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I own a house in Texas. I am on the deed, but NOT on the mortgage. Our credit was such at the time of purchase that the interest rate would have been ugly with me anywhere near the mortgage, so my Grandma put the house in her name (mortgage I mean) and me on the title.
We got a good rate this way and we make the payments (Grandma doesn't) and we put up all the down payment money.
The thing is, of course, if we sell in a few years to buy something else somewhere else, while I am so glad to have my house, I know that I'm not helping my credit at all by paying on a mortgage not in my name and I need to figure out how to increase our chances of getting a mortgage on our own. I figure by the time we sell and are ready to buy something new we should have about 20k to put down and will be looking at something no more than 115k. Preferably less but we'll see.
So, I am wondering if there is any way I can make my monthly mortgage payments count for something (credit wise) at this point, aside from keeping copies of the check each month?
What do you think our chances would be with bad credit but about 20% down and income more than sufficient for the home prices we're looking at (projected income)?
Would we be better off holding on to the house here, renting it out maybe, and trying to get a HEL to use to buy something else?
Depends on what your credit looks like...Have someone take a look at it and see what you can do over the next year or so to make it shine a little brighter. I would take this time now, to clean up your credit, get a couple credit cards, keep a next to nothing balance on them. make your utility payments with them, pay your credit balances monthly, and get your scores up a little. Then by the time you wish to buy you're in a little better situation.
You can use your cancelled checks to show you've made the mortgage payments for an new FHA purchase (it would not however go on your permanent credit record, but can be used to show good credit history with a lender for a loan, along with any other tradelines you have, if not on your report, then utility payments, car insurance and the like) Make sure you're paying EVERYTHING on time.
I own a house in Texas. I am on the deed, but NOT on the mortgage. Our credit was such at the time of purchase that the interest rate would have been ugly with me anywhere near the mortgage, so my Grandma put the house in her name (mortgage I mean) and me on the title.
We got a good rate this way and we make the payments (Grandma doesn't) and we put up all the down payment money.
The thing is, of course, if we sell in a few years to buy something else somewhere else, while I am so glad to have my house, I know that I'm not helping my credit at all by paying on a mortgage not in my name and I need to figure out how to increase our chances of getting a mortgage on our own. I figure by the time we sell and are ready to buy something new we should have about 20k to put down and will be looking at something no more than 115k. Preferably less but we'll see.
So, I am wondering if there is any way I can make my monthly mortgage payments count for something (credit wise) at this point, aside from keeping copies of the check each month?
What do you think our chances would be with bad credit but about 20% down and income more than sufficient for the home prices we're looking at (projected income)?
Would we be better off holding on to the house here, renting it out maybe, and trying to get a HEL to use to buy something else?
The first step would be to approach your bank and see if they would just add your name onto the mortgage. Since your Grandma will not be removing her name at this time, banks would add names to a mortgage because the more names, regardless to the creditworthy means more people for them to go after.
This would help to repair your credit and get you in a situation to improve your score so in a few years when you go to buy, you can at least show that you've paid your mortgage payments.
In addition, if they will not add your name to the mortgage, make sure you write a check out for every mortgage payment between now, and the time your looking to buy, getting a copy of the cashed check when it clears. While its difficult to use a payment history now to get a mortgage, in a few years, these loan programs might be back, so its best to prepare now.
As for your 20% down, yes, this will help substantialy in obtaining a mortgage, but who can say in a few years what will be required for a mortgage. This should be more then sufficient though in any market.
As for your heloc question, that depends on what you plan to do with the current home. If you plan to sell it, then how much funds will you receive? I do have HELOC loans that I use to purchase other properties with, and then I do a refi to get my cash back out, but HELOC's, (especially with poor credit) is tough to get at the moment.
you can't the payments on the current mortgage help your credit.
Kind of correct, you can use the payment history to prove your ability to make the loan payment, but you are correct that it does not improve the credit score.
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As for your heloc question, that depends on what you plan to do with the current home. If you plan to sell it, then how much funds will you receive? I do have HELOC loans that I use to purchase other properties with, and then I do a refi to get my cash back out, but HELOC's, (especially with poor credit) is tough to get at the moment.
Thanks for the response.
The mortgage is held by Chase Home Finance. I guess it cannot hurt to ask them but does anyone know if Chase is likely to add me?
They are forever sending credit offers here in my Grandma's name and more recently I've gotten them as well (though I just toss them)... because my name is on the mortgage payment I guess.
If we were to sell the house right now I imagine we'd only get about 15k cash. If we wait a few years and it appreciates at all (plus we're planning lots of improvements) then perhaps 20k. We bought for around 72k and owe 61k I think at this point. We're hoping to aggressively pay it down in the next few years before moving to get our balance into the 50's, or a bit less aggressive pay-down combined with improvements to increase resale value. I *think* it appraised in the low 80's (don't have the appraisal in front of me) last March but I don't think we could get that if we sold it right now. It needs cosmetic work.
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