How to Fix My Credit

There are many different way to fix a bad credit problem.  One of the best ways to fix a bad credit problem is through a regular mortgage payment.  This can be accomplished with a bank owned mortgage, or with a mortgage owned by an investor.  Many times, an investor can offer a house for sale for buyers with a wrecked credit that don’t meet the banks strict lending requirements.  It’s a win situation for the investor and for the buyer.  Not only does the buyer get the opportunity to buy a house that they normally wouldn’t be a approved to buy, but they also get the ability to prove to the credit agencies, that they can make regular monthly payments.  If the buyer is able keep current with the monthly payments, even for a few years, this will help to repair the credit of the buyer and allow them to refinance the mortgage at a much lower interest rate. The investor is able to benefit from selling their property to someone with bad credit, through a lease option that provides the investor with a better return on their money then they could get with a buyer who has good credit.

Details of a Lease Option

A lease with a purchase option offers flexibility to a potential real estate buyer. The program works exactly like it sounds; it gives the renter the option to buy. For buyers a lease option can be a great way to go because it gives them an exclusive option to buy the property being rented and binds the seller but not the buyer.

Reasons to enter into a lease option include the better use of a buyer’s time and money by allowing a renter the time to secure financing, save money, reduce debt and acquire financing. Additionally, since the purchase option price of the home is usually fixed when the lease is signed, another plus in an up market can be when home values increase over the term of the lease while the fixed option price remains constant, a buyer/renter can actually be earning equity while renting. Done properly, a lease option can be quite a good deal for a buyer. On the down side, if the value of the property decreases over the term of the lease the buyer has lost nothing since he can simply walk away at the end of the lease term.

Your lack of a credit history, can be a major stumbling block in your search for a home. However, for real estate investors like myself, this is not a problem.

Prevent Bad Credit

Another thing to consider is to avoid bad credit in the first place.  Did you know that finding a way to start a short sell of a house that you own will preserve your credit and take 3 years off of the time needed to repair it?  Foreclosure is absolutely your worst option, and anything you can do to sell your house is very beneficial to your overall credit score and something that should be accomplished at all costs.