Is it possible to get a loan with bad credit? A lot of people really wanna know because
they’re in that situation. Let’s talk about it.
If someone wanted to buy a property
or invest in real estate but they have bad credit, do you think it's still possible that
they could get a loan and still buy a property? If they have bad credit? NO. Do you think you
even could, is it even possible? It's tough. Alright, let’s jump into the meat
and potatoes on this subject. The first thing I wanna do is I wanna give you three different
strategies. Here’s the first one. You gotta work with a loan broker or a mortgage officer
that is brokering out to many different banks and is doing high volume. Let’s talk about
why. If you go directly to a bank and you walk into the bank that you work at, they’re
always gonna wanna offer you and pre-qualify you for some type of loan. But the bottom
line is that’s just one bank, and not all banks are the same. They weren’t all created
equal and they have different rules. So I recommend number one, going to a broker that
works with 20, 30, 40, 50 different banks. Now, they’re not gonna work with that
many unless they’re a serious operation doing high volume. So you may wanna ask
how many hundreds of millions of dollars’ worth of real estate do you broker out each
year? If they give you a funny look like “are you crazy that’s a lot of volume,” that’s
not your loan officer likely that can find the right option for you. Because there are
banks out there that work with people that do have bad report credit.
Second thing I want to talk about is what do you do if you have bad credit to actually
get it fixed. How important do you think credit is? Well, I mean in this day and age, it feels
pretty important. How long do you think it would take to fix your credit? 8 years. But
I believe it it would probably take at least you know maybe a year. How do you fix bad credit?
By paying your stuff on time. This strategy really comes down to doing some credit maintenance.
Sometimes we’ve got hiccups, sometimes we’re late on a payment and then all of a sudden
we say hey “I’ve got to get serious about qualifying for a mortgage.” Even if you’re
using your credit to buy a lot of real estate the way I have in the past, you’re gonna
need to do maintenance; so whether you call it repair or maintenance it’s good
to find the company out there that you can trust. This is not one of those things where
less is more. You’re not looking for the cheapest program. You’re looking for a company
that has been in business for a really long time has worked with thousands of clients
and keyword is 'attorney'. If an attorney is involved it’s more of a legitimate program
and what they’re doing is they’re using a nice little strategy. There’s a couple
of them that I wanna share with you. Number one is they’re going to challenge
the inquiries. For example, I remember that one time I was trying to qualify for a mortgage
and I found out that my credit had dropped in the last 90 days by 50 points and I was
alarmed. And when I found out why it’s because that last couple of months I had been shopping
at the Gap, at JC Penney’s, or wherever and they kept offering me that seductive 10% discount
if I’d use the in-store credit card and applied for it. Well I didn’t know that
every time I was getting that discount to save a few bucks that I was actually putting
out an inquiry and that that would temporally drop my credit. So the credit repair company
I worked with... they challenged the inquiries. And by law if you send a challenge letter
to whatever company did the inquiry, if they don’t report back within a short timeframe
with the response and whether the inquiry was legitimate or not, then they have to drop
it by law because the credit bureau has to report that. Now, that’s really good news
for you because most companies are not set up to take those requests seriously so they
just kind of fall by the wayside and I actually saw my 50 point drop go back up 80 points
and my credit got stronger, okay? Find a good credit repair company.
But here’s the third thing... if you find a broker that doesn’t have a bank that can
give you an option and if credit repair is going to take too long for your needs, then
your third resort is to do seller financing. Seller financing is basically where someone
else already has the house that you want and instead of selling it, they’re actually willing
to finance you the house. Now, that’s really neat because they’re not a bank and they’ve
got different criteria. They might ask for a little bit of a different down payment,
they might ask for a higher payment. Seller financing is an amazing strategy for actually
walking into the house that you want. How do you find these? What you do is you go through
the paper, find the house that you want, typically seller-financed are not presented by realtors.
And so if you have a “for sale by owner” you can call them up and say “hey I’m
not in a position to buy your house but would you rent it to me or would you do a lease
option and work with me until I can buy it in a couple years because I’m doing a couple
of things with my credit?” And there’s a lot of people out there that are willing
to do that and guess what, you’ve just negotiated yourself right past the bank by using the
person that has the mortgage, has the bank, and boom you’re right into your house.
Now, here’s the hidden strategy with this really great deal that if you seller finance
yourself into a deal, you wanna negotiate it where they’ll actually put you on title.
Because if you’re represented on title for at least two years then after two years you
can actually refinance onto the house. Now think about that, you basically back-doored
yourself into a super easy program that most banks will do because if they see you’ve
been on title for two years then they’re going to say well why wouldn’t we let them
refinance it. And qualifying for a refinance is way easier than qualifying for a purchase.
So what’s the big moral of the story? Listen, if you’ve got bad credit, you got options.
You can get into real estate and you don’t have to wait. If you need to wait or feel
like that would be the best option for you, then just focus on doing some credit maintenance
and some credit repairs and stick with it. That’s the key. Real estate done correctly
is a long-term play, getting into a home, and having that slice of American dream is really
key, so stick with it.
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