Mike’s Real Estate Show

Taken from TruliaVoices.com and a question from a consumer: Should I buy a home with a 500 credit score!!

What credit scores tell us and the lender, is your ability to manage your debt and credit. Having a 500 credit score is not indicative of someone who has yet learned to do this. I think it is in your best interests to practice managing your credit with unsecured debt and car loans before getting way over your head with a major home purchase! Consider this: a credit score of 720+, really great credit score, will get you an interest rate of 6.30% and using a $200,000 loan your principle/Interest payment will be $1,238.00. Your current credit score of 500 will get you an interest rate of 13.379!!!! payment of $2,272. Over the course of the loan you’ll payment amost $400,000 MORE in interest payments!! WHY DO YOU WANT TO DO THIS!!

Your payment is a staggering 100% MORE than those with geat credit. I refer you to the web site http://www.myfico.com for reference and how to get you back on the right credit track.
It’s not so much that you COULD find a loan to get into a home but WHY would anyone put you into that situation with such unmanaged credit skills which would no doubt lead you to a bigger mess. I would rent, build your credit score up and then, once you’re comfortable with HOW to manage money and credit, go and sit down with a lender to see if you want to go prime time with a home loan. For now, RENT!! And be very wary of anyone who wishes to get you INTO a home!!