I am recently unemployed, but will be receiving a healthy divorce settlement soon. I would like to know if I buy a foreclosed house outright and my

Asked by Missanya, Minneapolis, MN Fri Apr 30, 2010

credit is good (over 700) and I have no outstanding credit card payments, what do you think my chances of getting a home equity loan to fix the place up would be? I also receive child support, so I do continue to have income. Finally, is there any chance that the 1st time home buyer tax credit will be extended and could I take advantage of it in this situation?

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13
Elizabeth Si…, Agent, Minneapolis, MN
Wed May 5, 2010
Hi Miss Anya,

If you buy a foreclosure in many South, North and Northeast neighborhoods of Minneapolis (including Powderhorn, Bottineau, Willard Hay, etc.) you may qualify for a Minneapolis Advantage forgiveable 0% interest loan of $5,000 - even if paying cash.

This can help pay for part of the house to free up $5,000 for some work. When unemployed, GMHC will verify that you have enough in savings to get the house up to Minneapolis code based on the Truth in Housing report and enough income from some source to pay the taxes and insurance on the property (Often taxes and insurance are under $200 a month). Talk with your loan officer for details about the Advantage program and a home equity loan.

Best wishes!
Web Reference:  http://www.lizsibet.com
2 votes
Peter Boyle, , Minneapolis, MN
Sun May 2, 2010
First of all, I have not been able to find anything that indicates the efforts to extend the tax credit will be successful. If it were extended and you qualify as a First Time or Move Up Buyer, then buying a foreclosed home would be eligible for it. Your ability to borrow against the property will be limited by the income you receive as compared to the monthly payment. So most lenders will limit the payment to 30 or 35% of your sustainable monthly income. Most Home Equity lenders will require a 3-6 month history of verified child support payments to be able to use that income for qualifying. The fact that you have a large asset base is helpful but in itself not enough to qualify for a mortgage any more. Some finance companies could attach your assets to a “margin account” and you could borrow against the assets, instead of the house, but Asset Based Mortgages for residential properties seem to be a thing of the past. Many banks would consider the interest returns on your investments as income, and that plus your child support may be enough to qualify you for a reasonable home equity loan.

Peter Boyle
612 701 6816
1 vote
Colin Simpson, Agent, Wayzata, MN
Sat May 1, 2010
p.s.!
Ask your Lender about a 203K Mortgage. It lets you finance home repairs into your mortgage at the closing table. It's a little bit more expensive (rate) and more time consuming (paperwork, repair bids from contractors) than a regular loan, but it may fit your sitation.
Colin
1 vote
Colin Simpson, Agent, Wayzata, MN
Sat May 1, 2010
Hi Miss Anya!
You should contact a Mortgage Lender (brother in law) and local REALTOR to put together a plan to buy a home when your divorce is final.
I've been working with Cathy Robin for years. She's helped many of my clients find the right financing as well as securing my personal loans. She can be reached at; crobin@advisorsmtg.com Cell 612-839-1716.
The 1st time home buyer credit will not be extended for the general public :( The Feds are streching it as it is!
Good luck!
Let me know if I
1 vote
CCC, Home Owner, San Diego, CA
Fri Apr 30, 2010
This is how ownership works in MN. Minnesota is what is called a Family state.
Once you married someone that owns a home, you are the owner too.

There could be something that because you are getting divorce you might be consider first time home buyer. But it is clear that you owned a Condominium. It does not need to be your name on it because title will read:

Jhon Doe and wife. Then, that was/is you. Your name is not on title, but you are on it.

About the home equity line of credit: it is not the same (or it was not the same) to get it at the time of the purchase ( at the same time as the first mortgage) as getting in it later. It is called season ownership.

Benito.
1 vote
Jennifer Gra…, Agent, Sacramento, CA
Tue Sep 7, 2010
Missanya,

Any loan you are interested in has to be qualified for by documenting your income. Typically you can spend up to 31% of that documented income on housing. There are other factors of course. Ask a qualified mortgage lender with an array of products for all of your options.
0 votes
Jacque Erick…, Agent, Minneapolis, MN
Tue Sep 7, 2010
The best would be to do a 203K loan and if you want to use the cash settlement to put a large down payment you will have a lower mortgage and the rates will be at market. Equity loans can carry a higher rate. If the repairs are less than $30K - you can get a streamline 203K - much simpler version. The tax credit was a bit overrated - now that it has expired the prices have fallen and you could possibly save more on the purchase price than you would have gotten on the credit.
0 votes
Brad Anderson, Agent, Maple Grove, MN
Sat May 1, 2010
Check with a mortgage person on this. They are the most qualified to help you with this.
0 votes
Missanya, Home Buyer, Minneapolis, MN
Fri Apr 30, 2010
Aah. Thanks for the info. I do have an email in to my real estate agent and my brother-in-law is a mortgage broker, so I'm hoping that he might be able to help me out!
0 votes
Frank D'Ange…, , Minneapolis, MN
Fri Apr 30, 2010
No chance of the credit being extended unless your with the military or out of the country federal employee. The home buyer credit is extended for them. Obtaining a home equity loan is a good possiblity assuming there is equity in the home versus what is owning on the hom.
If youre need more help on these factors, please call Sheldon or Frank at 763 548 1444
0 votes
Dan Chase, Home Buyer, Texas City, TX
Fri Apr 30, 2010
In washington dc anything is possible, however, there is no real reasonable expectation of the tax credit being renewed.

You should be receiving child support. It has not happened and become a habit so it should not be counted. Many ex's never pay that support.

If you get a job in the same field as before it should not be to difficult or take to long to get a loan, however, you have no job. No job = no income. No income = no loan.
0 votes
Missanya, Home Buyer, Minneapolis, MN
Fri Apr 30, 2010
Thanks for the quick response!

Child support could be documented (it's in the divorce decree). I was never on the title for the home we had or the apartment he bought while we were married. That 6 month timeline surprises me. Is that a new guideline? When he bought the house we lived in we got the home equity loan at the same time as we got the mortgage.
0 votes
CCC, Home Owner, San Diego, CA
Fri Apr 30, 2010
I will say minimal since a Loan is based on the ability to repay during a certaing amount of time. So unless your child support could be document, I guess it will be ok.

Either way, you need to contact a Mortgage Consultant for a review of your scenario. A hard money lender and/ por Contract for deed could be an option. But since you mention Foreclosure, well, that increase the risk for the lender.

So, first time home buyer, you did not had a home before, right? You were not on the title of any property.

Also, for a Home Equity or mortgage, most of the time it requires at least a 6 months ownership.

Benito.
0 votes
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