Finance Question for Mr. Murray

[Tom]

My wife and I have just purchased land. We bought it outright. Due to a layoff right after 9/11, I went from earning $60K a year to $0 for a long time. We relocated and now I am doing fairly well. Not anywhere near what I had earned, but I am employed. During the time of unemployment, my credit which was impeccable for 20 years made a disastrous turn. Not a pretty sight.

The land we purchased is totally in my wifes name. I am fairly confident that I would be considered a high risk and not even be considered for a mortgage due to these issues. In 1999, my wife had filed bankruptcy. Her former husband had really ruined things relative to her credit. She has not had any credit issues since then. She had applied for unsecured credit once, and was turned down. We recently rented an apartment, which is in both names and should help her establish credit. We are planning to rent for about 8 months.

I have done some searching and she can qualify for a mortgage of approx 90K based upon her salary and also her home based business which has been operating for just over two years.

My question is, based upon the above scenario and the fact that we or SHE owns the land outright which is worth $20,000. Would there appear to be any issues in being approved for a mortgage even without my income and handing over a deed to land?

My bet is that Mr. Murray will have some valuable input!

Thanks

[rmurray]

I will try to answer both posts in one...

Pre-quals are about useless...They are nothing much more than an educated guess that an originator can get your loan done..nothing more...Actual approvals are limited in the time that they are good for..usually about 60 days with out credit rechecks and income and job reverification..

You have not clearly defined what the issues are with you...and I understand why...It sounds like your wife has no credit experience since the bankruptcy...This could be good in a long term plan..

FHA does not consider scores....bankruptcy is ok after 2 full years from discharge..but she will have to have 3 to 5 credit references in her name with 12 months payment record and NO 30 day lates in that time...Rent..if paid by check or with a corporate entity is good...electric bill, water, cell phone, phones car insurance..even cable and internet isp accounts can work..but they have to have her name on them...

There are other lenders that might work too...because of the real equity you will have in the loan...these lenders might have a slightly higher rate...but should have no PMI and maybe even lower closing costs...Remember if you take one of these loans..the goal is to refi at a better rate asap..so closing costs can mean a lot..

I would suggest you find a local mortgage banker (better than broker) that handles a full range of product...Thankfully the rush of refi business is slowing and they now have time to spend helping you...Find a long time experienced originator that will take the time to help...assure them if they are fair..you will stick to them...let them pull a credit app and give you advice on what your options are...

Self imployed income is a special case...The only thing they will count is the taxable income generated by the business over the last 2 years...I would get the mortgage advice before you file this years taxes...You might have to pay slightly higher taxes to achieve the desired amount of verifiable income..Again get the advice you can from a local originator..

When you visit in earnest...be perpared to bring 2 years tax returns, check stubs from current job, 2 months bank statements...every thing you can to help...

You might consider buying a full trimerge credit report with all three scores on her...I have found that usually there are many errors on credit files with recent bankruptcy...Even though the lenders are supposed to quit collection efforts..many times their computers do not quite get the word..

This can be done...just have patience and do everything the originator asks asap...Good Luck

[Tom]

Thanks Mr. Murray. We appreciate it. She will have in the area of 8 to 9 months of verifiable credit in the way of rent, utilities etc. We are looking at next August or possibly July.

Tom