Posted: Fri Apr 15, 2011 4:43 pm Post subject: Getting a mortgage - questions?
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I am not sure how Mortgage companies/banks work, especially in this economy. But I am looking at a house here in my town for 30k, it needs quite a bit of work from what I can tell. I would like to put an offer on it for say 25k if I could get pre approved for that or maybe 27k... something in there, I know the bank will take less than 30k being that it is a foreclosure.
So here is my problem, My wife and I live alone together in a house here, our rent is $350, we're young and have no credit. I don't bring home much money and right now she doesn't work. Neither of us have a car so it is hard to get around. That is why only I have a job, I make around $1,180 a month or so before taxes since I am a subcontractor working for my Dads business.
Other problems is I have only been working for my Dad since October 2nd of last year, so it has only been 7 months or so, but it is my Fathers business, so would the bank take that into consideration?
Also I think I will have around 2 to 3k to put down in a few weeks, which would make it 10% down.
The house I want is in South Eastern, Kentucky, Now things that I look as a plus side are, My wife and I own a home in Dayton, Ohio, we paid cash for it and fixed it up and are now renting it out for $500 a month. We also paid our taxes on it in February - which would show we make payments on time?
So I don't know if I can use that house as collateral or not, tax value is somewhere around 19k if I remember correctly - also the house I want is in Kentucky and the house I own is in Ohio, do banks loan on houses for collateral in different states?
So my main questions are, how likely am I to qualify for a 25k mortgage with 2 to 3k down, a job that pays 1.3k a month or so, and a house that I rent out for 500 a month plus I own it straight out with no liens.
Also I may be able to get my Father co-sign for me as well, he was a deputy sheriff in this County for over 18 years so he is a very respectable person in this area.
If you already have a mortgage on a property, then you won't be able to qualify for another mortgage in order to buy a new property. However, if you don't have a mortgage on the property that you own, then you will be able to qualify for a conventional mortgage if you have a credit score of around 700 - 720. However, in order to get a conventional mortgage, you need to offer a down payment of 20%. _________________ Procrastination is the enemy of your financial success
So if someone does not have a credit score that high and does not have 20% down at this moment there is no possibility to get a mortgage?
I have no mortgages right now by the way but I do have a house in Ohio that is fully paid for and I could use for collateral does that mean nothing to a bank?
I guess to put it in other words, if I can put 10% down and not have the best credit score but use my house as collateral in the mortgage process, do you think I'd have a good chance, not to mention I can definitely get a co signer - either from my Mom or Dad ( and I work for my Dads business but he doesn't have the best credit ) any help? thanks
If you don't have a high credit score or don't give the required down payment, it will be difficult for you to qualify for a conventional mortgage. With a credit score of around 620 and a down payment of 3.5% - 5%, you'll be able to get a FHA loan.
If the cosigner has a good credit score and pays the required down payment, then you'll be able to qualify for a conventional mortgage. In that case, your credit score won't be taken into consideration.
A cosigner isn't going to work on a conventional mortgage; therefore, if that route is being considered, you're going to be restricted to an FHA loan, which isn't bad.
Working for family and for only a short period of time is not a favorable situation. You're going to need to show 2 years' work history, though if you're bringing a qualified cosigner to the table, that might well eliminate that need.
You'll probably find mortgage loans in the amount you're suggesting to be very rare...these are very expensive loans to make for lenders and they wouldn't be able to pass along a lot of the common fees to you, as they ordinarily might. _________________ George M. Akerley
Mortgage Underwriter/Consultant
Word of Excellence- Writing/Editing/Proofreading
860-221-5044
So even owning a property won't help? what if I sold the property and brought more money down to the table?
just curious about that, I think I am going to try to find something I can just pay cash for I hope. I was hoping it'd be easier to get a loan, but in this economy I don't think banks are wanting to loan too much.
btw, does FHA loan for 30k or less? thanks.
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Posted: Thu Apr 28, 2011 11:39 pm Post subject:
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Unless you meet the required criteria, getting a mortgage won't be possible for you though you bring up a higher amount of down payment.
Noe, one of the biggest hurdles anyone faces is when trying to purchase something for such a small amount. The fees involved, in comparison to the loan amount needed, are exceedingly high. That puts lenders in a very difficult position, as they can only charge a certain percentage in fees on a loan. With such a small loan amount, that pretty much eliminates any method by which they can even pay their loan officer.
As a result, you'll find it well-nigh impossible to obtain financing for such a loan amount. The owning of property now has no real relevance to how they view you.
If you're fortunate enough to belong to a credit union which would consider a loan held in their own portfolio (not sold to another agency), then you can certainly try that source of funds. Check with a few in your area, see if you're eligible for membership and if they'll do portfolio loans. That might work. _________________ George M. Akerley
Mortgage Underwriter/Consultant
Word of Excellence- Writing/Editing/Proofreading
860-221-5044
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