It’s reassuring to know that the large sum of money you’re putting towards your home each month is going towards an investment. And, if you’re a renter, your money is certainly going towards an investment – your landlord’s investment, that is!

If you’re tired of paying someone else’s mortgage, it’s time to look into purchasing a home of your own. And, contrary to common belief, you don’t need stellar credit in order to be approved for a mortgage. Though it helps, it’s far from necessary.

If your credit score is low, try these strategies to help you purchase the home of your dreams:

1. FHA mortgage. The Federal Housing Administration doesn’t directly administer loans to buyers. Rather, they act as a liaison between buyers and private lenders by insuring the loan through the government.

* Since the government insures the loan, lenders are more likely to offer a loan to under-qualified candidates, and also offer the loan at a reasonable interest rate.

* FHA mortgages are tailored to buyers with traits that most private lenders find to be undesirable: buyers with low annual income, low credit scores, fresh college graduates, or buyers that have undergone bankruptcy within recent years.

* FHA mortgages require a down payment as little as 3.5%. So a home that is listed at $300,000 would require a $10,500 down payment through an FHA loan, rather than the standard 20% which would pan out to $60,000.

2. Seller Financing. When a seller finances a home, he agrees to allow the buyer to pay the seller directly over time for the home, instead of seeking financing through a traditional lending institution. This can be an attractive option for some sellers who are dealing with an overly saturated real estate market that yields few qualified buyers, and even fewer offers.

* Seller financing is becoming increasingly popular because lenders are tightening up their requirements and making unconventional borrowers jump through insurmountable hoops.

* More often than not, a seller that is offering financing will ask for a larger down payment in order to lower his risk. It isn’t uncommon for a seller to request 30% to 50% of the purchase price as a down payment.

* Be aware, sellers will still charge you interest on the home.

* To make the offer more attractive to the seller, consider offering more for the home. For example, if the home is listed at $300,000, you can offer $325,000. This will only cost you a couple of hundred dollars extra per month, but is a large enticement to the seller.

* Always employ the services of experienced real estate agents, as they’ll be familiar with this complicated process. An experienced real estate agent will be able to guide both you and the seller through the necessary paperwork, escrow account, and promissory note details.

3. Improve your credit score. Though it’s understandable that you want to buy a home right now, it might make more financial sense for your family to wait a while. Take a year off of your home searching and focus on improving your credit score. Typically, all it takes is a year to see a significant difference in your score.

* Increase your credit score by disputing errors on your credit report. Try to keep the inquiries to a minimum, though no inquiries would be ideal. And of course, pay all of your bills on time, especially your credit cards, student loans and car payments.

* Pay down the balance on your credit cards. Generally, lenders like to see that you use less than 30% of your available credit.

* Rather than deactivating older credit cards that you rarely use, keep them. Not only do they give you more available credit (which lenders love to see), but also, the older your credit history, the less of a gamble you’ll be perceived as.

Whether your credit score is 589 or 620, you can buy a home. You may not be able to receive the keys to your kingdom at this very moment. But if you’re willing to choose a less conventional approach to home buying or you’re dedicated to improving your credit score throughout the next 12 months, you can move into your new place in no time at all.

Your credit score can have a major impact on your life. Of course, this impact could be positive or negative, depending on your credit score. The higher your score, the more benefits it brings you.

MORTGAGE

One of the most notable impacts that your credit score will have is determining what kind of mortgage you can qualify for and even if you can get one at all.

If you have a poor credit score, you may get less than desirable terms or be denied for a mortgage altogether. Or they may tell you that they can get you financing if you come up with 50% of the cost of the house in cash.

A higher credit score will enable you to qualify for lower interest rates and a lower down payment. A lower interest rate not only saves you money on your monthly payment, but over the course of the loan, it can mean a difference of many thousands of dollars to you.

You may be thinking that you’ll just rent. While it’s true that renting an apartment doesn’t require a loan, they may run a credit check to make sure you’re able to pay the rent. A poor credit score may even keep you from getting an apartment, leaving you with little in the way of housing options.

LOANS

Mortgages are essentially huge loans, so if your credit score impacts your mortgage, it stands to reason that it would also affect other loans such as student loans, car loans, or smaller bank loans. Not having access to these sources of money because of a poor credit score can make your life much more difficult than it needs to be.

The higher your credit score, the better chance you have of securing a reasonable loan when you need one.

In addition, many of the great deals you see advertised only apply to those with good credit. For example, you may see an ad for a great deal on a car with no down payment. When you get to the car dealership to take advantage of their offer, you find out that it’s only available to those with a high credit score.

Whenever you see “w.a.c.” in small letters at the bottom of an ad, it means “with approved credit.”

The lower your credit score, the more you’ll have to pay for many items that you need or desire.

CREDIT CARDS

While you’ll continue to get “pre-approved” letters from credit card companies, the chances that they’ll grant you credit drastically reduces if you have poor credit.

Your credit score will also determine your interest rate and credit limit. So essentially, if you want to go out and buy high end stuff with your credit card, you’ll need good credit in order to get a suitable limit. They don’t just hand out limitless cards willy nilly!

JOBS

If you have poor credit, it may be more difficult to get a job if the employer does a credit check.

The reasoning behind this is that people with good credit are less stressed and more in control of their life. They may also be more able to focus on their job. A person with poor credit might also be more likely to steal from the company to pay their bills, so why take the risk?

As ridiculous as this may sound, it’s the reality of today’s job market. It does, however, provide motivation to keep your credit in good standing. With a down economy and companies laying off employees left and right, you never know when you may be looking for a job. Plus, moving up to a better job is easier with a high credit score.

CELL PHONES

Even cell phone companies look into your credit history when you make a purchase. Like every other organization, they want to know that you can pay your bills on time.

If you’re a fan of texting, tweeting, web surfing, or even old fashioned phone conversations, it’s in your best interest to keep your credit score on the high end.

Your credit score seeps into so many areas of your life that it only makes sense to keep it as high as possible. A higher credit score saves you all kinds of money, brings you opportunities not available to those with low credit scores, and makes your life a lot easier.