by Vincent Polisi

In today’s tightening lending environment, you may be like many people who are unable to qualify for a home loan. Still, your family deserves a home they can call their own.

You may be considering a Rent to Own, Lease Purchase, Lease Option and Owner Financing transaction as a viable alternative to conventional financing.

This is a great alternative if owning a home is truly important to you. But, if you dont start doing what it takes to qualify for a home right away, a Lease Purchase can be a financial disaster.

Your credit score is the single most important factor in your ability to get a mortgage. Unlike a few years ago, good income and cash to put down isnt enough!

You must start repairing your credit right away! Your first step should be paying off any recent collections. You will also want to pay your credit cards down as much as possible.

Because part of your credit score comes from the percentage of revolving credit that is available, you want to have at least four credit cards that are not close to their limit. Your score will be higher if you owe $1,000 and have $20,000 available than if you owe $1,000 with $10,000 in available credit.

If you have finance company loans you will want to get them paid off as soon as possible and have the accounts closed. While bank loans reflect positively on your credit score, finance company loans will actually hurt your score. The reason for this is because most people seek out finance company loans when they are desperate for cash. The credit bureaus see these loans as a sign of financial stress.

You will need to do more than just repair your credit because there are other factors which will impact your ability to qualify for a loan.

Other things that are important include job stability and income. Two years with the same employer is ideal. If you have changed jobs, this may be ok, provided the job changes were for career advancement.

If you are self-employed, qualifying for a mortgage is especially difficult due to changes in loan programs. Most people that are self-employed are taking full advantage of the tax code, and as such, do not show much income.

Historically, a large number of self-employed individuals sought out stated income mortgages. As these loans are no longer available, many are electing to do Lease Purchase transactions for two years to give them the time to document their income. It is important to do what it takes from the beginning of the lease term so that the required documentation will be in order when the time comes. Most every lender will require at least two years of documented income.

Other than income and credit history, there are other things that can impact your ability to get a mortgage. If you are not a U.S. citizen, you should be especially careful about entering into a short term lease purchase. Non-citizens will need to establish their credit files and have cash down. Even then, there is no guarantee they will be able to get a mortgage.

By working on your credit and other key factors that impact your loan approval, you can quickly be on your way to owning a home!

About the Author:
Vincent Polisi is President of financethedream.com. Financethedream is the nations top Rent to Own and Lease Option program, offering homes throughout the United States. financethedream.com prides itself on offering a comprehensive home ownership program for its clients, including credit reporting and credit repair.