Written by Randy on May 4, 2010 – 11:04 am
In dollars and cents it means that you can save tens of thousands of dollars. A person with bad credit who wants to buy a home needs to look at several credit issues and exposures. It is possible to buy a home with bad credit, but bad credit issues must be dealt with if you do.
For example, if we use a $100,000 home because it is a round number. Look at the information below that shows the added costs of buying a home with bad credit.
· Closing Costs for a bad credit buyer is 2-4% higher. At 3% this costs $3,000.
· Add 1% to a negotiated purchase price because it is harder to negotiate with a seller if you have bad credit.
· Interest Rate for a bad credit buyer will be approximately 14% vs. 8% with a good credit buyer.
· Interest Rate Monthly payment on $100,000 at 14% = $1172
Interest Rate Monthly payment on $100,000 at 8% = $735.
· That comes to $437 per month!
This adds up to $5244.00 per year and over a 7 year period (the amount of time that negative, derogatory and out dated information will remain on your credit report) Added up you can expected to spend an average of $36,708 over the next few years.
· These are the costs incurred by a bad credit score buyer.
Apply these same calculations to your other “extra interest” accounts on your autos, furniture, credit cards and on and on and on. Is it worth it?
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