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Should I finance or have my gma?

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Established Member

Should I finance or have my gma?

Good morning,

 

I am facing a dilemna right now regarding purchasing my first home. I am trying to qualify for a USDA Rural Development loan. I might be able to have a high enough credit score by the time I plan to apply(end of January), but would it make more sense to let my gma apply and then purchase the home from her once my credit score is higher. Her credit score isn't super high, but closer to 700. I could probably get my score closer to 700 by the end of this year since I have a judgment set to fall off my credit report in August.

 

Please advise. She also would be getting the USDA RD loan. Is there a huge savings if she gets the loan with her better credit? 

 

My fico score is in my signature.

 

 

1/26/2014: EQ 620 TU 599 EX 629
12/7/2014 EQ 583 TU 566 EX 577
Currently reporting:
Message 1 of 10
9 REPLIES 9
Valued Contributor

Re: Should I finance or have my gma?

Have you gone into the closest USDA office? The lady at mine encouraged me to go ahead and submit my app, my scores are similar, but with a very very thin file. I do have several alternative TLs (phone, sprint data plan for tablet, health insurance) that can verify a solid year of history with no lates. I submitted the pre app, have a meeting the 2nd week in January.  If nothing else they can put you on the path.

I've got some cards, got my house and got some scores with a 7 in front. Now what? Oh yea, live some of that life stuff.
Message 2 of 10
Established Member

Re: Should I finance or have my gma?

No, I have dealt with the lady at Regions. USDA referred me to a list of potential brokers. I am honestly a little worried about having any more hard pulls on my credit right now. That is why I am waiting until the end of January to officially apply.

 

We do not have a USDA office in my city(Hot Springs, Arkansas.)

1/26/2014: EQ 620 TU 599 EX 629
12/7/2014 EQ 583 TU 566 EX 577
Currently reporting:
Message 3 of 10
Valued Contributor

Re: Should I finance or have my gma?

So you are looking at the guaranteed loan. Im looking at the direct. Going guaranteed you may end up with some lender overlays making it more difficult to qualify. I would find the nearest office... the direct loan may be considerably easier to get.  http://www.rurdev.usda.gov/ARHome.html 

If you meet the income of low or very low and can show willingness to pay, whether thru actual CR and score or alternative TLs they can get you approved for the direct mucheasier. And if your income is low enough you can get the interest rate subsidized as well. This amounts to getting a reduced rate down to potentially 1percent based on income. The rest of the interest is not gone, but recaptured when the house is sold, up to a maximum of 50 percent of your equity.

I've got some cards, got my house and got some scores with a 7 in front. Now what? Oh yea, live some of that life stuff.
Message 4 of 10
Established Member

Re: Should I finance or have my gma?

My income is roughly 40k a year with a small child. I was under the impression that a direct loan was for people on the poverty line.

1/26/2014: EQ 620 TU 599 EX 629
12/7/2014 EQ 583 TU 566 EX 577
Currently reporting:
Message 5 of 10
Valued Contributor

Re: Should I finance or have my gma?

The income requirements depend on the area. In the area where im looking (nw illinois) as high as 45k can be low income.http://www.rurdev.usda.gov/HSF-Direct_Income_Limits.html theres a pdf that tells you what the limits are. You may be too high for your area tho. I was thinking guaranteed at first and simply called some lenders that I was familiar with and talked to a loan officer. Some felt i could make it, some didnt. Cant hurt to ask. Smaller local banks seemed more willing to to talk, prob cause a 70k mortgage is worth their time where for someone like wells fargo or us bank it was prob not. 

I've got some cards, got my house and got some scores with a 7 in front. Now what? Oh yea, live some of that life stuff.
Message 6 of 10
Established Member

Re: Should I finance or have my gma?

Contacted the banker. My gma was denied yesterday because she already owns a home even though her name isn't on it. I still am several point shy of the 620. I also still have the unpaid judgment on my record. I contacted the USDA regarding the direct loan and was informed that I had to have a minimum of a 640 credit score to apply.

 

What should I do now? Try to scrape up the down payment and have my gma do the purchase since my credit will not even qualify for FHA loan.

 

Please advise. This is my dream home and it will not be on the market long.

 

Thank you,

-Andrew

1/26/2014: EQ 620 TU 599 EX 629
12/7/2014 EQ 583 TU 566 EX 577
Currently reporting:
Message 7 of 10
Established Contributor

Re: Should I finance or have my gma?

Here is your real problem.  In your last post you mention an UNPAID judgement.  Doesn't matter what your score improves to when it falls off your credit report.  Nobody will loan you any money secured by property with an unpaid judgement.  As soon as the title hits your name, their position becomes superior to the mortgage grantor.  They (the mortgagor) have to be in first position.  So until you get that judgement satisfied, vacated or until it statutorily ages off in your jurisdiction (which could be 20 or 30 years) you will not be able to buy property in your name.

 


@kobashi64 wrote:

Contacted the banker. My gma was denied yesterday because she already owns a home even though her name isn't on it. I still am several point shy of the 620. I also still have the unpaid judgment on my record. I contacted the USDA regarding the direct loan and was informed that I had to have a minimum of a 640 credit score to apply.

 

What should I do now? Try to scrape up the down payment and have my gma do the purchase since my credit will not even qualify for FHA loan.

 

Please advise. This is my dream home and it will not be on the market long.

 

Thank you,

-Andrew


 

Message 8 of 10
Established Member

Re: Should I finance or have my gma?

The judgment will be satisfied before I ever apply for the mortgage. I will settle it in full if I have to. I am more worried about the credit score issue right now.

1/26/2014: EQ 620 TU 599 EX 629
12/7/2014 EQ 583 TU 566 EX 577
Currently reporting:
Message 9 of 10
Established Contributor

Re: Should I finance or have my gma?

Well the unsatisfied judgement is worth about 60 negative points on your score. Satisfied judgement about 30.   No judgement is worth about 45 positive.  A credit card with a limit over $2,000 is worth about 20 positive if it reports with a 1% balance and all other cards are at zero.  The nice thing about judgements vs. late payments is that the negaitve disappears immediately upon removal, unlike a late payment which fades over time.

 

Take these numbers and adjust your score and that is where you will be.

 


@kobashi64 wrote:

The judgment will be satisfied before I ever apply for the mortgage. I will settle it in full if I have to. I am more worried about the credit score issue right now.


 

Message 10 of 10
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