What is one of the most common reasons that homebuyers seek a contract for deed instead of a mortgage? Credit. Whether due to debt, divorce, foreclosure, bankruptcy, or any other reason, a low credit score can make it difficult, if not impossible, to qualify for a mortgage.
This is where the Slow Flip contract for deed comes in. It allows you the time you need to raise your credit score, without forcing you to sacrifice the stability of homeownership. But, in the Slow Flip program, you must convert a CD to a mortgage within five years.
How to Improve a Credit Score to Get a Mortgage
Correct Credit Report Errors
According to realtor.com, identifying and correcting errors on your credit report is a relatively fast and easy way to raise your credit score. Get a copy of your credit report and look it over. If you find any errors, you must provide documentation of the mistake to the credit bureau. Typically, bureaus have 30 days to investigate errors.
Settle Delinquent Accounts
If you have accounts that are past due or in collections, bringing them current will boost your credit score fairly quickly. However, your late payment history will remain on your credit report for seven years.
Reduce Your Credit Utilization
Credit utilization is the amount you owe versus your available credit. For example, if you have a $10,000 credit limit, and you owe $8,000, you’re utilizing 80% of your available credit. Pay down balances to improve your credit score. Applying for a new credit card will improve your utilization, but remember that credit applications show up on your credit report, and may lower your score in the short term.
Do you have questions about the Slow Flip contract for deed or our process? Get in touch – we’re here to help!
The Slow Flip contract for deed program helps families in the Twin Cities metro area of Minneapolis, St. Paul and surrounding suburbs purchase a home using a contract for deed, or CD, when a mortgage is not possible. The Slow Flip contract for deed can be an ideal tool to purchase a home when buyers need time to adjust their income, credit, debts or other financial components so they can eventually qualify for a mortgage.
Are you or your clients interested in learning more about the Slow Flip contract for deed? Contact us at 952-417-0000 today.