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Message
New mortgage advice
Posted on 4/28/22 at 1:09 pm
Posted on 4/28/22 at 1:09 pm
My neighbors son is trying to buy the house he's renting from a relative. He and wife make decent money, not great with finances, but no late or missed payments in several years.
From what I calculated, their mortgage payments would be below 20% of their monthly net income.
No concerning debt, just a couple credit cards with low balances. No vehicle or other debt.
They have saved nearly 10% of the value for a down payment.
Sale price of the house is expected to be around 15-20% less than the anticipated appraisal.
2 issues:
1- They had a CH7 bankruptcy, discharged in 2015, (those stay on credit 10 years.) Their first and only home was included in that.
2- Credit scores in low 700 range.
I'm trying to guide them a bit, as they are good people, but I don't know much about it.
Any advice to get started would be helpful.
From what I calculated, their mortgage payments would be below 20% of their monthly net income.
No concerning debt, just a couple credit cards with low balances. No vehicle or other debt.
They have saved nearly 10% of the value for a down payment.
Sale price of the house is expected to be around 15-20% less than the anticipated appraisal.
2 issues:
1- They had a CH7 bankruptcy, discharged in 2015, (those stay on credit 10 years.) Their first and only home was included in that.
2- Credit scores in low 700 range.
I'm trying to guide them a bit, as they are good people, but I don't know much about it.
Any advice to get started would be helpful.
6
Posted on 4/28/22 at 1:23 pm to eatpie
Apply for an FHA 203k loan. Only 3.5% down and you can borrow well over the appraisal for "rehab" and "reno" purposes. Credit score only has to be like 660 or so and that chapter 7 thing from seven yrs ago won't be an issue.
Posted on 4/28/22 at 2:28 pm to eatpie
quote:
I'm trying to guide them a bit, as they are good people, but I don't know much about it.
Any advice to get started would be helpful.
Find a mortgage broker in their area and sit down and have a conversation with them. They can do a "soft inquiry" on their credit reports and let them know their mortgage options, interest rates, monthly note, how much they would be approved for...
Posted on 4/30/22 at 1:16 pm to Tomatocantender
quote:
Apply for an FHA 203k loan. Only 3.5% down and you can borrow well over the appraisal for "rehab" and "reno" purposes. Credit score only has to be like 660 or so and that
FHA is the obvious way. Only down side is life of loan mortgage insurance. I would have the Leander look at traditional loan as well and compare the two loans.
Depending on the house location, rural development loan may also be an option.
Posted on 4/30/22 at 2:47 pm to eatpie
quote:
'm trying to guide them a bit, as they are good people, but I don't know much about it.
Please guide them straight to a mortgage broker (or three) to get professional advice. This is not really an area to advise people if you don't know much.
Posted on 5/2/22 at 1:58 am to eatpie
Discharged ch 7 won't be a problem. Credit score shouldn't either, since it sounds like DTI will be lower. PMI is going to be the only downside.
Posted on 5/2/22 at 9:00 am to Weekend Warrior79
YES! I tell people all the time. If you want to buy within the next year to let me do a soft pull and give them accurate numbers and goals
Posted on 6/2/22 at 3:14 pm to eatpie
Interest rates are up and banks will probably take a chance on this guy. Banks want to make money. Sounds like he can make the monthly notes.
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