I have a credit score of 517. What are my chances of getting a loan to buy a house for 300k that is valued at 450k?

Asked by HBK, Silver Spring, MD Wed Aug 14, 2013

The reason I am getting this "steal" is it is a family house owned for two generations. I have been offered the house at cost. Only problem is my credit. What type of options do I have. I am open for any "creative" financing. I just want to take advantage of the equity!

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12
Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Wed Aug 14, 2013
Good evening,

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.
http://www.consumer-action.org/

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.
http://www.consumer.ftc.gov/articles/0058-credit-repair-how-…

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

*If you thought my answer was helpful, please give me a “Thumbs Up” or “Best Answer.” Thanks!
3 votes
brent mendel…, Mortgage Broker Or Lender, Bethesda, MD
Wed Aug 14, 2013
I wanted to make it clear though that I welcome your application. The previous answer was not to discourage you from attempting to obtain a loan.

Thanks,
Brent Mendelson
1st Mariner Mortgage
nmls#111407
2 votes
Piero Marinu…, Agent, Silver Spring, MD
Wed Aug 14, 2013
HBK, give Catherine Purcell (her answer is below) a call. She's an excellent lender and will help you to repair your credit and get you a loan, likely without a fee.
2 votes
Thank you Piero! HBK, I will be happy to discuss your scenario with you to see how I can make it work!
Flag Wed Aug 14, 2013
Yeah, you won't regret it, she's sharp.
Flag Wed Aug 14, 2013
I am likely going to do that...
Flag Wed Aug 14, 2013
James Deskins, Agent, Worthington, OH
Wed Aug 14, 2013
Regardless of the value and/or cost of the home you chances are about "0."
1 vote
brent mendel…, Mortgage Broker Or Lender, Bethesda, MD
Wed Aug 14, 2013
The odds of a regular old fashioned loan are pretty much zero right now. There are some options such as hard money, rent to own, owner financing etc. Each have pros and cons. For example hard money basically is a loan for a year, perhaps two at very high interest rates and very high fees. They typically won't lend on a primary home though. And you need to fix your credit in the meantime so you can get a regular loan. It's a short term solution.

One note, beware the companies that charge fees for credit repair. I'm not going to say they are all scams but I just had a client two days ago complain to me about the company that took his money and he hasn't really heard from them since May and his score is still in the 500 range. Right where it was before he paid them. Do your homework, check the BBB, Google their name and see what pops up and ask them for client referrals. If you asked me or anyone that answered you I guarantee any of us could give you dozens if not more of happy satisfied customers. They ought to do the same.
Hope this is helpful and good luck.

Thanks,

Thank You,
Brent Mendelson
Senior Loan Officer
1ST Mariner Mortgage
O-240-235-5314
C-301-412-0259
F-240-235-8236
Bmendelson@1stMarinerbank.com
Lending in all 50 states
nmls#111407
1 vote
BJ Matson, Agent, Potomac, MD
Wed Aug 14, 2013
i would work on getting your credit straight first. The energy and time you spend on trying to find a program now, that most likely can't do it and will charge an arm and a leg AND require a significant down payment.... you're better off served paying your bills on time, paying off any collections or judgments, etc.

The fact that the value is higher than the sales price has no bearing on approving you more easily. The lender bases it's risk off the price you are paying and the amount of down payment you are willing to give. NOT a chance if youre trying to do this with a litle down payment.
1 vote
Piero Marinu…, Agent, Silver Spring, MD
Wed Aug 14, 2013
Pretty sure you can't get a loan from a bank with those scores, but I'm not a lender. Could the owner finance th property for a couple years until you get your credit repaired?
1 vote
The problem is, once the primary owner dies, it goes straight to the bank. However, before the owner dies, anyone she agrees to sell the property to can purchase it.
Flag Wed Aug 14, 2013
James Deskins, Agent, Worthington, OH
Thu Aug 15, 2013
What Eddie failed to mention is that land contracts can be risky and they are usually weighted to help the seller.
0 votes
Eddie DeLuca, Agent, Silver Spring, MD
Thu Aug 15, 2013
Get the current owner to do a cash out refi, then assume the non assumable loan with a land installment contract, totally legal, do it now, give a nice down payment, get the owner to hold a note for the difference. Two years of making on time payments to this loan will go along way towards "repairing" your credit.
These online forums are ok, they let you be anonymous until you need a pro......time to talk turkey, I am a 27 year realtor, I have done the above scenario many times as a buyer, seller or agent of one or the other, email me and if you are legit I can give you my cell and we can talk further, for free, DeLuca.team@realtor.com
Eddie DeLuca, GRI, Associate Broker
DeLuca & Associates Real Estate, LLC
0 votes
Eddie DeLuca, Agent, Silver Spring, MD
Wed Aug 14, 2013
Is there a mortgage on the property now? I can show you how to take that over. It all hinges on what the seller owes, how much you have for a down payment and what the seller is willing to hold as a note, kind of much to type here. Happy to discuss it at no cost or obligation.
0 votes
Miekeba Jones, Agent, Silver Spring, MD
Wed Aug 14, 2013
Hi HBK. your score will need to be 580 to work with a good lender I know. I also know a lender that will rapidly fix your score for a fee. contact me and I will help you.
0 votes
Catherine Pu…, , Silver Spring, MD
Wed Aug 14, 2013
Hello HBK,

I will be happy to look at your application and credit to see if there is a way to get you qualified for the purchase.

Call me at 202 573-6035.

Sincerely,

Catherine Purcell
Senior Mortgage Loan Officer
Fairway Independent Mortgage Corporation
catherinep@fairwaymc.com
202 573-6035
0 votes
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