If you are like many Americans, you may no longer be able to qualify for a mortgage. Perhaps your credit is less than perfect, or perhaps you have only been self employed for a short time. Whatever the reason, your inability to qualify does not mean that owning a home is not important to you.

Many people consider a good option to conventional financing to be renting to own or lease purchasing a home.

If you are serious about buying a home, this can be a good option. However, if you dont start doing what it takes to qualify for a mortgage at the beginning if the term, a Lease Purchase can be a financial disaster.

Most everyone understands that a good credit score is the single most important factor in determining your loan approval. Unlike a few years back, in today’s economy, good income and a down payment wont overcome bad credit!

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 existing loans with a finance company, they should be paid off quickly. Unlike bank loans paid on time, finance company loans lower your credit score. This is because they are considered a sign that you are strapped for cash and as such had to seek out a high interest loan.

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.

Changes in available loan products have made it especially difficult for self employed individuals to qualify for a mortgage.

While stated income loans were once popular among self employed individuals, they are no longer available. If you are considering a lease purchase or lease option, it is important that you begin documenting your income immediately. Lenders 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 actively working on credit repair and paying attention to other factors that will impact your chances of loan approval, you can quickly be on your way to becoming a Lease Purchase success story!

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