Expert: John - 8/18/2008

Question
QUESTION:  We live in pittsburgh at 2 kunh street. I want to buy the house that we are renting. He wants 23,000. I have 10,000. How do I go about getting a morgage with horrible credit? We have already had the house inspected by an engineer and know what we are getting into with this property . I understand that most don't give morgages for such a small amount. Thanks for your time.

ANSWER: Unless you can get private funding, like parents, etc, there is no way to get loan for bad credit.


John


---------- FOLLOW-UP ----------

QUESTION: I find it hard to believe that no one would give us a morgage when we have almost half of the purchase price. Even at 7%, and paying it off in 2 years, the loan payment would be roughly 500 a month which is 25 more than our rent payment. My husband makes 2560 a month which puts in well within our buget. Being first time home buyers in pittsburgh there are grant programs like "first front  door". There is also the new federal housing stimulus package that just went though congress. Bad credit or not we have many advantages that have been pointed out to me from other sites like ask experts.com and trulia.com. Maybe you might want to put a little more effort into your answers. Thanks anyway for your time.


Answer
Dana,

I put effort in.  I am not going to lie to you.  I am telling you from real world exp.

If you do not belive me, call and try to get a loan.

First, since it is under 50k, it will be hard to get a loan.  Very hard.  Most lenders will not even try for that low amount.

Second, you said you have bad credit.  All loans go off the credit score.  Not just how much you make.  You can make 5000 a month and have a 320 credit rating, and you will not get a loan.  I am not saying you are that low, but I have no clue on your rating and you never said how low so I have to think the worst here.  Like I said, I am going to tell you the truth.

Those programs are nice, but again, your credit will effect the program loan.  

You said;
"new federal housing stimulus package that just went though congress".

Ok, you need a high credit score or at least a good score to get the FHA loan.  Which is all that is.
Trust me, I have been reading it.  It helps out first time buyers through FHA loans and helps out home owners that can refinance.

Now here is something I forgot to tell you before I went to work today.  Which I sent you before I read this reply from you.

You can ask the seller if they would consider a lease to buy option or a rent to own.
That may work out better for you.

And yes, from what you told me, it would be hard to get a loan.  Sorry to break the news to you.  But thats the facts.  

Also, in order to get a 7%, you will need a credit rating of at LEAST 680 to 720 to see that low of a rate.  You said you have horrible credit.  Well bad credit is like 15%.  A 550 rating is around 9 to 10%.

I really do hope I am wrong and I do hope you get a new.  Anything is possible, but I hate getting someones hopes up, when there is a high chance of not getting it.

And if you do get a loan, please share with me so I can help the next person.  Feedback helps.

Good luck,
John