Looking for Mortgage Help?

[NewStart2010]

My husband and I are on our second marriage.. Me - I filed bankruptcy back in 2007. Now have a student loan I am paying off and 2 credit cards. Credit score is almost 600. My hubby - put his home in foreclosure after his divorce back in 2007 and his ex wife and daughter completely demolished his credit due to being idiotic hypochondriacs. His credit score is just under 600.

We just moved into a home that we LOVE and are renting..we just left a home that the owners let go into bankruptcy and they never told us anything. We just had 60 days to get out. We are now here in the home of our dreams..renting of course...and the landlord is wanting to sell due to her illness and wanted to let us have first shot. Due to our credit...we have no idea how we could qualify for a mortgage. I keep hearing of FHA..what are the up to date laws on that? My hubby makes great money now and I work full time as well. So we have the income to purchase a home...but any advice on how to get there?

I have to say - we've been here for 7 months..and this is truly the home of my dreams. When the owner told us yesterday that she is putting it on the market I thought I was going to vomit. We both lived horribly for so long with our ex spouses and now it seems our past is controlling our financial future. I'm so depressed right now..I want to keep this home but don't honestly know how. We've been married for less than 2 years...

Any advice would be greatly appreciated...thanks so much!

[Drazil65]

Hi, welcome. A couple of things on FHA right now, they have score requirements which might be more in the range of 620 I think to qualify. Also, I believe there is some new requirement that is coming into play with FHA (maybe by July 1st or something like that, the very near future) where if you have any old collections or issues (like charge offs or defaults and the like) they would have to be paid in full before you could get an FHA mortgage. Check into that and do some research.

Have you approached the owner/landlord about her perhaps financing it for say a year or 2 with rent with the option to buy clause? Do you think she would be willing to do that as that would give you time to search out the best financing options. It might be worth a try. Goof Luck!

[HHM]

FHA credit score guidelines depend on which type of loan you plan on getting, which means, how much down payment can you make. The minimum credit score used to be 580, but that is if you plan on putting 10% down. For loans with lower down payments, you will need to be 620 or higher. Other issues include consistency income, employment history, etc.

Note, that statistically, the average FHA borrower that actually gets a loan has a credit score of 693.

When was your husbands house actually foreclosed. What date did it actually go back to the lender...was that more than 3 years ago. Also, do you have ANY money for a down payment. Even FHA minimally requires 3.5% minimum down payment. Also, with FHA, because of the mortgage insurance requirement, your payment will be higher than a loan without mortgage insurance. So, when it is all said and done, the mortgage payment cannot exceed 30% of your gross monthly income. (ideally, from a financial perspective, you should keep your mortgage payment to less tan 20%).

With troubled credit, I recommend working with a mortgage broker instead of a bank directly, the broker will have more options.

[btbeme]

Some other thoughts and options...

- Can the homeowner sell to you? This is a possibility if the owner does not have a mortgage on the home already. You can draw the contract and pay the homeowner directly for xx years until such time that you can secure a mortgage on your own.

- Work with the owner and their realtor to see if it can be listed as a "rental - occupied" and find a buyer or investor willing to carry your lease going forward. Happens a lot more often than you would think. Encourage the owner to work with a realtor affiliated or familiar with investment groups in your area, rather than some friend's son-in-law.

- How long is your lease? Is it written and signed? Some states have very firm laws regarding rental leases and how they must be honored. Check with a real estate or contracts attorney in your local area to see what rights you have.

- Are you or spouse ex-military? VA loans are similar to FHA, but more forgiving.

- Are you in a rural area that would qualify for a USDA mortgage? These are pretty rare and quite specialized, but worth a shot if you are in an area that qualifies.

This many years outside of a BK discharge, I am surprised that your credit scores have not rebounded. Have you checked your credit report for accuracy? Have you made attempts to reestablish credit in the last couple years? FHA credit score guidelines are pretty strict, so a good score and consistent income will be huge factors in qualifying.