Mortgage / low credit score / house appraised for $33,000 MORE than sell price?

Deal Score0

What are the chances of getting approved for a mortgage with a low credit score (560) when the house was recently appraised for $ 33,000 more than what we will be paying for it. We will probably apply in my boyfriends name only (that’s his score) the ONLY thing on his credit is a current auto loan, that had a few lates, and a previous auto loan, that was never late, but is now closed. I know most places require a score of 620, but with the instant equity in the house, does that at all improve our chances of finding someone to approve us?

  1. Reply
    May 1, 2011 at 3:31 am

    It’s not instant equity because the lender uses the lesser of sales price or appraised value to calculate the loan to value. Technically a property is only worth what someone will pay for it unless it is a non-arms length transaction

  2. Reply
    May 1, 2011 at 3:34 am

    Not a chance. Equity or not he is going to default and they know it.

  3. Reply
    My Take on It
    May 1, 2011 at 4:22 am

    With a score of 560, you will NOT be approved.
    The “instant equity” you believe this house has has NO bearing on whether YOUR boyfriends credit history/income qualify him for the loan.

  4. Reply
    May 1, 2011 at 4:40 am

    To get a score of 560, there has to be more than a few lates.

    First his credit score is probably going to kill his chances of getting a loan. Besides that you have to consider debt to income ratio. There’s no way to figure that from your information above, but it’s not really going to matter with that score.

    Second, the lender will lend him a percentage of the lesser of the purchase price or appraised value. Lets say the purchase price is $ 100k and the appraisal is $ 133k. If he’s approved for 80%, it will be 80% of $ 100k. On the other hand, if the purchase price is $ 100k and the value turns out to be $ 90k, the loan amount will be 80% of $ 90k.

    BUT with a score of 560, we wouldn’t give him a loan if he was putting all but $ 25k down (our minimum loan amount). His score is just too low.

  5. Reply
    May 1, 2011 at 5:15 am

    I think there will be an options so that you can get that loan.. Try to talk to a dealer about it.

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