Profile picture for SBott

First time home buyer, my credit score is 716. We want to purchase & improve our current residence.

Hi! Thanks for any insight you can offer. I have a strange situation, and am researching how to proceed.

My husband and I are in our early 30s, and have been married for nine years. We have one child, and own both our vehicles free and clear. My credit scores are 703, 708, and 738, for an overall average of 716. We want to purchase our first home soon, and we would like it to be the one we are currently living in. His father owns the house, and we simply took over his payments informally – we make out a check to him each month and he in turn makes his loan payment to his lender. I believe he does have a first and second mortgage both on our home. We have no formal/written living agreement, simply the verbal directive that we have our house payment in to him by the 12th of each month.  We have previously discussed purchasing the house formally, for whatever he still owes on it, once we were able and ready to do so.

I have several questions that I am not finding satisfactory answers to thus far in my research on this matter, and so I am hoping to pick your brains. :) I will post my questions as the first comment on this discussion, as they won't fit here and I have already typed them up as concisely as I can manage.
  • October 31 2013 - Belton
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Answers (2)

Profile picture for Gary DiFilippo
I am a Senior Federal Lending Specialist with a National Lender. I have had numerous similar situations over the past 12 years, and there are a few different options available for the purchase of this property, most of which would allow you to purchase the property with no out of pocket expense at all. Please feel free to contact me through my profile at anytime, I would be happy to answer any questions you may have. Thank you and best of luck.
  • October 31 2013
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Profile picture for SBott

1.

How do I get my home appraised, and do I still HAVE to get it appraised if we have already agreed with the owner to pay the remainder of what HE owes on it?  We understand that the home is most likely not worth nearly as much as when he bought it shortly after it was built (in the early 2000s) but we would like to stick to our word to pay whatever he owes so he isn't taking a loss. I believe when he bought it, it was $165k. He still owes around $130k I believe. I will be able to confirm these details when necessary, for now I will use those estimates.


 
2.

Do I get an appraisal first, or contact a lender for approval first?


 
3.

Does the owner's holding two mortgages on the place have any adverse effect on my right/ability to purchase it? Will I be purchasing it from him, or the lenders he is beholden to for his mortgages? Do I need to speak with his current lenders and deal/dicker with them directly, or am I supposed to deal with the homeowner?


 
4.

Can we borrow more than the value of the home? It does need repairs, and anyone doing an appraisal will be able to clearly see this. Some of the needed repairs are superficial but there are a couple of issues which are relatively serious. There is a problem in the wiring that we need will need to hire an electrician for; there are two plumbing issues; there an issue with the home settling due to soil erosion, which has caused one wall to sort of shift and crack; there are windows which need to be repaired, and we are hoping to repaint the interior and possibly get new carpeting if we can find something durable and reasonably priced. We would like to get a new deck as ours was improperly built and is clearly unsafe. The builder opted to use nails instead of screws, the wood is warped and cracked, and many of the nails continue to come back up even after being pounded back down. The stairs are tall, steep, and creaky and the top step actually came off while I was stepping on it, on my way down to the back yard. The large support beam that goes up the lower side of the crosspieces (the long side pieces that the steps are actually nailed to) is cracked almost all the way through.


 
5.

We both have relatively low-paying full-time jobs. We do feel confident and ready to purchase this home, however, because my credit is good and according to the very reputable website I used to search for loan offers, officially purchasing the home in my own name would lower our monthly payments significantly. As I said, we are currently making my father-in-law's mortgage payments, to the tune of $1100 per month. We have never been late or missed a payment, since we moved into the home in April 2009. According to the site I used, based on the offers from various lenders I qualify for a payment range of about $500-$750 per month. Under our current budget, this is much more manageable than our current setup of $1100 per month. The one thing that has aggravated me is that our faithful payments have never been reported on our credit, because none of this is on paper – we just pay his dad. We can provide proof of these payments from our bank, however, because all house payments were made out to his mom or his dad (who are married and live together, and have a joint account) by check. Bearing all this in mind, should we still be able to get a loan to purchase this first home? We wish to obtain a 30-year Fixed FHA loan. I am not interested in any ARM loans and will not qualify for a VA loan, as neither of us served in the military.


 
6.

I have 6-7 "revolving" (?) accounts (all in good standing) listed on my credit reports, and I currently hold a student loan to the government for around $29,000. This loan is also in good standing.



 
 
Thank you so much for taking the time to read into this lengthy situation of mine – I appreciate your help and advice.
  • October 31 2013
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