Buy a Home Regardless of Credit: Real World Help for the Imperfect

Now, please keep in mind that I am no professional, though judging by some of the incompetent idiots I met during this process, I very well could be. Mostly, those who love me would say that I am an obsessive-compulsive control freak with delusions of grandeur. Those that don't love me would say I'm a ball-breaking bitch. I say they both have a point.

I have compiled, with little regard to political correctness, things I think those unfamiliar with the homebuying process should consider. In particular this is for my folks with more student loans than savings and more credit report dings than dreams. I'm on your side. Do with this as you will but know that this is the sum total of my housewarming gifting.

* Make up your mind: Do you want to own a home? Believe it or not this question stumps 80% of those in my social circle. Something about being younger than 40 and not yet millionaires - it drives us Gen-Xers crazy. But before you decipher your FICO or let the one-eyed guy at the tax filing place sell you on a great mortgage deal, you must determine if you WANT a house. The reasons for wanting one are irrelevant, as long as it matters to you. You don't even have to be able to articulate it; just want it. From there the rest is easy.

* Your credit score is EVERYTHING... and nothing at all: Trust me - I know this fear. Some of us have had more collection calls, cut-off notices and guys named Vinny knocking on our Momma's door at 4 in the morning than we would ever care to admit. We would rather not know what's on the damn thing. First rule of adulthood? Pull your head out of your ass. There's no more debtors prison - unless you incurred your debt with a glock - so get over it.

Your credit score is just a number that, unlike the one that measures your privates or your boobs, does not determine your worth as a person. It's just three inoccuous digits and in today's automated underwriting driven mortgage industry - that's where racist white guys in blue suits don't get to turn you down just cause your last name is Johnson - it drives the products for which you qualify.

The good news is credit scores are fluid and pretty easy to prop up long enough to qualify and close on your house if you're smart and/or willing to do the legwork. I seriously know people who went from a 498 to ownership in 12 months. No lie. I'd add them as references but, well, let's just say - Vinny's still looking for them.

To this end, go to www.myfico.com and buy all three scores. Your scores MUST be from FICO to be worth crap. Anyone with a URL and a merchant account can sell you "a" credit score, but the industry only recognizes your FICO scores.

While you are there I strongly suggest adding the monthly credit monitoring system. It is extremely useful during the homebuying process because you have real time access to any changes - say, an overzealous broker doing too many credit pulls or a wayward account popping up - and if you're like me you'll sleep better knowing there is at least one thing in this world you can control with the click of a mouse.

Tip: You can buy your scores from My Fico but get a cheaper monitoring service at www.truecredit.com. However, pay the scores at True Credit no mind, they are not My Fico official and thus, worthless, BUT they do allow you to monitor your reports for changes.

* Repair or Mobilize: Now that you have your credit scores you'll either be at the nearest professionally decorated model home with a gleam in your eye or you'll be listening to bad country music and crying into your beer. Stop both right now.

If you're reading this I assume you are not one of those spotless credit people who must only call your local banker and "sign a few docs" to buy a home. So that means your credit may need a little propping up. How do you know if you do?

Throw out the lowest credit score of the three and the highest, is the number left 580 or above? If yes, you qualify for a decent range of products, most offering 100% financing with no PMI or Private Mortgate Insurance. PMI is a costly add-on to your monthly mortgage payment that some lenders force you to get in order to secure a loan with them. PMI pays the lender should you default on your mortgage. PMI only protects the lender and, as of the date I write this, is not tax deductible. As such I consider it the biggest rip-off since, well, since the last novelty insurance product. I suggest you avoid PMI if at all possible.

However, if you are within 20 or 30 points all is not lost. There's more info on the web about credit repair than fake boobie .gifs but I'll only send you to one place: www.creditboards.com. This board is not a shill for "credit clean up" services, they offer real advice from real people who've done it and almost any situation you can imagine has been dealt with over there. I'm too lazy to type a novel on credit repair so go read the board.

I will say that you want to check for easy errors to fix - credit limits not posting, old paid accounts not reflected, shit your momma put on there when you were five - easy stuff to remove. If you're within spitting distance of 580 those small changes can get you there.

Also know that I'm assuming you don't have any money. If you do have up to 10% cash to put towards a downpayment your score can be as low as 500 for some lenders.

TIP: Paying someone to "fix" your credit is stupid and usually illegal. Stop it.

TIP: You can pull your own credit a million times without it affecting your score.

*The House is of no consequence: This is where a lot of folks get lost. They find a house before they find the money. Unless you live in California, there are way more houses than people throwing money at you. Always, always, always follow the money. Actually, that's a good rule for life.

With a workable score its time to shop, just not for houses. It's time to shop for a lender/broker. This is where you get to be in total control - that either scares you or gets your panties a nice, warm cottony mess of moist. Uh...yeah.

This is a big purchase so do NOT, under any circumstances, listen to your great Uncle Kenny when he says he knows a guy. Don't even listen to well-meaning family who bought a house 20 years ago. A lot has changed and unless it's their business they don't have a clue. Do NOT walk into one of those brightly lit "buyer's agencies" where a 20 year old with a GED will show you how to overpay for a matchbook built home in a "transitioning" neighborhood with a shady builder.

I don't care if you're only looking to spend $60k - pretend you are a million-dollar buyer. Make people earn your business. Settle for no less than a professional lender or broker who will return your calls, answer all of your questions, get you the best deal and smile as they do it.

Start by reading every local real estate online board you can find. Look for brokers or lenders who say things like: flexible products, all credit types accepted, low FICOs ok, online processing, etc.

Every lender/broker is not created equal. Some...many...most only know how to do one product for one type of customer - easy customers with spotless credit and loads of cash. You want the guy who knows which bank is offering a new product with great terms for people exactly like you.

Call at least FIVE brokers/lenders. Go with your gut. If you're a man, find a woman with a lick of sense and go with her gut. Do they have a real office? Who are they affiliated with? Do you like them?

Tell them your credit scores and your situation - be honest. Give them a time frame. Sound intelligent by quoting me directly; they're less likely to try and rob you blind if you sound like you read.

When you get the guy who says "I can get you a loan tomorrow!" hang up on him. He's lying.

When you get the guy who says, "I think I can put together some options for you. Let me do some searching and call you in a few hours" wait a few hours for the return call and then hire him.

Only after picking your lender or broker do you let them pull an "official" credit report. Credit pulls are like gold for borderline borrowers - a few too many can totally change what you qualify for. That's why you bought your own and why you'll interview before letting anyone else pull.

TIP: What's the difference between a lender and a broker and why do I say everyone should always go with a broker? Well, one lends money and the other saves you money. Learn the difference and then get a broker.

*Paperchase: Your broker will come back with several options. Which you choose is up to you. Again, there are lots of sources that break down the difference in loan products and for whom they best apply. Some of the best are www.bankrate.com and www.creditboards.com where you'll even find actual mortgage experts offering free advice. Ask them. I'm just a writer.

No matter which product you go with you'll want to get a pre-approval letter. Basically, a pre-approval letter says you're legit; you got money in the bank, shawty what you drank! You can, indeed, buy the bar - as long as it is appraised for its true value and has a house built around it.

Your pre-approval letter is different from a bullshit "pre-qualification". Monkeys can be pre-qualified if they get a check for their used car lot appearances. Being pre-approved means you've been vetted by your lender, have submitted real information and been found worthy with a few stipulations. Chief among them is the loan amount. Your letter should have the maximum amount for which you qualify. This is the last time you should heed that amount.

Get your letter and then, only then, do you get to go shopping.

TIP: Get several copies of the letter and keep it with you. It is your passport to circumventing sales agents, getting respect at the model home and sometimes the perfect opportunity presents itself and you can slap it down on a table like the big joker in a spades tournament! KA-POW!

*OPM - I really wanted to go with some cool rip-off of OPP but I got nothing. Basically if you are poor, have little cash, borderline approval and want a house it would behoove you to buy with Other People's Money.

Actually, even once all that changes try to use Other Peoples Money as much as humanly possible; it smells way nicer than yours and spends easier.

In today's market, if you are flexible on what your home must have or where you must live, you can find builders who will PAY YOU to buy their home.

Now some cynics will claim that they are only taking money off their profit margin and aren't really paying you and blah, blah, blah. Those are white people who are use to free shit. I ain't had nothing free since the candy lady's boyfriend offered me some mary janes to see my bloomers. So I say, take it where you can get it.

You were gonna buy the house anyway, why not use the builders money, regardless of their motivation?

Unless you're a snob who just MUST have granite and tile and build on a special corner lot with a tree line, you are in a position to do some wheeling and dealing. Why? Because fools got houses stacked up like money in a rap video. They're built or almost built with no buyer. If you can compromise on picking your kitchen floor or can live with a bay window, you can tell them, "look, I'll take this off yo' hands in exchange for you paying my closing costs and down payment."

You'll be surprised at how many people take you up on that offer. And if they don't - keep it moving. This is, again, where being flexible comes in. And let's be real, you need to be happy to get a house. Please, don't lose your damn mind over a lazy susan and separate tub/shower combo.

Again, there are lots of sources to help you determine how to choose a home. You will want to consider location, proximity to development and schools, price, etc. But I'm the only non-expert willing to speak to you like family so I'll say what they won't say.

This is your first house. It will not be perfect. It can, however, truly "fix" your credit with a solid payment history. It can offer you financial options you never dreamed of - almost all small business owners finance their new ventures by pulling cash from their home. It does change the way other lenders and potential sugar-daddy's look at you. Keep focused on your focus. Model homes and open houses are fun. They are designed to seduce. But do not be fooled - they don't love you. They just want to line up a chain of agents and lenders and processors to pull a financial train on your ass.

Take someone along to balance your impulsive nature. Enforce a "no sign rule" for 24 hours. Do not, do not, do not let anyone talk you into anything, ever.

You are probably black. You may be a woman. These people will think you are stupid. Let them think that, but don't you dare prove them right. Ask for everything. Have your ducks in a row. Demand service and only make deals that work for you.

TIP: I know OPM only works in markets where homes aren't scarce. If you live in markets like L.A. or N.Y. or San Francisco my best advice is - MOVE! You ain't never gonna have nothing in them markets. And even if you do find a way to buy a place there's an excellent chance that you'll be the last fool to buy it, cause the market will drop and you will have a $5 million dollar mortgage on a one room studio with attached toilet.

*Sign and Drive! You got a pre-approval letter. You waltzed into just the right neighborhood, found just the right deal. Now you're ready to sign a purchase contract.

If you decided to get a realtor, this is the only place they will probably earn their money. They SHOULD decipher every line of the contract with you and you should PAY ATTENTION! This is not like your student loan exit exam, you really want to understand this stuff. So ask questions, no matter how simple. And the first time someone rolls their eyes or throws off on you, pick up your purse or your balls and walk the fuck out.

This is the first major financial deal of your life. It can determine how all other financial deals go for you. Treat it with respect.

I'm no big fan of Realtors, mainly because I never met a good one. But if you lucked up on one, they should also catch any details you missed. If you don't have a realtor go back to wwww.creditboards.com and read, read, read.

You will be expected to give the seller or builder a check at this time, a commitment to buy the home...UNLESS you used OPM and then you're home free. But I do want to note that everything is negotiable. If you don't have $1000 to write the contract, say so! You'll be surprised how quick someone will cut that in half or let you pay it in two separate payments or, even, if times are bad - pay it themselves.

They - your realtor, seller's agent, builder rep - don't get paid untill you close. And they stand to earn tens of thousands of dollars off you. Giving you $500 ain't nothing to them. Just keep that in mind. Along the way almost everything can be negotiated.

Once signed, you fax your contract to your lender and the fun begins. It is called the "Race to Close"!

TIP: I don't like Realtors. I never met one who could do for me better than I could do for myself (a theme in my life). But if you don't like staying up until 2 in the morning reading and researching and executing your own home search, by all means get one. Just don't abdicate your own responsibility to them. They're just selling it, you'll be the one living with it.

* Between Here and There: You know that guy who called you every 15 minutes to see if you'd found a property or sent you emails to just say "thanks!"?

He's nobody.

After you get a contract most brokers pass you off to loan processors and underwriters who do the real work of getting your loan closed.

Get to know these people. Let it be known, nicely, from the get-go that you're one of those "annoyingly involved" types.

Get their names and email addresses. Get their direct extensions. These people are often salaried, unlike your broker, so they get paid regardless. As such, they often aren't too good at following up or chasing down errant paperwork.

But guess what? This is YOUR deal. YOU do the legwork. YOU follow-up. If you're one of those passive, namby-pamby people who waits to be coddled and cared for, homeownership isn't for you. Neither is voting, higher education or operating a motorized vehicle. Just move back to your momma's house and invest in vintage porn.

Everyone else - be prepared to be frustrated. Do what you got to do to get ready for it because it is inevitable. Buy some liquor, get a little wacky-tobacky and batteries for the vibe cause these fools are crazy.

They will lose your paycheck stub/w-2/purchase contract/application. That's why you should have copies of all of that. If you really want to be a superstar, scan them and have them at the ready to email with a moment's notice.

They will not return your call or they will lie and say they didn't get something. This is when you pretend, once again, to be Donald Trump. After one such instance, you ask for a supervisor. They hate that, 'cause the supervisor actually cares if you close. Demand service. They'll close your loan just to get rid of you.

TIP: Be nice when you can but a bitch when you must.

*CLOSE! - If you made it this far, you deserve your home.

Closing should go without a hitch if you stayed on top of the loan processing or your agent did. A week or so out call every 15 minutes to confirm that your closing attorney has all the necessary paperwork. Your loan should, ideally, be funded - money wired to the closing attorney - PRIOR to your closing.

More details on all this lingo at www.bankrate.com and, yep, you guessed it, www.creditboards.com. I don't reinvent the wheel.

Have every email and every piece of paper ever given you. Learn what a Good Faith Estimate or GFE is and make sure it is correct. Take the day off work - you'll need the whole day to manage your nerves.

Now may be a good time to note that closings are often rescheduled when there is a problem with the loan. I don't play that. One, if you're borderline, waiting another month or two could change your whole financial picture. There are creditors and collection agencies that make a living of sniffing out your homebuying intentions and reinserting some outdated info just to fuck with you.

Close on time and quickly if you can. If you decided to build, though, there is little you can do to control this. Again, this is why I strongly encourage folks like us to look at existing properties.

At closing you'll read everything, sign your life away and get some keys.

After all that I give you two weeks to get over smelling your new carpet and flushing your very own toilet. All this work was really about correcting the mistakes that made buying a home difficult to begin with. Pay your shit on time if you have to bring back rent parties or pull out the old g-string.

This is your chance to get this right. Do not screw it up.