How to get into a house with marginal credit but a good income?

Question

I am married with a combined income of $125,000/yr. We filed a joint bankruptcy approximately 5 years ago. My wifes credit, while not extensive (3-4 Credit cards--nothing over 1,000 limit) is all good except for the Banko. I have not used credit in about 15 years with one exception and that was a small ($5K) loan which was paid on time.

I spent many years self-employed though I am now in a permanent position and have been for the past 7 months. My wife still contracts as I did, but may be taking a permanent position in the comming month as well. I also have an existing Federal tax lien (appx 15K).

It's not at all pretty, but would like to know from any experts in the field if they have any ideas as I am really tired of throwing away 1500/mo in rent--thanks

Would the Federal tax lien HAVE to be paid for anyone to finance us?

Answer 1

Is the Tax Lein on your wife? Or just on you? If it is on you and not on the wife, you may want to look into going off your wife and her credit. If her income is not enough to qualify you, there are ways to work around it.
1. You can go off 12 months bank statements - underwriting will add up all the deposits and devide by 12 to get a average of her income. It helps if you deposit into that account too, it will make her income higher, and lower your DTI (debit-to-income ratio).

2. If her credit is high enough 630 middle score or better - than you can go stated.. What that means is they will call and confirm that she is working, but not ask about income. You state (salary.com) what her income is for your area, state, job).

Most company's does what Federal Liens to be paid off - But there are a few companys that do not require it. The BK is history, you can refinance, or purchase 1 day out of a BK. To go conforming it needs to be 2 years - some lenders it is 3-5) so you are good to go there.

So it sounds like you will need to go with the wifes credit to get the mortgage. After the closing, just go to your local court house do a "quick claim deed" and add YOUR name on the property....You will not be on the mtg, but you will be on the deed.

There are a few things to consider:

Decide on how much you want to spend, if you want to escrow the taxes and insurance. Say the taxes are 1200 a YR and insurance 800 a year (just an estimate, ok) That is 2,000 a year divided by 12 = 166.66 If you paid 1,000 a month now - (166.66) your P/I Principle and Interest would be 833.34. Now you decided on the price range you are looking into. If you have great credit, a 1 loan at 130,000 at a rate of 7 percent over a 30 year time would be 864.89 - This is just a estimate - ok -

It greatly depends if you need help with closing cost, (The seller could do Seller Help toward your closing cost). If that is the case, I normally tell my clients NOT to hackle over the price, since you are asking for closing cost help - especially if the home is thru a realitor, and the seller has to pay the realitor their fee which runs from 3-6 percent of the selling price, and you ask for 3-5 percent toward closing cost -assistance) Follow me so far??

Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.


Try to find someone (broker) that will pull your credit one time, and submit your loan application to company's that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). This will tell you the up-front closing cost (etc) associated with your loan. This is a estimate only - not the final - but it does help you figure things out.


Good Luck, and if I can help in any way check out my web site, for links to all the credit reporting agency's and other useful information. I have many programs available, and lenders to choose from - to help you get the best rate available. From USDA Rural, Government loans, Conforming, Sup-Prime, Investment, Commercial just to name a few.

Answer 2

This Site Might Help You.

RE:
How to get into a house with marginal credit but a good income?
I am married with a combined income of $125,000/yr. We filed a joint bankruptcy approximately 5 years ago. My wifes credit, while not extensive (3-4 Credit cards--nothing over 1,000 limit) is all good except for the Banko. I have not used credit in about 15 years with one exception and that was a...

Answer 3

I don't know all your specifics but just about anyone can get a mortgage. I've gotten people with 461 credit scores get approved.

Its all a matter of how your ability to make payments on time look on paper. That is also the reason why you need to pay off any judgments on your credit. Would you lend someone a large amount of money if you saw that they don't even pay the government back?

If I were writing the loan for you I would also look in to both of your credit history. If one has better credit than the other, not just score but history, then it might be in your best interest to get a stated loan.

If you have any questions feel free to ask me. I don't know what state you're in so I may not be able to work for you, but I can still help you with questions.

Answer 4

I don't know where you live, but the best thing to do is take the guess work out of purchasing a home or whatever you want to purchase.

You need to find a mortgage "Broker" that specialize in sub-prime loans or Alt "A" loans. They will need proof of income for you and your wife, also 6 months bank statements from each checking account and saving account. You need 2 years of fed income taxes as well as 2 yr of W-2 forms if you have them. As long as your position with your new company is close to the same as you did as a self-employed individual you should be ok.

With the information you provide the mortgage broker he will fill out an application for you, he will get a credit report for you which will have your credit scores. Based on your credit scores your broker will be able to tell you the type loan you are qualified for, to include if you need to bring any money as a down payment. Based on your income and debts on your credit report he will be able to tell you how much house you can afford to purchase.
If the federal Tax lien shows up on your credit report there might be problems, but if you are making payments and they are current, there should not be a problem.
After you have been pre-approved (not pre-Qualified) by the mortgage broker he will put you in contact with one of his real estate agents he knows to assist you in finding a home for you and your wife. Once you have agreed on a home to purchase the real estate agent will prepare a purchase agreement for you and the seller to sign. He will give this to your mortgage broker who will at this time order an appraiser for the house you have decided to purchase.

He will also open escrow (Get a closing agent) to complete the transaction. He might also request additional information or documents from you, not to worry this is common. He will order our loan documents for you to sign and teh closing agent close the transaction.

Your first payment will be due in about 30-45 days.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 5

The only stumbling block to having filed bankrupcty in the past, is that it seems you haven't re-established many lines of credit since then on your side.

You need to get with a competent mortgage planner to evaluate your specific situation in detail and find a lender and program that can service your needs.

The big thing I see from your statements at this point is that tax lein. Have you tried resolving it, are you disputing it, set a payment plan yet? Lot's of side-bar questions...

With your incomes though it seems like you shouldn't have a major problem getting financed.

Answer 6

You already have some great answers but please let me add my two cents. Sounds like your wife has reestablished since the bk which is good and since you are both married typically her credit is also your credit. You may not need any money down but I would recommend contacting a Mortgage Broker as they typically deal with sub prime and alt A lenders who will compete for your business from the broker. Most lenders will require the tax lien to be paid but the ones that don't will charge you a higher interest rate if you don't have the cash to pay it off. I hope this helps you but if you need any help or have have questions please email me [e-mail]

Answer 7

I'm a loan officer in Utah. So if you are in Utah I can get you a loan. But past that, I would go to a mortgage broker that specializes in niche loans. Tell them your situation, and they can find a lender that focuses on income over credit score. These lenders are called subprime lenders. They will often take scores as low as 450. Your bankruptcy shouldn't matter as long as it has been discharged.

Answer 8

We just bought a house and our situation was worse than yours. The most important thing is to have a good downpayment, Not less than 10% of the price. And closing costs. A fixer upper is easier to get. Dont aim too high with the first house. You need a realtor that will work with you.

Answer 9

Marginal Credit

Answer 10

Your current credit will get you a mortgage with 10-15% down. If you want to be sure, most banks will give you one with 20% down.