Mortgage Options - Where to Begin

[Anonymous]

For the past few months my wife and I have been passively looking for property for our family and to start a small lambing operation on. Two weeks ago we found the perfect spot just a few minutes from where we currently live. Perfect for our family and business. So we started shopping for a mortgage, or some way to purchase this property. The seller is asking $219,900 which is very overpriced. A CMA only puts it at $200,000. However, this doesnt include the condition of the house which is lacking and requires a fair amount of remodeling to be worth that amount in this area. We're thinking closer to $180,000.

My wife is a stay at home mom with no income and several debts, and thus we are only applying in my name. I work full time and gross $34,320, which is expected to increase to $40,000 in March 18', and my credit scores are 600-620. I have been employed at the same job for 2 years and have been in the same industry for 4.

I have 5 negatives;

1. Caci - Collection

     Unpaid

     3/27/17

     $30

2. CCS Collections - Collection

     Unpaid

     4/6/15

     $80

3. CK-Midam - Collection

     Unpaid

     6/14/17

     $37

4. Ad Astra - Collection

     Unpaid

     10/30/14

5. Law Offices of Mitchell - Collection

     Unpaid

     5/30/17

I have 5 credit cards;

1. $8/$500 - $8 once - 2x 30 lates

2. $32/$600 - $32 once

3. $480/$500 - $15/mo

4. $0/$300

5. $0/$1250

And one installment loan;

$2514/$3500 - $160 /mo

I also have 4 student loans, all of which are in deferrment, but considered in good standing.

$5460

$3037

$2607

$1446

So technically, my monthly income is $2860, and my debts are only $215 a month. BUT here's where is gets tricks. The property we live on is in my wife's name, and is completely paid off. It's only 3 acres and a mobile home, estimated to be worth $50,000. Not much. The question is would it be more advantageous for a mortgage for me to have this in my name or not? If we can get financing for this other property, we intend to sell this one and use the procedes to completely wipe out all of our debts and put the remainer into our new mortgage balance.

I also have a situation with a piece of property my mother owns. She owns a piece of family property estimated to be worth $150,000, and is waiting to gift it to me until the time is right. Would this be advantagous?

Then there's the business side that complicates things. The property includes 32 acres perfect for our lambing operation. I have a full business plan, profit projections, the works, and expect to produce $12,000 a year starting out.

SO what would be our best route?

USDA is out since we want to run a business from the property.

Would it be better to secure business financing for the entire property? Seems unlikely we would be approved for such.

FHA seems to be our strongest choice currently. We're in Madison county, Missouri. Fortunately Missouri has a program called First Start that would allow us to take out a second mortgage at 4% of the purchase price to cover down payment and closing costs, which would be forgiven after 10 years.

Would having the additional properties help our situation? I considered using a HELOC, but without a seasoning period that's unlikely. Our would additonal net worth help alone on approval?

Thank you in advance for any suggestions.

[JVille]

Have you pulled your FICO Mortgage Scores, those current collections are a killer. Your need to pull your credit report and do some work.
Fairly certain that FHA won’t touch 32 Acres, they make home loans and not farm or business loans.
So where to begin, pull your credit and look at your Mortgage Scores, not Fico 8 but the scores the lender will use. Then sit down with a lender.

[Anonymous]

I do have my current credit reports, but not my mortgage scores, just Vantage. Just purchased the report package from myFICO though, but will have to wait until tomorrow to call and verify my identity.

I've actually already applied with a few lenders, and confirmed the FHA would work on the property despite the 32 acres. Unfortunately there are only a handful of lenders in Missouri that are certified for the First Start program, and none of them are local. So all communication has been through email and phone only, not exactly able to sit down with them

[Anonymous]

That credit card with $480/500 is hurting your scores majorly. Don't let any card you use post a utilization over 38% -- use it as much as you want but pay it down below 38% before the report date.

Also can help EQ if you only let one card report a balance versus many. You definitely can improve your scores even more by playing the utilization game better. See my 11 Rules link in my signature for the AZEO method.