Hi all you mortgage experts. Ok this is my situation. I am looking to buy a house and it is a great deal and must work quick. will appraise over $400k and i can get from the bank for approx. $270k. Im in michigan and have been here for almost 2 years. My credit was damaged because i had 3 homes, 2 in Fl on the water and then the market crashed and i had to pay on all these homes. I did pay but had to pay late. It almost killed me. so anyway, my credit score is now in the low 500s and starting to bring it back up. I have to do stated income because self employeed. I can put down at 20k no problem. Im pretty sure it is doable somehow. I would appreciate any help. I need to get a approval letter with the offer also. closing in 30. This is a house i will keep forever. thank you

Use 10 of your 20K to buy a new credit profile, just kidding. Seriously though, talk to a credit repair company regardless of the outcome of this transaction. Lexingtonlaw.com is great, but I hear there are better ones out there.

Someone would get rich if they had a list of new credit profiles for sale. ha! Im working on the credit, i understand know how important it is. I really never needed it before. I always had enough money.

You are looking at below 70% LTV so you should be able to find a lender. Even if the interest rate is a little high get it and refi it in another year. What is your debt to income ratio? It may be more of an advantage to use some of that 20K to pay off some credit cards to reduce your debt to income ratio which will bring your credit score up.

For future reference never buy investment property in your name with your credit. If you plan to buy more then start an LLC and begin building some corporate credit that is seperate from your personal credit. Since you are self employed you may be better off forming a small LLC or Scorp for your self-employed activities and pay yourself a salary which eliminates that stated income problem because you will get a w-2 from your corporation. Get a consult with a local CPA for some advice on the advantages of becoming a corp.

Given your situation I think the best thing you can do is ask the bank you are purchasing it from if they will finance you. They have the motivation $$$$. Other than that, I would suggest that if you can borrow some money from a private party to get your down payment to 30%. With a 70% loan-to-value you may get a loan. After that work quickly to improve your credit and refinance. Make sure you have no prepayment penalty (buy it out). That way you will be able to refinance at the first opportunity.

great info guys! keep it coming. thank you

what if i started a LLC now. would that work? i really do want to buy more homes. how do you build up credit in the llc

I realized you never stated if you had any of your own skin in the game. (money) At a 65% ltv you should be able to get a hard money loan, (I have a lender in mind) but you will have to show the ability to repay. Now there would be no D/I requirement, FICO under 500 acceptable D credit okay, purchase money or refinance allowed, up to 75% LTV depending on the deal and of course foreclosure bailout allowed. Now you need to stay focused here and an LLC is a fine idea, but later, you're trying to get the house you're going to live in for the rest of your life and you only have 30 days. A 100k is about a minimum loan. Hope this helps....yeah I know I didn't give you the lender. 815-886-9024.

your credit score is 500 you say..I don't think this is doable..But its worth a try


http://www.builderscut.com

Wrong. Any institutional lender on a purchase will base the loan to value on whichever is the lower between the purchase price or the appraised value.

However, as another poster indicated, a private money (i.e. hard money) lender may base the LTV on the appraised value. Private money lenders play completely by their own rules. From my experience most any hard money lender will want two things here: a) a very, very strong appraisal supporting that value ( at least 4 to 5 very similar comps within a very close proximity to the subject) and b) a very sensible explanation for why the seller is selling the property for more than 30% less than the market value.

the seller is the bank, they had it listed for $389k but couldnt sell it. comps are going to be hard because this house is huge and on 11 acres. there are houses within a stones through that are on the water and sell in the 1 to 2 million range. but, i guess thats not a comp. wouldnt they appraise for what it would cost to build? 4000 sq ft at $100 per sq ft??? plus land?? just guessing. it is only a 7 year old home.

thank you . i need all the info i can get. will have to wake up running on monday.

Most residential lenders will not allow you to close an loan in an LLC. The few that allow it have tougher guidelines

Danny

will they do it for commercial properties

Usually yes but keep in mind that commercial property financing is just about a completely different ball game from residential.

Higher down payments, higher interest rates, different underwriting. The financial track record of the property will be closely looked at.

Paul,
W2 yourself does not eliminate the problem suffered by Self-Employed individuals. As a RE for more than 15 years I can assure you any credible lender will still require to see the 1040's and see the adjusted gross income. If you write off alot of items you can still have a negative adjusted gross, thus W2 is far from a solution.

Also, how do you know she will be at 70% LTV? What lender do you know will use the appraised value instead of the purchase price? Only time I have seen this done in 15 years is when the house appraises for LESS than the purchase price, NOT more.