When a California resident wants to buy a house, a lender will run a credit check. If prospective buyers have a low credit score, it may hinder their ability to get a mortgage. However, those with poor credit may still have an opportunity to purchase a home. One option may be to enter into an owner finance arrangement.
In this scenario, a buyer will make monthly payments of principal and interest to the seller of the home who will take back a mortgage. It may also be possible to enter into agreement that allows a buyer to first rent the property with an option to buy in a year or two. This may be beneficial as a potential buyer gets to know all the pros and cons of a property before making a long-term commitment.
First-time borrowers who have a credit score of at least 580 may be eligible for an FHA loan that comes with a down payment of as low as 3.5 percent. Those who have a credit score under 580 may have to put 10 percent of the purchase price down. Credit scores may be determined by the length of a borrower’s credit history as well as payment history and amounts owed to creditors.
There may be many different ways for an individual to buy residential property. Regardless of how a person chooses to make the purchase, it may be worthwhile to do so with the assistance of an attorney. There is a lot of paperwork involved in the escrow process, and an attorney who has experience in this type of a real estate transaction can review the documents to make sure that they are in order.