You have worked your whole life maintaining your perfect credit, then all of a sudden you lose your job. No matter how you try and what things you sell, you just could not save your credit. Before long they are repossessing your home and your car and you have absolutely no where to call home. The only choice that remains is to rent an apartment, but even there you have nothing but shut doors and no one wants to help you due to your credit rating or FICO score.
It never dawned on you that you would ever lose your job much less your credit, so now what can be done? Is there a way to rent a home with bad credit and if so do you have to live in the "dumps?"
Looking for a new home:
Before you even go out the door to look for a new home, get all your ducks in a row. It is absolutely fruitless to begin a home search until you have a few things done and prepared. First it is imperative that you get a credit report and have it ready. There are many places on the Internet that offer a free credit report once a year. Here is a link for Trans Union:
Free Credit Report
Now that you have your credit report you can search and see where the main points of discrepancy lie. Try to alleviate as much as you can before house searching. Many collection agencies will agree to negotiate the amount owed and in exchange will wipe the debt off your credit report. If they will not agree to that then have them make an immediate report that the account has been rectified. You can also put letters on file with the credit bureau explaining exactly what happen.
Once you have corrected your credit report as much as possible, take the credit report with you when you begin house hunting. It is important to be honest and upfront with the people who are considering renting to you. Stay away from the big complexes and look for a smaller unit or home that is owned by an individual. Many management companies have set policies on credit and ratios.
Some apartment and home managers will also go by the LTV (loan to debt ratio). This is the debt to rental ratio. So they will consider your monthly rental compared to your income. The normal ratios will be 30-36% of your income after debts are deducted. So when considering a home for rent keep these ratios in mind.
Credit Report and 7 Years of Misery:
Keep in mind that the bad marks will be on your credit for seven years and ten years if you file bankruptcy. During this period you will not be able to buy a home or a car. What you can do is try to reestablish some good credit to show potential landlords that you are a good risk such as taking out a fully secured loan through a savings and loan. This is a normal procedures to begin establishing credit. Look for a secured credit card also as a second choice or a account with a small department store, such as Mervyns.
Do not give up as there are many places that will work with you if you are honest, sociable and are dressed well. Funny how people judge you by your appearance. A manager would much rather you be upfront with them, then to find out you lied after the new credit report comes in. Sometimes they will not pull a new credit report if your report is recent.
As a former broker of a independent office in Downey, California, I can give you my best advice. Buying homes in California is very easy, if your have good credit. Now with the new foreclosure problems in California, the banks are extremely careful about who they loan money to. Years ago, we use to help less than perfect buyers obtain homes through creative financing. But, now that is a thing of the past. If you know what you can qualify for ahead of time, it will save you a great deal of hardship.
The amount that you can qualify for is 33 percent of your income after taxes, in most cases. But wait, you must deduct all your debts. So if you make $5000 per month and you have $1200 in monthly debts, that leaves you with a monthly income of $3800. You take 33 percent of that figure or $1254 per month. That figure includes the cost of PMI (private mortgage insurance), taxes and insurance. If you are putting more than 20 percent down on the purchase of a home, then there is no PMI. Some loans with hard pressed areas, are offering basically no money down loans and no PMI.
Wells Fargo Bank is one such bank offering a loan without no PMI. You can look at their offers through this website:
https://www.wellsfargo.com/mortgage/
If you are looking for a bank that offers no down payment, here is a link for a article listing the major banks. Wells Fargo also does no down payment along with Bank of America. Bank of America is much easier to get a loan through.
http://www.msnbc.msn.com/id/24580917/
As the article discusses, the down payment is disguised through gifts. Normally a down payment must be in your account for over 2 months. Some banks are offering no down payments, where a 3rd party holds interest on the property, such as a lien holder. All of these loans have catches.
California is still the most expensive place to live out west. Home prices generally run in excess of $200,000 unless you live out in the country. California is the land of the rich and the famous, but even Los Angeles has its slums. Some of the nicest areas to live in Southern California is Downey and Lakewood. They are very affordable communities. San Bernardino and Riverside communities are more affordable, but with the drive to commute, many prefer the locality of being close to Los Angeles.
If you want to find a reputable Realtor, contact the California Board of Realtors at:
http://www.car.org/
A local Realtor will be able to guide you to the best deals and many companies have on line services. One such service would be Century 21Jervis offices located in Downey. If you want any other area, they can direct you. They are the best office there:
http://century21jervis.com/index.htm
Financing can be set up through the home loan departments at Bank of America:
http://maps.google.com/maps?oe=UTF-8&sourceid=navclient&gfns=1&um=1&ie=UTF-8&q=bank+of+america+in+home+loans+at+downey+california&fb=1&split=1&view=text&latlng=2450088227044241933&ei=S_KFSvX9B9nTjAeC3dSiCw&sa=X&oi=local_result&ct=result&resnum=1
These are merely examples of places I have dealt with in the past and know that they are reputable. In no way can I guarantee them today. Buying a home is a simple matter with prequalifying for a loan, finding a Realtor, who will in turn find you the home of your dreams.
You have worked your whole life maintaining your perfect credit, then all of a sudden you lose your job. No matter how you try and what things you sell, you just could not save your credit. Before long they are repossessing your home and your car and you have absolutely no where to call home. The only choice that remains is to rent an apartment, but even there you have nothing but shut doors and no one wants to help you due to your credit rating or FICO score.
