I thought you had to have good credit to buy a home... ?

Traditional Home Loans

Traditional home loans are made through a bank. The bank checks your income, the amount of debt you owe, and of course your credit score, which is seen as a buyer's ability and willingness to repay lines of credit. But what happens if you went through a recent divorce? Had a bankruptcy? Had a foreclosure? Had your identity stolen? Or even just made some credit mistakes when you were "young and dumb" and it's still there on your credit report years later, torturing you? Your credit score will not be good enough to qualify for a home loan, as a bank will see you as "risky."

The Catch-22

There is nothing more heart-breaking than wanting to benefit from owning a home, knowing you have the ability to pay a mortgage, and can't because of circumstances that lowered your credit score. You know that you have the financial ability and personal willingness to pay, but you're shut out in the cold by banks who view you as a credit risk.

This is why many people with credit troubles give up on the idea of ever buying a home. We've been trained to think that unless we qualify for a loan from a bank, we can't buy a house. And this is simply not true.

How can I buy with no credit check?

The answer is simple. It's called seller financing, or contract-for-deed. The process is very easy. The buyer makes a down payment on the house, just as would happen with a traditional bank. In seller financing situations it is best to have 10% down or more, in order for the seller to pay their costs to close the sale in 30 days or less. The seller of the home keeps this down payment, then the buyer pays principal and interest on the remaining amount of the purchase price of the house to the seller for a pre-determined period (30 years, 20 years, 15 years, etc.) At the end of this term, the deed and ownership of the house belongs solely to the buyer. It is the same as borrowing money from the bank, only in this case, the seller is the bank. And if you later have the finances or credit in which to pay the remaining amount to the seller in one lump sum, you may do so at any time with no penalty!

Why do I need a Realtor for this?

It is extremely risky to participate in seller financing situations with no Realtors involved. A real estate contract to purchase the home that is signed by both you and seller is a legally binding document. If you don't have representation in a process such as this, you stand to perhaps be taken advantage of by the seller in many different ways. A Realtor will explain the real estate contract to you, then fill it out according to the terms of the sale. A Realtor takes care of the many issues that pop up between the time of the offer and the time of the closing of the sale. Realtors also use an escrow company to collect your mortgage payments, who record that the full payment was made, then give the seller the money. In no way can the seller later say that you missed a payment if you did not, because the escrow company keeps records of every happening until you take full ownership of the home. The biggest and best reason to use a Realtor in this situation is your Realtor is free to you. In almost any real estate sale, the seller is the one who pays the Realtors' commissions. You may, at your option, pay the Realtor's fee in order to negotiate a lower sales price, but in most cases your representation is paid for by the seller.

Why don't more people know about this?

Seller financing is not a commonly-used method which is used in order to buy a house, so many people don't know about it for this reason. Many sellers who have their house for sale need to sell it right away so they can use the proceeds of the sale for their own financial reasons. However, there are also sellers out there who are ready, willing and able to sell their home to buyers like you. There are homes in every neighborhood, condition and price range available for sale. And the best part is, seller financed sales many times can close in just a matter of DAYS!

So what do I do now?

If you have questions or concerns, or have down payment money and are eager to buy a house in Topeka or the surrounding areas, call me at 785-318-0913 (cellular) or 785-271-0361 (office direct.) You may also e-mail me at jessica.bryant@coldwellbanker.com. When we meet, I will go over the entire process with you in explicit detail so you know exactly what to expect. I have good experience with seller financing and am extremely comfortable with this type of sale. I'll verify that you have the funds to make the down payment, and we will find your perfect house. We'll fill out the proper paperwork and just a few short days later, we should be ready to close the sale of your new home! Call or e-mail me today so we can get started finding the home of your dreams!