Approaching owner about his vacant house?? (loan officer, 2013, income tax, pre-approval)

[chrisanthemum7]

My husband and I and our kids rent the upstairs in a house my mother purchased about two years ago. Next door is a vacant 3BR house that used to have tenants, but there was a small fire in the garage and they vacated the house shortly after. It has been sitting for about a year and a half. According to public record, the 2013 assessment of the house was 50K!!

We believe the owner is upside down on the property at this point. We tried loosely to set up a rent to own situation with him last year, but nothing ever came of it. We would really like to take advantage of the opportunity and buy the house since it's right next door and we are outgrowing our current arrangement, but we are not really in the best position to buy. I don't work and my credit is a lost cause but my husband, while he doesn't have a credit score, has been able to dispute quite a few of his charges and get his debt ratio down to <5k. He only has about a 2-month credit history on a secured credit card we just got to build it. And as far as his job history... he's managed to have steady employment for about 2 years but not with the same employer.

We are expecting a sizeable chunk of income tax at the beginning of the year, something like 9K. We would like to be able to use it for a down payment on a loan, perhaps approach the homeowner and offer to buy the house upon pre-approval and work out some sort of terms either to purchase as is with renovation budget built into the loan, or perhaps for the entire amount he owes on it contingent on repairs/updates, but what is the likelihood that a lender would even approve us? Do we have any leverage at all that would constitute an offer worth considering? Property values are rising rapidly here now, and it's kind of painful to know there is a house up for grabs right next to us that will either sit vacant another year while we rent somewhere else further away, or worse will suddenly be snatched up under our noses by some investor and beautifully flipped.

[SmartMoney]

The home next door likely is lying in wait of foreclosure. I would only recommend attempting a short sale on a damaged property, no matter how small the damage, to an experienced investors. Quite likely, the bank would rather sell for cash at at half the amount you would be willing to finance. Banks today want out and without future ties with a new owner. If the property goes to foreclosure, the bank will want one of their loan officers to vet your husband. This means the seller would be able to compare his credit to other buyers wishing to purchase.

Your better plan of action would be to use the tax return to maximize your husband's credit. Not saying to pay off everything (but then again, maybe). Those contested debts could be placed back on his credit once the debt is proven to belong to him. However, lenders today now require all disputes to be resolved.

There are many first time buyer programs out there, programs with grants and little down. Trying to put the cart before the horse rarely works, which is what you are attempting. I realize this is not what you want to hear, but better to read this than to write about all the money you lost trying to buy before you are ready. Let us know what county/state you are in and we can see what special programs are available to first time buyers.

[chrisanthemum7]

I appreciate the straight forward response. What I didn't want were people telling me "there's a way to do it!" when there really wasn't.

We're located in Nashville, TN. I don't think the house is damaged beyond cosmetics (we were friendly w/ the tenants and entered the house after the damage. It smelled like a bad bon fire but that was about it) and we know the roof and HVAC is fairly new. We'd be willing to even to do a rent to own thing, paint or replace carpet in lieu of discounted rent at this point. I've been here 20 years and it's disturbing to see all the various places I've rented around town go up in price for virtually no change to the property, and in some cases depreciation. My husband has a record, which prevents us from being able to rent successfully. Next year will make it seven years so we're hoping that will open up more avenues then, but for now we have to seize opportunities wherever, so looking at this vacant house every day is just making me kind of desperate.