Expert: Connie Wildasinn-Broker,GRI,Realtor® - 9/24/2008

Question
I make about 130,000 a year but I do have a NY state tax lien.  My credit is not good but the income is stable (and is from 2 jobs).   I do have a sister in law that make about $50,000 a year and her credit is about 600 points.  My landlord is about to loose the house and give it in a short sale.  What are my chances of getting the house?  They are going to sell the house for less than 200,000 (original value about $400,000) and I have $10,000.  Should I try to buy using my sister in law?  Should I try to buy using my own credit?  Could we combine?  I do not know who to trust.   How could I get a very good realtor that can guide me during this process?

Thank you

Answer
Hi Hector,

You only have a couple of options on the property you are currently in … your best bet to seek out a lender in your area and use your sister for the loan.  Your sister will most likely need to go FHA for her low FICIO scores, but I am not sure if her income is high enough to support the loan. You will be hit for the tax lien, if you are anywhere on the loan.  The lien is most likely on your name? And that attaches to anything you try to do… You have great income, take care of the tax lien! Don't let things like that follow you around, as you now see why it hurts you!  

A short note on Short Sales… just because your landlord is trying to sell short, does not mean the bank or investor that holds the note is willing to sell short.  If the comparables in the neighborhood show that the property is worth say $350,000 then that is what the bank / lender will be looking for in a sale amount.  The bank/lender will do their own BPO – Broker Price Opinions which are mini appraisals usually from 3 – 4 different sources and derive a dollar figure to offer the property from that…

Lastly keep in mind that if you are borrowing money, there is a cost to borrow… you will need anywhere from 1-2% in fees to cover escrow, title, recording stamps, transfer fees, and then on top of that there could be impounds for your taxes and insurance… You need to find a good loan broker or direct lender, credit union, local bank… get referrals from people you know and trust… and if necessary speak with 2 different people and make sure the monies line up… you can do what is called ‘double apping’ but keep in mind, lenders only get paid if they close the deal, and all working on commission work harder when you are  committed to them, as then they are committed to you.  

Good luck…