There are numerous single moms out there with questionable to bad credit wanting to purchase homes? Where should they turn?
Thanks,
Brandon
Sub-prime lenders.
well, they could also try lease options. that is what i typically recommend to people when i get asked that and believe me i get asked it a lot. there are even folks out here who can show them how to get credit ready to buy when the lease part of the contract expires.
a single mom wishing to buy a house can be classified as “high risk” so interest rates for these people would be super high?
These people? There really is no classification for “these people” when applying for a loan. The things that matter is their fico score, if their income can pay the loan, and whether they can document their income and assets. It also depends on the type of home they’re buying, condo, SFH, multi and the loan amount. For “these people” it’s all going to be a little different.
i think it’s better to fix the credit, build credit score before purchasing… They could hurt their credit if they cant pay mortgage, and any associated costs attached to owning a house. It’s much much cheaper to live poor until you cant afford the luxury…Rather be safe than sorry because we are looking at a single income.
Brandon,
For the “questionable” credit borrowers you can always try FHA or ALT-A lenders like Aurora or Greenpoint.
I like the idea of the Lease Option for this type of situation, you have to have a place to live. My thoughts are that since the Real Estate market is softening in some areas home owners may be more inclined to accept this type of deal. I wonder how hard it would be to find a multifamily house that already has at least one renter to help make the payments?
Another question for the finance guys and gals. “If a person has a house or multifamily unit under a Lease option contract and they make all of the payments for a year will lenders consider this as seasoning?”
Just thoughts, I am not sure they will work for most people.
NDI
ND,
Yes, one year counts as seasoning. However most lenders will want to see cancelled checks to prove that the 12 months of payments were actually made, and made on time.
"If a person has a house or multifamily unit under a Lease option contract and they make all of the payments for a year will lenders consider this as seasoning?"
Yes, In fact the client (your renter) could actually do a refi of the property instead of a purchase at the end of the 12 months. Lenders will look at it as a refinance of a private mortgage.
Thanks for the info Gentlemen! I assume this would work if I offered owner financing to someone with challenged credit as well? Of course I would want a big down payment or option money up front.
NDI 