Buying a home in Houston TX after bankruptcy, foreclosure or short sale

Do you have foreclosure, bankruptcy or short sale showing up on your credit report? If yes, you may have already given up your dream of buying a home because foreclosure, bankruptcy or short sale severely damages credit. Lenders will not approve your mortgage application if you filed for bankruptcy in the past or had to short sell to avoid foreclosure.  

Mortgage experts say that bankruptcy, foreclosure or short sale can prevent a person from taking out a loan for at least seven years. Even after seven years, you must have a stellar credit rating in order for lenders to approve your home loan application.

So the question is: should you really give up your dream of homeownership after foreclosure, bankruptcy or short sale? Well, if you have turned your life around financially and can arrange for a large down payment, you may still be able to buy a home.

How do bankruptcy, foreclosure and short sale affect your credit rating?

Having a good credit score is necessary if you are planning to buy a home in Houston TX or anywhere else for that matter. Lenders will approve your mortgage application only if you have a good credit score because they use it to determine creditworthiness of a borrower. Many circumstances may cause an individual’s credit score to drop.

For example, missed credit card payments or delinquency on car loan will damage your credit score, but bankruptcy, short sale and foreclosure have the biggest negative impact on a person’s creditworthiness. As already mentioned, lenders won’t even consider your home loan application for at least seven years.

If you don’t pay your monthly mortgage installments, you have two options – you can either declare bankruptcy or short sell your home to avoid foreclosure. If you don’t short sell or declare bankruptcy, the lender will foreclose. All these will have more or less the same damaging impact on your credit report.

Let’s now discuss how you can buy a home if you have bankruptcy, short sale or foreclosure showing up on your credit report:

 Owner financing

If you have arranged for a large down payment – anywhere between 15 per cent and 20 percent, you can buy a home with owner financing in Houston TX.

In an owner financing arrangement, you pay monthly installments to the seller rather than a bank. In other words, you borrow from the seller. If you want to know how owner financing works, click here.

The biggest challenge is to find a seller who is willing to owner finance. Here at Shop Owner Finance, we help credit-challenged people buy ANY home in Houston and anywhere in Texas with owner financing. There is no credit check or income verification. 

A highly-qualified realtor will help you find your dream home and get you through the home buying process at no additional cost to you. The home buying process will be almost similar to what it usually is when someone buys with a conventional mortgage. You will hardly notice any difference.

You can refinance with a conventional lender when your credit score improves. There will be no pre-payment penalties.

Rent-to-own homes 

In a rent-to-own arrangement, you rent a home with an option to buy it by the end of the lease period.

Buying the home is usually optional, but you will need to pay ‘Option Money’ up front. This Option Money gives you the choice to walk away at the end of the lease period if you don’t want to buy the home. Option Money is non-refundable. It means that if you decide not to buy the home, the owner will keep the Option Money. The Option Money amount is negotiable.

So the idea is to rent a house and when your credit score improves after a certain number of years, you can buy the property with a conventional mortgage.

Rent-to-own homes are even more difficult to find. Moreover you can’t predict if your credit score will improve to such an extent that you will be able to take out a conventional mortgage by the end of the lease period. Nevertheless rent-to-own is a great way to buy a home in Houston TX if you have foreclosure, bankruptcy or short sale showing up on your credit report.

If you are interested in learning more about how you can buy ANY home with owner financing or our services, visit this page. Click here to watch some of our clients explaining how our system works. Start the search for your dream home by clicking here or get in touch with us today.