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Hi, I'm trying to see if there's any loan that I may qualify for so I can buy a cheap foreclosed house in the near future, but my circumstances may be iffy.
I'm 26, in Ohio, no kids, not married.
The good:
I have a 700+ credit score.
No debt at all.
Just started a new FT union job that pays nearly double the minimum wage.
And I'm looking to buy a cheap foreclosed house a year from now- & by cheap I mean between $25,000-$50,000.
Also could maybe obtain a wealthy co-signer via family if necessary.
The bad:
Can only put $1,200 down, that's all I have in savings.
I have no assets since my car was a gift so it's in a family member's name.
But my main concern is that I haven't had ANY income for the past 2 years & I'm not sure if my reasoning would be acceptable to a lender.
Essentially I didn't work because I just didn't need to. I had no bills, I lived with my long-term boyfriend who paid for everything. But he passed away unexpectedly a few months ago.
& I didn't go to school during this time either as my boyfriend relied on me to drive him back and forth to work and school everyday so I kinda lived around his schedule. The plan was for me to go back to school and get a job after he paid the $2,000 in fines to get his license back and graduated, but he passed 3 days after getting his license back and 2 months before his graduation, so again it's not like I couldn't or wouldn't work, but we just had a logical, scheduled plan. But that plan fell through. I hope that makes sense. It's not like I was aimlessly unemployed, it was part of our plan, it made sense at the time.
Prior to the 2 year employment gap, the last time I had a solid 2 years straight of income at the same job was from 2011-2014, and 2008-2010 before that. Anything in between is all short term part time jobs with mild/moderate gaps (from 3 to 6 months) between each one.
That said... is it likely that my "good" could outweigh the "bad" of not working for the past 2 years?
Is there any loan that a lender would feel comfortable giving me?
And again, would it help if I had a co-signer? Or had the title of my car formally put in my name (it's not an expensive car though, it's from the 1980's)?
Sorry for the length and all the questions, this is all new to me. I just figured rent is so expensive here it would be half my income, but ironically houses are cheap here so if I could just get a small loan my mortgage would be a fraction of what rent would be.
Any input, suggestions, opinions are welcome. Thanks for reading.
Agreed. Cosigner only option, but that still doesn't mean success. I have a second concern and that is if you have a credit score? Have you ever been responsible for a housing payment, a lease in your name alone? Any financial obligation?
Look at this from a lender's perspective - on every area of consideration, it sounds like you fail to meet any of the criteria. I suspect approval may be difficult even with a cosigner. And it would almost certainly require more than $1200 down. Most likely, a lender would counter with your cosigner to purchase the home as an investment property (even more down).
Personal opinion - it sounds like you need to learn how to function on your own, hold a job without a 3 month break and demonstrate you are credit worthy. I just said this very thing to my youngest son recently, so I know this won't be well received. But there's no way to dress up this advice.
I have a second concern and that is if you have a credit score? Have you ever been responsible for a housing payment, a lease in your name alone? Any financial obligation?
Yes I have an excellent credit score that I built up using credits cards responsibly from the age of 18. That's really the only reason I had credit cards, to build my credit score. Whenever I'd be between jobs though I'd close my accounts so I wouldn't be tempted to use them irresponsibly, so I don't know if not having credit cards in 2 years would mean my score has gone down or not, but it was right at 700 last time I checked. I thought I mentioned that in my first post but maybe I didn't, it was late when I posted it so I might have missed some details.
And oh yeah I've always paid rent, minus the 2 years I was unemployed, but my name has never actually been on a lease. Anywhere I've lived it was more of a "hey I need a new roommate, move your stuff in next week and start paying me half the rent and I'll pay the landlord" type of deal with friends. So yeah there's no way for me to "prove" to a lender that I can pay rent, I guess that's a problem.
Not sure if I've had a "real" phone bill because prior to my current job, all my old jobs were minimum wage so I couldn't afford anything with a contract. I'd have those cheap burner phones from Walmart that I'd use cash to put minutes on every month, but I'm not sure if a lender would be able to use that info or not.
Thanks for the advice though. I don't even know if I could get a cosigner or not, they would never co-sign anything before. I think they may consider it now but probably only out of pity due to everything going on recently, and I don't want that to be the reason they co-sign anything. So even if they said they would cosign I'm not sure I'd even want them to, but I was just curious. Thanks again.
No. You will not be able to buy a house. In a year from now, you might but it isn't likely to go well. Ask a lender, THEN. In the meantime, nail your life down. No more shiftless nonsense and excuses like "I paid rent but not officially. I have a cell phone but it doesn't contribute to my credit, does it? I'm really responsible but everything fell apart around me, the passive victim of these circumstances."
Nut up and get down to it. Get your life a paper trail at last, work hard, live cheap, and SAVE. Set goals for yourself on a calendar. Research what needs to happen. It might take two years instead... go for it!
You can make it happen.
Do NOT go for a foreclosure... they're usually cheap because it needs someone with SAVINGS - a LOT of savings - to fix it up to be liveable. That's not you.
*I am not a lender so am hardly an authority on this*
There is no way you can get a decent loan right now. You definitely need more savings and to build up an income history. One year may be possible, two years would look a lot better. Other concerns are that it is tough to get such a small loan...there are federal requirements for lenders to do these because people need them, but the lenders obviously don't want to. Secondly, financing a foreclosure (if by that you mean a property that was foreclosed upon and is now REO) is spotty. The property has to be in livable condition, and often times those are not. In both concerns it is possible I am just saying your chances are reduced. I would reach out to a lender ahead of time, a good one will give you advice and tips and hopefully be rewarded in the future when you are in a position to borrow.
given the totality of what you've posted, I think you need to:
1. check your credit score today.
2. rent for a year with you on the lease
3. be in your job for a year
4. have an open credit card account that you use and pay in full each month
5. check your credit at the 6 month and 9 month mark (most credit cards have this feature for free, anytime, on their website)
Start by saving as much as you can on your new job. Live cheaply. IN a year or two you should have a good amount saved towards a downpayment. Try & live on only half of your take home pay & bank the rest.
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