I received an email recently, responding to one of my ads. I will not mention the contact information of the person who contacted me, nor precisely quote their question. But the website inquiry went something like this:
“Message: Hi Gerry,
I saw your ad near my work and went on your website. You sound impressive, but I notice that on the FAQ section that renters can’t receive a mortgage? Boo too bad… we are looking to buy. Would you know of any places available to us for help?”
My response was as follows:
“Hello Mr (Name With-Held)
Renters can often obtain a mortgage on a property they are buying.
With good credit (and sufficient verifiable income) rates as of this date are as low as 2.44% on a 5-year fixed mortgage. As little as 5% downpayment is common. Additional costs are very low.
With bad credit … now you will need a MINIMUM 15% downpayment PLUS COSTS to purchase. Rates vary on the situation – but 3.99% and up is common. With costs – you will need something in the range of 17%-18% saved for downpayment at the least.
With bad credit COMBINED with insufficient verifiable income …. now you will need around 25% for a down payment and costs. Rates vary on the situation – but 8% is common.
In summary – you can almost always borrow money, the issue is the cost of the borrowing.”
On my website, the Frequently Asked Questions are there to quickly get to the heart of the matter. Renters often borrow to buy a home – otherwise how would anyone ever move from renting to home ownership. But if your credit is bad, and your income is non-verifiable, borrowing is not cheap. This is the point of my FAQ.