Home loan question?

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I have a question about a home loan. My gf has great credit but only makes about 13,000 a year before taxes. I make about 32,000 a year before taxes but I have terrible credit and am going to do a bankruptcy probably sometime this year. Now a friend of mine will be selling her house sometime this year. The house is valued at about 90,000 but they will sell it to us for around 67 or 68,000 so the loan to value ratio would be good. We plan on getting married and we have a little one on the way. I would love to purchase this house rather than rent an apartment. I dont know much about the mortgage business and yes I do plan on seeing a loan specialist at some point. I however do not want loan shark terms or sky high intrest.

What advice can you give me and have you been in a situation like this?

  1. Reply
    May 3, 2011 at 12:36 am

    First you have to get in contact with a loan officer. Do not use a bank. They are limited to what they can do for you. Go see a loan broker. Some one who can search all companies offering home loans. Your loan officer should be able to coach you as to what you need to do to be able to purchase your dream home.

  2. Reply
    May 3, 2011 at 1:25 am

    Unfortunately I don’t have experience like this but I DO know of a way you can help your credit score over the next few months. Become an AUTHORIZED user on your girlfriends credit cards. This will help boost your credit score. BUT FOR GOD’S SAKE do not use her credit cards. For more info, see this VERY useful Bankrate story.

  3. Reply
    May 3, 2011 at 2:10 am

    Why would someone sell you a house for $ 22,000 less than it’s worth? That just doesn’t make any sense.

    It’s probably not worth what they say it’s worth.

    Maybe you should just concentrate on getting your finances on track rather than try and play games with the mortgage guys.

  4. Reply
    May 3, 2011 at 2:38 am

    My first reaction would be to have your friends give you a gift of equity for the difference between appraised value and your purchase price.

    But, the only way that would probably work would require a fully documented income loan. Which means both of you would need to be on it. It’s possible you could qualify, but if you’re thinking of filing for bankruptcy, you might be sitting on too many collections or judgments that would be required to be paid in order to close, which could screw up the deal.

    Your best bet to avoid problems: FHA financing, gift of equity from your friends, and have your parents co-sign the mortgage with your GF. Or her parents. It might work on conventional financing, but sometimes conventional financing requires that your GF meets a certain debt-to-income ratio, which she couldn’t. FHA does not have that requirement ever, which is why I’d lean that direction (it’s also easiest for gifts and cosigning in general).

  5. Reply
    May 3, 2011 at 2:52 am

    There are several issues here.

    Your girlfriend won’t be able to qualify for the financing all alone at here income level. Your credit will probably preclude you qualifying for a loan either since the sub prime market has imploded. Since income can only be counted for those who will be on the loan and on the title to the property this is a huge issue.

    Next; even though the property may be worth quite a bit more than your friend will sell it to you for, the investor requirements state that your loan to value will be predicated on the sales price or the appraised values whichever is less so from the lender’s point of view, that differential will be worthless.

    My advice to you is to take the time to get your credit squared away and save some money so that once your credit is at an acceptable level, you can shop for the most advantageous loan. Lending is a risk based industry, all they have to judge you by is your credit history. If you want the best rate at the lowest costs you have to bring something to the table, excellent credit.

  6. Reply
    May 3, 2011 at 3:04 am

    Head over to: http://www.mymortgagebroker.com/

    There is all kinds of information for your review there or they might be able to sort your situation out for you.

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