Any possibility that I will qualify for a mortgage???

workerbee412 · Joined: 06 Sep 2009 Posts: 1

Hi All I have a question and hope someone can give me some advice, but I'm new to this board so I'm not sure if I'm posting this in the right place.

There is a house that I am interested in purchasing. It is in the process of foreclosure (not sure how far along in the process). It is actually next door to my parents! I wouldn't mind living next to them, that's not an issue! We were able to go in the house and look around the other day when someone from the dept of rural housing was there the other day.
The lady that is going through this foreclosure is now living in another state so the house is empty (except for trash left behind).

I'm very concerned about being able to qualify for any mortgage. I've always been nervous about "getting financed" for anything because if they deny you it feels like a big fat rejection (which it is), and I hate that feeling (as I'm sure everyone does).

We make a decent salary for a married couple in our late 20's (around 50,000 which is ok for this area). The PVA value of the home is $41,500. We live in an area of the midwest where you can get a decent size house for a decent price.

We currently own our home (it is a family house that was passed down to us). If we could sell this house, we would have a down payment, but if this house does not sell, we would not have much of a down payment. The house we are looking to buy is a little larger than the one we are currently in, and we would like the extra space.

We owe $11000 (2 years left) on a car payment (our other car is paid off). We owe less than $5000 on a student loan.
And embarrassingly enough....we owe over 15,000 on credit cards. Those are our debts. I have paid off 1 credit card so far, so I am working on my "stupid" debt.

We wouldn't have any problem making a reasonable mortgage payment, but I'm so nervous that no one will lend to us. I have heard of FHA loans, but don't know if that would be an option for us.

Does anyone have any advice or words of wisdom?? Is there any chance of us getting a mortgage??? I don't know how long it will be before this house is even on the market, so there is not anything I can do at this point.

My credit score is around a 660 or so.

Thanks in advance for the advice!! I really appreciate it!

m2c · Joined: 03 Aug 2005 Posts: 937

You’re a real contradiction in terms – afraid to speak with a lender but will to jump into an attempt to purchase a house in foreclosure!

First your pedestrian FICO score is likely to make FHA your only option – LLPA “hits” with conventional financing would be devastating a most reasonable down payment levels. Lot of FHA outlets have gone to 660 minimums although that now “FHA speaking”. FHA is very sensitive to “buy and bail” (ML 2008-25 on the HUD site) so expect to be hit in underwriting with full debt loan, if any, on the house you’re now in.

Sounds as if you’re contemplating a sales price less than $50K. Very hard to make a buck at mortgaging at these levels. Yes, we could charge more but then we run amok of “predatory lending”. End result you ain’t going to get a loan through broker channels no matter how good your are. Commercial banks will be your best source with a CRA loan. Easiest definition of a CRA loan is “political blackmail” – they have to make so many to keep the regulators off their backs so they don’t care if they’re losing money; they’re paying for “protection”. Obviously the calculus has changed recently but I’d start with banks for information.

Buying out of foreclosure is tricky especially when owner has taken off “out of state”. The seller owns (and possibly spouse if there are dower rights) and controls access to the property until title is transferred and there could well be other liens on the home. Utilities are probably off so you don’t know if pipes leak, etc. Since the seller is in foreclosure it’s unlikely she will pay any normal closing costs unless you belly up with an increased sales price and then there’s an issue if the house will appraise at this level. Buying out of foreclosure can be tricky!

Got my doubts on whether you’ll get this particular dream house but nothing to be embarrassed about sitting down with a LO about your mortgage limits.

KristinK908 · Joined: 29 Sep 2009 Posts: 26 Location: New Jersey

what state?
you need 3.5% minimum downpayment but can be a gift..