Posted on: 09th Jan, 2009 10:30 am
i am a potential first time home buyer shopping for a lender willing to lend to myself and my husband considering our low credit scores. mine is right around 500, his is in the middle 400's. we recently moved back to our hometown with a very low cost of living. before this we were paying $725 a month rent for the past three years. living here, my husband is making more money than he did before, and rent prices are only around $400 a month. since we are used to paying so much more a month, $400 sounds like a dream to us, but we hate to throw away money towards rent each month when a nice starter home in this area is only around $25,000. right now we're living rent free with relatives, so my question is this....
if we are able to provide a bank a higher down payment and agree to a higher interest rate, is it possible to get approved for a mortgage around $25,000 considering we'd be first time home buyers with low credit scores and some bad credit marks in our credit reports? if this is possible, is there are certain name for these types of special lending loans? i've heard the term, subprime? where would i look for that type of a loan?
i don't have a realtor and don't have a specific property in mind, i just know that is the average price in this area and can probably even find one a little cheaper.
i know the best thing to do is clean up our credit scores first and then apply, but we are thinking of this loan as a temporary situation and would be willing to refinance later after our credit is better and we can get a better rate. also, given a $25,000 mortgage the payments would be so low we'd be able to make at least double payments each month and could have the loan paid off in less than 10 years.
we have taken steps to fix our credit, but it'll be about a year before any substantial change in our scores takes place. we're living rent free with relatives right now so i'd like to take advantage of that and use this opportunity to save money for a high down-payment amount.
so in summary, do you have any suggestions for lenders that will lend to people in our credit situation, considering we have a nice income and what amount do you think we'd need for a down-payment to get approved for a $25,000 loan?
thanks!
if we are able to provide a bank a higher down payment and agree to a higher interest rate, is it possible to get approved for a mortgage around $25,000 considering we'd be first time home buyers with low credit scores and some bad credit marks in our credit reports? if this is possible, is there are certain name for these types of special lending loans? i've heard the term, subprime? where would i look for that type of a loan?
i don't have a realtor and don't have a specific property in mind, i just know that is the average price in this area and can probably even find one a little cheaper.
i know the best thing to do is clean up our credit scores first and then apply, but we are thinking of this loan as a temporary situation and would be willing to refinance later after our credit is better and we can get a better rate. also, given a $25,000 mortgage the payments would be so low we'd be able to make at least double payments each month and could have the loan paid off in less than 10 years.
we have taken steps to fix our credit, but it'll be about a year before any substantial change in our scores takes place. we're living rent free with relatives right now so i'd like to take advantage of that and use this opportunity to save money for a high down-payment amount.
so in summary, do you have any suggestions for lenders that will lend to people in our credit situation, considering we have a nice income and what amount do you think we'd need for a down-payment to get approved for a $25,000 loan?
thanks!
britni, i'm afraid that you are right in that you'll have to wait a year or so to buy. your scores are not going to get you qualified for a mortgage. fha, the most forgiving type of mortgage out there, has pretty much eliminated from consideration anyone with a score below 580.
work on your credit, save your money as you said, and wait.
work on your credit, save your money as you said, and wait.
IF your okay with a higher interest rate and higher downpayment as you suggested than you may want to look into a private investor or "hard money" as an option. You want to make REALLY sure you can afford the payments before you jump into something like that though because the last thing you need is more derogatory credit on the scale of mortgage lates.
Sound like that would be your only option for now until you fix up the credit situation.
Sound like that would be your only option for now until you fix up the credit situation.
