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Buying a house!!
I have no idea how this works really but me and my boyfriend would like to buy a home ln September... Neither of us have any credit.. I hAve a car loan and credit card both in my moms name so I don't get credit for it maybe a little..I tried various credit card company's and no one will give me a card... My credit score is like 600, and my boyfriends is 0.. We both have been at our jobs for 5 years but only seasonal.. We would like to put 5% to 10% down on a house but I'm wondering if Anyone would even give us a loan being that we have no credit? Even if we could rent to own or something.. I don't want to pay rent for someone else's mortgage.. If anyone can help thank you :))
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As someone who bought a house with my husband at age 19, I know a lot about this.
First off, it depends on where you live. I live in Canada, and rules here are stricter than in the U.S. If you don't have at least 20% down, you have to pay an extra 1% on your mortgage, which adds up to a lot. Also, you have to be able to show steady income. This is where we had trouble, because we were both students. We ended up getting the mortgage because we were able to show 4 months of steady employment and because we had enough saved to cover the costs of living during the school year, but only because the bank manager made an exception for us. We were rejected by 4 banks before this one gave us a loan, and my husband had excellent credit for a guy his age. What I would suggest is to go to the bank and ask them to pre-approve you to find out what range you can afford. If they're not on board, there's a good reason for it. They won't take unnecessary risk if they can avoid it.
The big thing to think about is that home ownership is a money sink. Interest rates are really low right now, but could you afford the same house if the rates doubled? How about tripled? Be sure that you have some wiggle room that way. Another way it can be an issue is repairs and maintenance. What if you develop a huge crack in your foundation, or your roof starts to leak, or your pipes burst? You can basically bet on spending at least 2% of the value of the house every year in maintenance and repairs. When we moved in we were surprised to find out that we couldn't keep our insurance unless we had a new power box installed at our cost... that was a $5000 surprise! Renting can be good in that you don't have to worry about all of that. Think of it as paying someone else to make sure you've got a fully functional roof over your head. Also, make sure that you have a detailed budget in place. Know what it costs to run a house ahead of time: our house is very small and costs us a minimum of $120 a month for electricity and water, not to mention natural gas ($70), water heater rental ($25)and home phone/internet bills ($70). Two-storey homes can cost upwards of $200 a month for electricity alone.
Rent to own can be a great option, but make sure that you're getting value for your money and not overpaying. It might be worth waiting another year until you can afford the house you want rather than rushing it.
In the meantime, there are ways to build credit. Cell phone bills, if paid regularly, are a good stepping stone. So is a secured credit card, where you give the company a certain amount of money (like $500) and you get a credit limit equal to that amount. Spend a reasonable amount and pay it off each month, and you'll build credit.
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If you have no credit, It may be hard to get approved to put a down payment on a house yet alone buy one.
For starters, I would recommend looking into a home that has the option rent to own. This gives you the opportunity to rent and see how well you manage the house without owning it right off the bat. If you can manage, Then I would continue the method of renting until the house is paid off. A loan generally is given to people who are approved and have credit built up, If you have no credit history then you may be shot down. I moved into an apartment and had no credit at the time and was almost turned down cause of it.
Rent to own is probably your best option.
Good luck
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