     Jerry Starr (Castlerock) | Friday, September 08, 2000 - 05:39 pm 
My wife and I have found a house that we want to buy. In trying to obtain a loan, we've found that our credit is just too bad. This is mainly due to several late payments (a few recent - most 4+ years old). I've also got 2 collection items from a couple years ago, but have paid these off.
If we have my parents co-sign for the loan (who have excellent credit and no current mortgage) will we have any problems obtaining this loan?
This is an excellent site! Thanks in advance for any help! |
| Senator (Senator) | Saturday, September 09, 2000 - 02:22 am
how bad is bad? have you talked with a mortgage broker yet? there is at least one who posts here and is excellent in helping. I opted not to pursue a mortgage right now due to the high prices but my scores were around 600 a year following bankruptcy. I hired a law firm to challenge negative items on my credit report and they have been successful in many cases. In talking with the mortgage brokers, credit is out there--rates can be high.
A co signer is liable if you default. It's nice for your parents to willingly sign but consider that fact before you do. Good luck.
I can recommend talking with Don S and if you are in CA there is another broker. Also, keep in mind that home owners insurance is now FICO based with many carriers. I have switched to AAA (Am Auto Assn) because of that fact. good luck |
| Don Semler (Dsemler) | Saturday, September 09, 2000 - 04:53 am
Jerry,
Adding a cosignor DOES NOT change the credit profile. Cosignors are best used when there are income issues to overcome. I'm a big fan of FHA for first time buyers as they do not use credit scores like conventional loans. With FHA the deal has to make sense.
From the lenders view, why did you have the recent lates? Was it beyond your control or just mismanagement on your part? How have your rent payments been? Always on time for the last 12 months? (This is extremely important).
Other thoughts: How much is your housing expense going to increase?
Example: 1) current epense, $300, new house payment $900. Borrower has soem recent lates and no savings. ---- Not a good loan.
2) Current expense $700, new house pmnt $900, soem recent lates do to extenuating circumstance, borrower has $5,000 saved, putting down 5% vs 3%. -- Better loan.
provide some more details and I would be glad to help. Feel free to email me if you wish. |
| Shylock (Shylock) | Saturday, September 09, 2000 - 08:39 am
Cosigners, in general, will not help overcome credit limitations.
There are a number of options open to you:
a) Subprime lending. If you are willing to pay an interest rate high enough someone out there will give you a shot.
b) Cleaning up your credit. Perhaps there are some items on your credit that are inaccurate or can be removed through a negotiation process to make your score higher.
c) Creative financing. Perhaps your parents can purchase the house conventionally and resell it to you using creative financing. Land contracts, lease options, PAC Trusts and other creative techniques exploit legal and practical loopholes to the enforcement of the Due on Sale clause contained in all conventional mortgages. If you decide on that route get a good real estate attorney to help you because there are myriad pitfalls.
d) FHA, HUD and other government giveaways. Many lenders will be happy to loan money to you if the taxpayers insure them against default.
Did I miss any? If so I'm sure someone else will post. |
