Financing in Vail>Question Details

Jmcbride, Home Buyer in Vail

Would it even be possible to qualify for a loan?

Asked by Jmcbride, Vail Mon Apr 30, 2012

I am going through a divorce, my credit was great but now is under 640. I have a foreclosure and a repo on my credit report. i make approx 45K a year and have 20k in assets. My home was actually sold back to the bank for $1 - it was a deed in lieu of foreclosure but it still shows up as one. I want to start over and I don't want to waste money renting. Is it at all possible to find a lender with these negatives?

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Jimmy and Marka Brenner are with Blue Sky Mortgage. They are detail oriented, have a large portfolio of lenders, and know the business inside and out. I cannot recommend them highly enough; and they would be a fantastic resource for you. They are in the Avon Center Building.

(970) 476-0602
1 vote Thank Flag Link Thu May 1, 2014
I disagree with Suzanne and totally agree with Trevor (a mortgage broker). There are many factors involved. It's entirely possible to still show decent credit but have a foreclosure on your record and NOT qualify for a mortgage. Any lender to going to see that as a red flag. But you do need to get through your divorce and see where you stand after that.
1 vote Thank Flag Link Tue May 1, 2012
Thanks Sally.
Flag Tue May 1, 2012
Good morning Jmcbride,

First and foremost, your divorce would have to be complete before you could contemplate applying for mortgage financing. Since an Underwriter can't know the final result of a divorce decision--- whether there are alimony/child support obligations---you must wait until the divorce is final.

Next, to your credit. We see many credit reports with low credit scores (anything less than 620), and often many scores in the 500's. This is BAD credit. If you are one of the folks affected by this terrible economy, you have a low credit score and you have a dream of buying a home, here's some simple advice for you.

It is unlikely you could be approved for mortgage financing with that credit score at this time.

Beware of any mortgage professionals promising you an approval with such a low score. Wait on buying a home. I recommend you take the time to resolve your credit issues.

First, settle any outstanding debt. If you owe money on collection accounts, charge-offs and/or judgments, make payment arrangements and get these accounts paid promptly.

Next, begin rebuilding your credit. If you have current accounts with good payment histories, or even some previous late-payment-blemishes, make sure you continue to pay those accounts on time. If you do not have any existing credit accounts then you'll need to establish several in order to create a viable credit history.

I have found that CONSUMER ACTION is an excellent resource for objective advice on all things credit related. You'll find free and sincere advice on everything from settling collection accounts to rebuilding credit to building credit from scratch on their website.

Beware of anyone offering to "repair" your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE.

The best way to buy a home is to have a decent credit history combined with sufficient Income and Assets for a home purchase.

The best way to have a decent credit history is to settle negative outstanding obligations and pay all your bills on time for at least two years.

Trevor Curran
NMLS #40140
1 vote Thank Flag Link Tue May 1, 2012
Thanks Trevor. That was all very helpful. My accounts are all paid up to date, except the repo vehicle that is in both names that my ex is to pay.
Flag Tue May 1, 2012
Rather than get the differing opinions on here, consider reaching out to a mortgage lender that can take all of your exact info and see what they can do for you. I'm sure there are some lenders locally that may potentially specialize in your situation. You seem very knowledgeable about your situation and seem more than capable of finding a lender that can make it work for you. Good luck!
0 votes Thank Flag Link Wed Feb 26, 2014
For a FHA loan we require a credit score of 620 and you would need to be 3 years out from Foreclosure date.
0 votes Thank Flag Link Wed Feb 26, 2014
Sounds like you are on the right track, keep up the good work. We have some terrific local lenders who specialize in assisting buyers by creating a plan of action for credit repair. Unfortunately most rent to own options are wanting a considerable upfront down payment. Establishing local relationships with a relator who had a good lender partner would be in your best interest. As you continue to improve your financial situation, you lender and realtor will keep you aware of the various local buyer assistance programs as you qualify for them. They will be your local point of contact and will be a huge asset in helping you achieve your goals.
0 votes Thank Flag Link Mon Jul 16, 2012
Another option for you to look into is a lease to own agreement. At least if you’re paying rent you can try to put a portion of the rent towards purchasing in a couple years after your credit has been repaired. Email me to get in touch with a seller who may be interested in working with you.
0 votes Thank Flag Link Mon May 7, 2012
There is a ton of great information in the answers supplied by the other real estate brokers and mortgage person. I suggest you sit down face to face with a local lender and discuss your situation. I can make some recommendations to lenders in the Vail Colorado area if this is your area. I am seeing local and regional banks have some flexibility look more objectively at each borrower. the big guys just can look at anything outside the "BOX" Good luck.
0 votes Thank Flag Link Tue May 1, 2012
Thanks Mark. I will contact you about relocating to Vail.
Flag Tue May 1, 2012
There are a lot of factors that go into mortgage approval and credit score is only one of them. 640 is really not that bad! As far as the deed in lieu of foreclosure, it depends on how long ago that happened. I would imagine with a credit score as good as yours it was some time ago and no longer affects your ability to get a mortgage.

I always advise people to talk to a local mortgage banker. They will look at your entire situation and tell you what, if anything, you can qualify for today. If you can't qualify today for some reason, they will tell you exactly what you need to do to improve your situation and how long it will take for those actions to take effect so you will know approximately when you WILL be able to buy. When I say mortgage banker, I don't mean one of the big banks, but a smaller, more local institution that specializes in writing mortgages. If you don't know one, talk to a realtor and ask to be referred. Good Luck!
0 votes Thank Flag Link Tue May 1, 2012
Yes. for my construction loan, no big banks would loan and I had 80k equity in the land i paid cash for and assets. I also had over 780 credit and a government job for 3 years. A small-town bank was the only lender that would even consider my loan application and that is who I went with. Even after the economy sank and my ex lost his job and we separated, they still tried helping me and offered the deed in lieu option. It still isn't on my credit report, so I really am not sure if it even will go on there. I just want to be prepared with the worst case scenario. Thanks again.
Flag Tue May 1, 2012
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