Will I be able to get a mortgage? I have a bad credit rating but I do have $40K and looking for a 120K house?

I want to know if I will be able to get a mortgage from anywhere even though I have very bad credit from the past. I have $40 K for a down payment and the houses I am looking at are around $120k.

I do have a full time job grossing $700 a week so what am I looking at here?

8 Answers

  • 1 decade ago
    Favorite Answer

    I don't know how bad your credit is nor do I know your credit scores.

    In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, which you can find one in your local telephone book.

    Make sure this mortgage broker or mortgage banker is able to do government loans such as FHA and VA loans if you qualify for one.

    He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.

    The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.

    When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started.

    #1 One month of pay stubs for each person that will be on the mortgage.

    #2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.

    #3 Two years of federal income tax along with the W-2 that match.

    Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.

    Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.

    Now make sure before you get your pre-approval you and your mortgage broker go over all your options as to the mortgage programs you qualify for, the interest rate, monthly payments.

    If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.

    You should select the loan that best suit your financial condition at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.

    Make sure your mortgage broker explain all your options so you may make an intelligent decision.

    What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.

    So select the best option for you and your financial situation.

    You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.

    Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign.

    Your mortgage broker will now order an appraisal to show proof of the property value.

    The mortgage broker might ask for additional information or documentation, don't get all up tight this is normal, just supply the information or find the documents needed.

    After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.

    Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.

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

    "FIGHT ON"

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  • 4 years ago

    the foreclosure is just the beginning. this will be on your credit reports for the next 7-10 years. good luck getting another mortgage during this period. also, the bank will sell the condo and will come after you for the deficiency. if they get a judgment in court, they can lien your other property, attach to your bank accounts, or garnish your wages. the judgment will also appear on your credit reports, further nuking your score. lastly, in some states if this is not your primary residence, if they don't go after you in court for the deficiency, they can send you a 1099 for that amount and then you get hit with the capital gains tax on it. getting the picture here? if you can pay, you would be far better off simply holding onto the property for thforeseeablele future. the market will rebound eventually. P.S. not all mortgage loans are "non-recourse". whether they are or not depends on the language of your lending agreement.

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  • 1 decade ago

    your income should be fine for what you are trying to do. FHA is probably out of the question if your credit is bad. it would help to know scores and what is exactly on your credit report. You may be able to do a conventional loan since you have such a large portion to put down. I'm sure you could find a broker to find a loan for you since you are only looking for a LTV of around 70%. Good luck with it.

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  • Anonymous
    1 decade ago

    You probably can get one from a lender that specializes in poor credit. You will have to pay more upfront and more in interest. Really what it is - is a 'crap" loan. I would refinance as soon as your credit starts to improve. But from here, I predict rates will be going back up - not down. So your bad rate now, might not be so bad later, just make sure you get a FIXED rate - not one of those ADJ ones!!!

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  • Ranger
    Lv 7
    1 decade ago

    In today's market, it is very doubtful you will find a bank or federally regulated institution willing to loan to you. Your best chance it to look for private mortgage money that comes from places like family trust and private investors.

    Private Lenders charge higher interest because the risk they take is greater than the risk banks will take.

    One other source may be to look for OWC (Owner Will Carry) properties. The seller is willing to take a contract and have you make payments to him through an escrow company.

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  • 1 decade ago

    I bet you can find a foreclosure for 40k and own it outright. Some people bought 3 years ago and were forced to move on military orders. They foreclose, and you reap the benefits even though you have bad credit. And they probably didn'tn have bad credit but now they do because of the foreclosure. Ironic ain't it?

    Source(s): me just being bitter.
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  • 1 decade ago

    I would check in to an FHA loan program. There guide lines for credit is much lower. In MN I think the lowest credit score is 585. Remember that in order to tell if you qualify for a loan they take all 3 reports but they only use the one in the middle

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  • 1 decade ago

    No, in addition to the credit issue the low income will prevent a loan. You will be hard pressed to make payments for the house, taxes and insurance, and your credit rating proves that you do not step up when hard pressed, you default.

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