Profile picture for Debbie Holmes

Need a mortgage with someone just one year out of bankruptcy, 640 credit., and cash any help?

Hi I have a buyer who had a bankruptcy due to medical problems.  It was discharged one year ago.  She has worked up to a 640 credit score and has $90,000 coming in cash from stock from her divorce settlement.   She is employed and earns around $30,000 a year.  She is willing to put 25 -50% down on property .  She would like to use the money to buy a small house to live in and an investment property that would produce income.  Is there any way to fund her?
  • July 27 2010 - Boise
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Answers (16)

As for the home to live in, that could be done with an FHA loan. The rental property is another issue altogether. Credit guidelines for investment property loans generally require 4 years discharge from bankruptcy.
The suggestion below from Jim Paulson regarding a duplex is probably the best way to accomplish both and could also be done with an FHA loan at great rates and wouldn't require much down payment.
JR
  • February 19 2011
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If ALL debts discharged in BK were in fact medical you may have a shot.  Try her local bank first then maybe a broker who may be able to talk to an UW and supply a good letter of explanation.

Other than that, rent for a year.  Not that much time.
  • July 28 2010
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Profile picture for Debbie Holmes
Just need to find a lender who will lend at reasonable fees and interest for a large down.
  • July 28 2010
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Our backup plan is to buy one small property (not a condo) and she could live in it or rent it out.  Then she could finance it in a year when she is credit worthy (can get a mortgage).  She came to me with this plan and it is a good one.  She wanted to get more then one home and a loan is a way to do it.  The rates are low and the prices are way down right now.  The company told her to expect her payout between August 15 and September 30.  We are hoping earlier then later.  Its like the last month of pregnancy...You know its coming the question is when?  
The plan we wish to pursue is the 2 home plan....  This could help set up enough income to supplement her income and perhaps work towards eventual retirement income.
  • July 28 2010
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Profile picture for SoCal Engr
@ Deborah - Not sure what your client's backup plan is, but I have a feeling you may want to follow this thread.
  • July 27 2010
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What price home is she looking to buy?  Another consideration would be to have her buy a duplex and rent out one side but I am thinking you will need an owner carry or a lease purchase.
  • July 27 2010
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I think her plan is valid and will be successful.  She already pays $750 in rent and the rate on a normal mortgage for $50,000 would not be nearly that high.  The landlord idea is also a valid way to invest for the future.   The property would have a good cap rate.  If we fail to get the loan we will go to plan b then finance the home next year and buy another property.  Her bankruptcy was due to medical problems that left her very far in debt.   I think that she will do fine if given a chance.  
 
  • July 27 2010
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@ Deborah - Unless there is some underlying urgency to purchase, maybe this is a time to counsel patience and work out a more reasonable plan and timeline for your client.
  • July 27 2010
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"And yes the Interest rate is high and the Points are as well but it they want a Home this is an Option that is worth a look and remember the buyer can always refinance in a few years "

Really, are you still using this line? In the face of all the "owners" who are unable to refi?
  • July 27 2010
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We don't want private money... When we checked it was 4 points at 12%..... Seemed way to high.....Could get her in trouble...
  • July 27 2010
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Try Buffalo Savings Bank!!
  • July 27 2010
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I use Private money lenders for this type of Buyer since it is based on Assets and not Credit History, In Florida I deal with Hard Money lenders from 65% LTV for a Single Family Home that is a Primary.

And yes the Interest rate is high and the Points are as well but it they want a Home this is an Option that is worth a look and remember the buyer can always refinance in a few years
  • July 27 2010
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She has never owned a home.  She would like to own a home.  Plan b would be to buy something outright and refinance next year...
  • July 27 2010
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did she lose the house? was she on the note?
  • July 27 2010
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Chapter 7...
  • July 27 2010
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What chapter was the BK?

  • July 27 2010
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