$50K for downpayment, 2 Borrowers, 1 with Poor Credit Score (loan, approval, credit card)

[Corysk8r]

My elderly mother-in-law and I are trying to buy a house together. We have $50K for downpayment. Price range we are looking at is $135K - $200K, for properties that will appraise at $150K - $300K. My FICO is 559 and hers is 800. Income/debt ratio is fine. But, we can't seem to get approved by a legitimate lender. It seems it should be a no-brainer, especially with such a large downpayment to make, but apparently it's not.

I have negotiated settlements on two bad credit card debts and paid them both just in the last 10 days. My score may not change quickly enough to meet current FHA guidelines, even with rapid re-score by mortgage lender.

We are in Texas, have an August 31st move-out date from house we currently rent, and have several properties to choose from. I'm also a single mom with twins starting middle school September 1st. We need terms that are both reasonable and stable.

I am nearing panic mode and wondering if anyone can make any suggestions for us? (Not panicking enough to entertain ridiculous offers of approval that result in outrageous fees and requirements, though!)

Grateful for any thoughts (and/or simple prayers) for us in this endeavor.

Cory

[sneezecake]

Is the end-purpose of this to have a place to live or to have an investment of your own? I'm not a professional, but wouldn't the logical course (if the former) be to just have your MIL take out the loan and deed herself from the bank and then just draw up papers/terms of residency, lease-to-own, or something along those lines? Seems with a 559 you're going to be the drag on any application submitted.

[chet everett]

When you say "elderly" do you mean MIL is not working? If that is the case, it very likely is the problem -- unless she has a LARGE non-wage income from a stable pension and/or investments lenders really are not looking at her scores, they are looking at your scores...

The situation is such that they ONLY kind of loan some lenders will be extending to someone with a sub 600 score is going to have an unattractive rate. On the plus side, you have $50,000 for a downpayment, if you really do have solid work history there ought to be some lenders that will at least give you a fair loan, even though it might have a higher rate. It might even be worth looking for a lender than will offer a "no fee" refinance for a year or two out, as that might be when your score improves...

Keep pluggin' away, there are decent people in the business -- with the downpayment alone you are not the kind of person that is going to walk away from a committment.