
Find a house you can buy with no cash
So let's say you find a neighborhood you like and you can afford the houses there. Time to buy something and you don't want to have to put money down, do you?
Remember I said you have to find motivated sellers? That isn't hard to do these days, is it? Everyone is motivated it seems. The trouble isn't finding motivated sellers so you shouldn't have a problem there.
Here's the deal you are looking for. If you are in an area with $150,000 houses, find a house where the motivated seller has a $150,000 mortgage. And then buy the property "subject to" the existing mortgage.
It really is that simple. The seller moves out. You settle at the lawyer's office. Nobody tells the lender anything. You start making the payments.
The loan is still in Mr. Seller's name. Is that a problem? No. You are the owner. You have a grant deed on file at the county courthouse in your name. No problem at all.
Anyone can sell their house to someone else as long as they are still the owner, and title will transfer. Even if there are loans still on the house. Doesn't matter.
The magic of buying without qualifying for a new loan
So in this situation, Mr. Seller signed a deed over to you. You checked the loan balance (punching in Mr. Sellers' loan number into the mortgage company's automated robot phone system) and now you have the keys and you have every right and privilege as the owner that Mr. Seller did.
But look what you did. You have the mortgage interest deduction which lowers your taxes. You own the house, lock stock and barrel. But you never had to get your own loan.
Many sellers will want you to pay off the loan. Of course they will. But they are motivated, remember? So you tell them that you aren't going to do that just yet. When will you? Maybe in a year or three. Maybe in five years. A motivated seller can be convinced to sell to you because they are relieved that someone else is stepping into their shoes. It's human nature to breathe a sigh of relief and let someone else (you) deal with the mortgage.
And it's as simple as that. There are wrinkles to this and things you should know, but it really isn't that hard.
Buy a house even with bad credit
You can be a homeowner if you have a foreclosure on your record, even a bankruptcy (though it has to be discharged). You can have downright awful credit. And you can still own a nice house.
Things will turn around in the real estate market. Maybe not next year or the year after, but not long after that. These things last about four years typically. Maybe this one will last five or six years. But real estate will be appreciating again. And you will be sitting pretty. You will have taken care of your bills, gotten rid of your crushing credit card debts, have good credit, and be a fine upstanding homeowner proud of your beautiful home in a pleasant neighborhood.
And if you haven't done so already, join my valuable email list where I send you dozens of insider's tips on keeping your home, restoring your credit, settling bills for dimes on the dollar, and much more. I will start off with getting you a valuable free 25 page report packed with information.