Home Buying in 60033>Question Details

Andrea, Home Buyer in Harvard, IL

I'm Disabled and have Terrible credit due to a Divorce and Ex Husband anyway of getting a home ?

Asked by Andrea, Harvard, IL Sun Jan 13, 2008

I am already paying 725 a month for rent surely I can find a home with those payments?

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Andrea, a lease option is a possibility, but I think you may be better off continuing to rent. A lease option can be a good way to get into a home if you are confident that you will be able to qualify for a mortgage in the next few years (when the option comes due and you exercise it by getting a mortgage and buying the home). That means you will use the time to clean up your credit and save a down payment. Lease options can be structured so that part of the rent goes toward the down payment, but you have to be able to show that the rental is based on market rents, and only the amount above market rents can be used toward the down payment. This means your payment will likely be higher than it is now.

Another thing to consider is the total cost of owning a home. This includes the principal and interest on your mortgage payment, the property taxes, home owners insurance, an association fee if you are in a condo or town home, as well as utilities repairs and maintenence. Chances are this will come out well above the rental you are paying now.

There are a lot of other reasons to own a home, but it might be smart to take your time and regroup now. Down the road you may be in a better position to buy.
0 votes Thank Flag Link Mon Jan 14, 2008
Dirk's right. Look for a lease-option. Craigslist is a good place to start. Do some research on how it works. Basically, in your case, you'll want someone who has a house they want to sell, but haven't been able to. Fair market rent is around $725--because you're not going to want to pay more than you can afford. Or at least fair market rent is equal to or less than you can afford.

I don't know your area, but what that probably means is an older property that someone's owned for awhile. Their total payments on the property should be much above what you'll be paying; while lease options can work under such circumstances, owners don't like eating large negative cash flows. And it's possible that the house you lease-option will have been completely paid off by the owner. So they own it free and clear. But, probably, it won't be in great condition. It'll have been vacant for awhile--maybe because it doesn't show all that well or needs updating. The owner's rented it for quite a while and would prefer selling, but knows that in today's market, with that particular property in the condition it's in, it won't sell.

So you come along with solutions to both the owner's problems. You want to rent today--solving the immediate problem of the property being vacant. And you would like to buy at some future date. Make that date at least 3 years from now. That'll give you time to improve your credit and accumulate some savings. The owner won't mind; there will be cash coming in today, and the prospect of selling the property in as-is condition in a new years.

Structure the lease-option so a portion of your rent is credited toward the purchase price. It can be as much as the owner will accept. You might start off at 50% credit, going down to 20% as a negotiating maneuver.

There's more to it than that, of course. But do some research on lease-options and see what's available out there.

Good luck.
0 votes Thank Flag Link Sun Jan 13, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Need to know mre about your definiton of bad credit. Do you have mortgage lates on your report? You may be interested in My Community which has some additional provisions for disabled persons. Check out my blog from here:
http://localism.com/article/133262/My-Community-Loan-Pograms…

Greg Zaccagni
0 votes Thank Flag Link Sun Jan 13, 2008
You need a Seller Contract Girl friend. The Banks will likely not touch you right now as Credit is a must in today's world.

Look online at Craigslist.com under Real Estate. You will liley find a lease option that you can get and or a Lease purchase or wrap around contract. This will be your best shot Andrea. Some people would probably be willing to get creative with you rather than loose a home or Condo to the Bank. Having some downpayment would probably be a must in this situation.

If you have a desire to own you will. That I am certain of. Realtor's and others will be hard pressed to help you as the fee involved is either so small or none at all! I really wish you teh very very best in recovering form your Divorce and am sorry to hear that you are disabled.

Life is a tough thing most of the time. That is why you have to savor the good stuff!

Dirk T Knudsen
"The Real Estate Doctor"
Web Reference: http://www.nwhomecenter.com
0 votes Thank Flag Link Sun Jan 13, 2008
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