One worry I hear often from first-time home buyers is that they have no credit or a limited credit history. While this often gets lumped in with the “bad credit” category, that’s not necessarily so! There are several creative ways around this obstacle, and it’s easy to address with a creative, knowledgable lender.
First, think of any recurring payment (monthly or quarterly) that you are obligated to pay and that you consistently pay on time. Got a cell phone bill? Car or health insurance? Gym membership? Heck, even a Netflix subscription? Anything from utilities to daycare can check the box. If you have proof that you maintain three recurring monthly payments, plus rent, that is often enough for lenders to be able to build a case to help get you a mortgage.
Remember, there is “good debt” and “bad debt”, so be sure to talk with a lender before you attempt to drastically change how you manage your money if you plan to purchase a home.
Special thanks to one of my favorite mortgage experts, Andy, who shared this and many other great nuggets of wisdom with me and my clients! If you are currently renting and hoping for a change of scenery, he should be your first call.
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