How to Buy A House With Bad Credit

Understanding that not all home owners want to remain owners. You need to find people who want out. They're either broke, unable to make their payments, lost their jobs or may be moving and having a difficult time selling.

To find houses that people are needing out of simply look for houses for sale that are listed as a "Short Sale". Short sales typically represents a seller who is going to sell their home for less than they owe on it. For example: The seller owes 300,000 and the current value is 250,000. Either the bank has agreed if the seller gets $250,000 they'll take it or the seller will pay the difference. Today, short sales are very common.

Once you've found a seller who is doing a short sell, make sure the amount owed is reasonable. For example, let's say that after closing costs and realtor fees the seller would be short 10,000 or 20,000 if you were to purchase the house for $280,000.

Offer to lease the property for a pre set amount of time...5 years, make sure your payment goes directly to the bank and verify that they are not in foreclosure..get a lawyer for any legal issues.

Tell the seller you'll make the payments in the form a lease payment for up to 5 years or whatever works for you. But you want an option to purchase the house for a preset amount. The preset amount should be for a reasonable amount. Lets say $280,000, its current value, or a little over that or whatever you work out.

So lets review: You find a person who cannot continue with the house payments and is subject to losing their home and getting very bad credit. You save them from foreclosure by leasing the house for 5 years, making sure the payments to their lender are made. You get an option to purchase the home anytime with in the next 5 years at a preset price that you set at the time you lease the home. If the home escalates in value, say it goes up in value in the next 2 or 3 years and you've cleaned up your credit. With the built in equity you should have no problem getting a loan.