Reporting private sale/mortgages??

Anonymous · ‎08-18-2014

I am currently exploring the idea of purchasing a home from a family friend, private sale. The house has been paid off and there are no liens on the property. We have discussed different payment arrangements, I.e- rent to own/ and different Mortgage options.(any advice/ or resources would be greatly appreciated!!!)

He has offered to accept monthly payment on the total price of the house at a lower interest rate than I would be able to secure from any lending agency. (holding the mortgage note)

There would obviously be a formal contract drawn up by a real estate attorney/title agency? (if anyone has any advice on this, please respond!!!!)

As a first time home buyer, I would like to take advantage of the purchase in raising my credit score. Is it possible for him to report my payments to the credit bureaus? Does anybody have any idea how one would go about doing this?

Any and all responses/advice are welcome!!!!!

StartingOver10 · ‎08-19-2014

Private mortgages don't report. There is a fee to the reporting company/person for each time they report for each CRA. I don't know the amount, but I have heard it is relatively expensive. Maybe google can help give you details on how much it would cost.

Your score can completely recover by having revolving tradelines (credit cards) or installment loans (auto) and a mortgage reporting is a very small part of the actual scoring formula. In short, you can obtain very high FICOs without having a mortgage tradeline report at all.

There are advantages to not having a mortgage tradeline report too.

There are no inherent benefits for a first time homebuyer except that there might be a possibility of down payment assistance in a few selected programs to a very small portion of the first time homebuyers (usually income based). Many times that benefit is offset by higher interest rates - depending upon the program.

The benefit you are receiving, a lower interest rate for the life of the loan, is a much better benefit for you.

bdhu2001 · ‎08-19-2014

If the real estate attorney reviews it and approves it, you've got a sweet deal. You'll still be able to say you own your own home and the payments are only listed as whatever you claim on credit applications. In addition, you get a lower interest rate. I believe all installment loans look the same for FICO scoring and you can get a great score without having a mortgage.

If you don't have a car and you want to raise your FICO with an installment loan, use Revelate shared loan method. Otherwise remember that financial security and saving money is better than having the best FICO score. Your score only needs to be good enough to get the best rates for what you want to obtain. You're getting your home so the other things would be best interest rate for cars and credit cards. Do you know what your current FICO score is and what you'd like your score to be? There are many tools to raising your credit score & buying a home isn't one of them or necessary to raise your score.

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coterotie · ‎08-19-2014

Just the out of pocket sunk costs mean this is a no-brainer. Add up costs of credit reports, appraisals, mortgage title insurance, inspections, points to the lender, mortgage insurance. Not to mention the benefits of the below market interest rate. None of the above costs increase your equity in the home or make the home look prettier. Or raise your score.

@bdhu2001 wrote:
If the real estate attorney reviews it and approves it, you've got a sweet deal. You'll still be able to say you own your own home and the payments are only listed as whatever you claim on credit applications. In addition, you get a lower interest rate. I believe all installment loans look the same for FICO scoring and you can get a great score without having a mortgage.

If you don't have a car and you want to raise your FICO with an installment loan, use Revelate shared loan method. Otherwise remember that financial security and saving money is better than having the best FICO score. Your score only needs to be good enough to get the best rates for what you want to obtain. You're getting your home so the other things would be best interest rate for cars and credit cards. Do you know what your current FICO score is and what you'd like your score to be? There are many tools to raising your credit score & buying a home isn't one of them or necessary to raise your score.