Even if you can’t get a major credit card, you can own a home. That is the theme of the new edition of “No Credit Required; How to Buy a House When You Don’t Qualify for a Mortgage,” by Ray Mungo and Robert H. Yamaguchi.
Since 1968, co-author and self-employed writer Mungo has purchased seven houses without credit. “Our aim is to show that anyone, regardless of credit history, can own a home in the United States,” the book promises. The book then proceeds to deliver, offering many alternatives to fit the needs of many diverse situations.
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“No credit, no job, no problem” is the heading of one of the introductory sections. Perhaps that is a bit of a stretch, but Mungo and Yamaguchi then proceed to show how home buyers should look at their current situation to determine which no-credit home purchase method is best for them.
If you have cash for a substantial down payment, the authors show how that will greatly help overcome credit problems. Several times they emphasize that home buyers with a 30 percent down payment will have no trouble obtaining a 70 percent mortgage.
Mungo and Yamaguchi even include some “far out” methods of acquiring a home with no credit to qualify for a mortgage.
These techniques include acquiring a foreclosure property, adverse possession, equity sharing, lease with option to buy, seller financing, mortgage assumption, and even “en viager,” which means acquiring property from the elderly and even the deceased. Although legal, the last method is a bit challenging (although it is widely used in France) because the home seller retains a life estate, which can last many years.
However, the section about reverse mortgages for senior citizen homeowner is a bit misleading. It implies the lender takes title to the home. That’s not correct. A reverse mortgage lender has only a lien on the residence and the homeowner is never liable for any deficiency, even if the homeowner lives to 120.
The book is filled with many good and bad examples, both from the personal experiences of the authors and from acquaintances. Along the way, the authors delve into home selection and why avoiding a no credit purchase of a “bad house” is advisable. “Beware of negative unchangeables, because they can make your house difficult to resell,” the authors warn.
Chapter topics include “No-Qualifying Assumable Mortgages”; “Owner Will Carry”; “Owners Who Carried and How It All Worked Out”; “Lease with Option”; “The 30/70 Rule”; “Adverse Possession”; “Equity Sharing”; “Foreclosure to You”; “Quitclaim”; “‘En Viager’ and Buying from the Old”, “Dying, and Dead”; “The Unwanted, the Desperate, and the Ugly”; “Go for It! New Techniques for the 21st Century”; and “Credit-Free and Home for the Holidays.”
This new book is heavy on techniques for buying a home without credit but light on specifics of each recommended method. It is filled with lots of sound advice, such as “Offer some down payment, no matter how small” and “property in bad condition is a prime candidate for an owner-will-carry sale.”
One way or another, even if you have bad or no credit, this book shows at least one method that will enable a home purchase. On my scale of one to 10, it rates a solid 10.
“No Credit Required; How to Buy a House When You Don’t Qualify for a Mortgage (Revised Edition),” by Ray Mungo and Robert H. Yamaguchi (New American Library-Penguin Group, New York), 2004, $12.00, 190 pages; Available in stock or by special order at local bookstores, public libraries and www.amazon.com.
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Real Estate Center).
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