I need SERIOUS advice!!!!!!!!!

[theREBIRTHofCREDIT]

Hello and thanks in advance for all of your great advice. O.K. Let me start by saying my current (personal) FICO scores are EQ 604, TU 612, EX 615. About 10 months ago my scores were in the LOW 500's. I have really been trying to improve my score to (in the near future) by my Dream Home. The house that I was first interested in this past summer was my brother's house appraised for $165,000, but selling it to me for $135,000. At that time mymiddle score was 540. I couldn't get qualified because I hadn't been self employed at least 2 years. So I backed out the deal. NOW, my sister-in-law is approaching me again to see if I am still interested (since my credit scores are up "a little" and they are about to close on their NEW house "lol") She's telling me that they will sell it to me for $125,000 and I could pocket $10,000 and I don't have to put any money down or pay closing cost! But after looking at the paperwork it reads "Estimated loan amount $141,000 First Mortgage Fixed Rate 30yrs. Purchase Property" Does this mean she had the loan officer add the down payment and closing cost into the loan amount and if so is this a good idea to have them do this? Also, Since the time I backed out of the deal, I am not interested in living in that particular home anymore. I've actually had my eye on a new community being built just outside of my city (the home's are starting at $190,000+, but I figure if I get my score up enough I would qualify for a lower rate). She suggested that I still purchase their house and use it as rental property (but the loan papers say "owner occupied") She suggested that I rent it out to a Section 8 renter and by doing this I will see a great increase in my credit score (by making timely payments) and I will have extra income to report. According to the loan papers my approx. mortgage (tax and ins. include will be approx. $1,304 a month (they're trying to get me approved FHA) According to my research of the area 3 bed 2 1/2 bath single homes are renting for no more than $1,300 max. so there's NO PROFIT if I rent! And I still would have to pay water & sewer Anyway to make a long story short WHAT SHOULD I DO??? My overall goal is to move into the new community around this time next year and hopefully my FICO would be up at least 100pts.

Message Edited by theREBIRTHofCREDIT on 12-15-2007 08:21 AM

[granny031350]

IMO, your sister in law is looking to get out from under her place.  If I were you, and you are not sure, I wouldn't put myself in a place where I didn't think I wanted to be. .  I would run away from this deal cause I think it smells.

[Anonymous]

I'm with granny on this one.

[ShanetheMortgageMan]

Unless you plan on living in your sister's home, don't buy it... if you do, you'd be committing fraud with the loan you are approved for (FHA).  I have no clue why the loan amount says $141k when she said the sales price would be $125k, she shouldn't be able to communicate at all with your loan officer... your loan officer should be keeping everything confidential unless you give the loan officer authorization to speak to another individual.

[Anonymous]

Just a note since I saw your post....everyone always wants the "new home" in the "new community". Beware. This is like driving a new car off the lot....it is worth a whole lot less the minute you drive away. Try to let someone else take that financial hit. Buy a "used" home, it is better value. Especially a home you can fix up and improve a little over time.

But I agree with other responders....and would add, be careful of doing business with family or friends. You could ruin the relationship. A home is only "worth" what someone is willing to pay for it, so $10,000 off the asking price is no big deal, unless someone else was actually planning to pay that asking price.

Always, always, follow your instincts. Your instincts seem to be telling you that something is "off". Walk away. There will always be another deal.

[AlwaysLearning]

It sounds like she is pressuring you to buy her house right away because her new house is almost done and she needs to pay that mortgage.  She is suggesting you buy it and rent it out as an income opportunity.  If that is such a great option, why doesn't she do that?

This situation seems really fishy and with an investment like that, I wouldn't put my money on fishy.  Back out of the deal and when the time is right for you, then you buy a house.  Don't work on someone else's timeline.

[fishbjc]

ONE THING I will warn you about pertaining to new communities.  We purchased our home during the beginning of the last phase of building.  We purchased in 2004, our community will be complete in spring of 2008. 

Those people who bought into phase I and II are finding it nearly impossible to sell their homes for what they have into them.  Many have taken a large 'hit' to dump the home.

Builders offer all kinds of 'incentives' to get buyers into their 'new builds'.  Nobody will really gain much equity until all phases are complete.  We have homes that were owner occuplied for under one year and they're being dumped for up to $30 k less than original purchase price.

Unless you plan on staying 'long term' don't build in Phase I.

[fishbjc]

Be careful renting Section 8.  I have a friend who owns five rentals which are Section 8.  He can't wait to dump these homes.  The homes get trashed and his rent checks are SLOW to arrive, meaning he has to front the payment before the checks come in.

Four out of Five of his last renters left his home filthy and in need of repair.  One couple even helped themselves to the window blinds and cabinet knobs.