How can i get an approval letter for buying a house if I have bad credit?

Asked by Jennifer Bolin, 11784 Sat Nov 20, 2010

I had a car that I let go back 2 yrs ago and it ruined my credit. Now I have bad credit and cant get a loan. Its a double wide. How can i convince someone to let me have a mortgage loan? What other options do I have. I want this house bad>>> My parents live right beside of the house and they keep my kids when I work. This would be sooooo much better on gas and everything. Plus my parents are getting up in age too. I would like to be there for them when they need me. Thanks>

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Hannah Fliegel’s answer
Hannah Flieg…, Agent, Larkspur, CA
Sun Nov 21, 2010
Hi Jen,

You might consider working on your credit first and getting your credit profile in good shape first. Then you would work with a mortgage broker to get approved for a home loan, this way you know the interest rate and the loan amount upfront. Then you locate the property which you are interested to purchase.

This way you set yourself up for success long term.

Good luck!

Hannah Fliegel, FICO Pro
The Credit Repair Expert
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0 votes
Myra Gouger, Agent, Las Vegas, NV
Sat Nov 20, 2010
You can't and you won't get an approval from a bank. You might be able to get a private individual to make you a loan. If you can find such an individual nowadays, they often charge very high interest rates.
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Don Tepper, Agent, Burke, VA
Sat Nov 20, 2010
Depending on who's selling the doublewide, you might be able to get owner financing. As you probably know, there are a limited number of lenders even willing to lend on mobile and manufactured homes. Without credit that's acceptable to them, you're often out of luck. Further, the amount you want to borrow is probably much lower than conventional lenders will consider. Where I am, you can get decent double-wides for $30,000-$50,000 and new, gorgeous ones for $115,000. I'm guessing you're probably in the $30,000-$40,000 range. That's below the limit most conventional lenders will lend.

In owner financing, the seller acts as the bank. This is most often successful when the seller is an individual (not a bank or park management). The paperwork's simple, but you should have a lawyer review it. Basically, you'd deal with the seller like the bank: A downpayment, then monthly payments. Sometimes there's a balloon payment at the end; sometimes not. It depends on what you can afford and what the seller needs.

A lease-option, as suggested below, is another possibility. But seller financing is far better for you and, often, the seller. However, the mechanics as described below are inaccurate.

If the seller needs all cash (not uncommon in mobile home parks), another possibility is getting an investor to lend the money. The investor buys the home at a discount for cash. Then he sells it to you on terms. That's the way I'm selling a manufactured home in Virginia right now. I bought at a discount for cash, then am selling to the buyer on terms. I make some money and the buyer is able to buy a home that he otherwise couldn't have.

Hope that helps.
0 votes
Dave Griswol…, Agent, Bridgewater, NJ
Sat Nov 20, 2010
Hi Jen, The credit score is a part of the mortgage process our suggestion would be what Greg has said try to get a lease purchase. If you have enough of a downpayment prehaps your family might buy it for you and you pay them the monthly payment or make the payments directly to the lender this way it will show you've been making payments so when you credit score improves to buy it back from your family wouldn't be too hard..
All the Best
Dave & Lisa
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0 votes
Greg Fox Jr, Agent, Alpine, CA
Sat Nov 20, 2010
With our struggling economy, many people have fallen upon difficult times in the past two years. Knowing that you let your car go 2 years ago, isn't uncommon. The question I would have for you is whether you had any other credit that you were able to keep paying and in a timely fashion? Many people have had credit issues such as yours and have been able to repair their credit and increase their credit scores by paying their other creditors on time, or starting fresh by obtaining alternate credit (ie. a secured credit card from their bank).

There is another hurdle in your qustion and it pertains to the property itself. Many lenders including the Federal Housing Authority (FHA), have changed their underwriting guidelines for lending on manufactured homes which may hinder financing on the property. I would check with local lenders to see what these guidelines are and also to have them work with you to get your credit back on track.

On a different note, if you don't already have a Realtor, get one. There might be a another option for you to get into this property. Have your Realtor check to see if the Seller is willing to do a Lease Option to Own. This scenario works when the owner doesn't need the lump sum immediately. Typically, a Lease Option to Own is for a determined period and has specific language as to the agreed upon purchase price (you negotiate based upon the prices today and not what they might be in the future) the amount of monthly rent and whether or not any of this rent will be used towards your downpayment should you excercise your option to purchase. If the Seller is interested in doing a Lease Option to Own, you would be able to get into the property now as a renter, while re establishing your credit to buy at the end of the Lease Option period. Also in a Lease Option to purchase, there is usually a small amount of money that is put up in "good faith" by you and should you choose not to exercise your option to buy at the end of the established period this good faith money would go to the owner of the property. This shows your willingness to have some skin in the game. If this option works, you will still need to start working with a local lender to get on track with repairing your credit.

Good luck!
0 votes
Clark Riel, Agent, Reno, NV
Sat Nov 20, 2010
How bad is your credit? Do you know? Have you run your credit lately? Have you talked to Lenders? Is the seller willing to carry a note? Can your parents help? There may also be a hard money or private lender available in your area that is willing to lend you money. But the hard money and private loans will carry high interest rates and the cost of getting the loan can be high, so make sure if you go this route it is really something that make financial sense. Also something to consider is that lenders treat manufactured homes different than conventional homes and there are fewer lenders that handle this type of property. You may need to call around and check with a lot of different lenders. If you can't find a lender who will handle this type of property it may be a good case to make to the Seller to carry a first (assuming they are in the position to do so). Good luck!
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Anna M Brocco, Agent, Williston Park, NY
Sat Nov 20, 2010
Keep in mind that lenders are much more stringent when it comes to making loans--just how bad is your credit, and can your negative be removed from you credit, if so try to handle that situation first, etc.; ....have you visited with any qualified loan officer(s) yet, and if so, did he/she give you suggestions on what needs to be done in order for you to qualify.....
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Terrence Cha…, Home Owner, Allentown, PA
Sat Nov 20, 2010
Maybe the lender would allow your parents to cosign for the loan. Or maybe your parent could help you out by gifting you some money towards the purchase of the property. And not only do you need to deal with the bank, but the park owner as well. They would need to approve you as well and if you can't get a loan for the trailer, then you may not be able to be approved to move in any way.

Good luck.
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