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First time home buyer with W-2 question

I have a 638 score but I only make $5,000.00 a year. My husband is the bread winner but has no credit so couldn't be put on the loan. My father in law has agreed to co-sign for me. He has a 641 score and has a large income. The only problem is even though he has been working for the same company for three years he had to change contractors last year and is now considered self employed resulting in him only having one year of W-2's of being "self employed". Does this mean I wouldn't be able to get a decent loan without having to put a lot down, if I could get a loan at all? by marla22 from Shafter, California. May 18th 2012 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

For your father in law to co sign, he would have to have verifiable income, and if he's considered self employed, he needs 2 years tax returns. There are lenders out there that can help your husband get financing... No score is better than a bad score..And some lenders allow "Alternative" credit such as rent payments, auto insurance, utility, phone, health insurance payments, even regular deposits into a savings account can be used as alternative credit... The best advice I can give you is to contact a LOCAL mortgage broker, not the local "Big" bank, and certainly not one of those 50 states internet lenders...By applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

May 18th 2012
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Crestico Funding (CresticoFunding)
#314 ranked lender in California - 340 contributions

Hello Marla,We may be able to help you, we have loan programs for borrowers who don't have traditional credit. it requires 5-10% down payment and it's government insured. if you are interested please contact Houtan Hormozian Houtan.Hormozian@crestico.com or 310-933-4748 for more information.

May 18th 2012
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Bradley Manhoff (Autobahn)
#3 ranked lender in Arizona - 9 contributions

I am going to have mirror Mr. Acres comments, no credit can work. Definitely look locally for a broker, ask friends or co-workers for solid referral. Good luck and feel free to email me direct for advice.Best Regards,Brad Manhoffwww.autobahnmortgage.com

May 18th 2012
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Thank you for your responses. My husband did try to get approved but was unable to that's why I was wondering about my father in laws situation.

May 18th 2012
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John Schlobohm (jschlobohm)
#20 ranked lender in Connecticut - 18 contributions

The question should be who is going to make the monthly mortgage payment and do they have the ability to repay the loan? If you make $5,000 per year you can afford a monthly payment of $137.50 per month. Your husband does not have any credit? He needs to establish some credit and then relook at qualifying based upon his income, assets and credit. You need to do some mortgage planning before you run out and buy or shop for a mortgage. Suitability = Approvability. A co-signer never helps if you don't have your own financial house in order. Proper mortgage planning and education can help you get on the road to homeownership without you spending money and ending up dissapointed.John 914-433-4646

May 18th 2012
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J.D. Peck (MortgageColoradoSprings)
#45 ranked lender in Colorado - 77 contributions

Unfortunately, you are out of luck with your father in law as a co-signer. I would suggest that your husband starts working on his credit to establish some scores. The ideal way in which to do this is to apply for 3 credit cards and no more than that. Because of his lack of credit history, he may only qualify for prepaid credit cards which is fine. After he has obtained these, he needs to keep a very small balance on them at all times, but never exceed 30% of the credit limit. An example of this would be using no more than $90.00 on a credit card with a $300.00 credit limit. He should use the cards immediately upon receipt, then simply make the minimum payment, but make sure to leave a small balance on the account. DO NOT pay the balance in full. If he indeed has no credit, this should rapidly establish qualifying credit scores for him. Most underwriters will not give an approval unless someone has a 12 month history of accounts however, because you will be the secondary borrower your account history will cover this requirement. Stick with a local broker as you will have many more options.

May 18th 2012
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Jonathan Rhode (jrhode)
#183 ranked lender in California - 130 contributions

Marla-I would say the best option for you would be to ad your husband to your good credit, this way he will be given a credit score. Once he has a credit score, you can then look at putting an alternative credit package together so that he will meet the tradeline requirements.If you would like to discuss alternative credit please feel free to contact me at 877-401-1389 xt 103 or email me at jrhode@cstonemortgage.com

May 18th 2012
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Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 1,828 contributions

Your situation is going to be very difficult. You are looking at an occupant borrower with minimal income and a modest score, that is below what is needed for most investors, but could be increase fairly easily and a non-occupant co-borrower with a modest credit score that has split income history. At the very least this is going to be a very difficult transaction. The best advice is to work with a local Mortgage Banker/Broker. They will know most of the programs of the various different lenders and see if there is a way to make this work for you. Good luck. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com 888-889-9950

May 18th 2012
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Peter Torneanu (peter@loandoctors.us)
#80 ranked lender in Arizona - 10 contributions

Marla,This is a easy fix. I do a lot of loans with this scenario. Not having credit is much better than bad credit. I can qualify you and your husband by using alternative credit. Alternative credit is anything that you have been paying on for the last 12 months that does not report to your credit such as car insurance, cell phone, etc. I would be more than happy to help you and your husband qualify. Please call me at 480-788-7607.Peter TorneanuThe Loan Doctors

May 18th 2012
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Larry Gray (lgray_312_247)
#594 ranked lender in California - 1,139 contributions

I do run the tool, often, for "rapid rescores." We look to see the least costly way for a borrower to increasethere credit score in a matter of days. So it may be possible for you to get to at least 640 in short order.Your husband does represent a dilemma though "no bad credit can work." If you would like to consultwith yet another lender please do contact me. We are a direct lender but we have a correspondent relationshipwith quite a number of lenders for more choices. We control the entire loan process and we fund with our own money. We do keep loans as well. You might go to my website for contact information.

May 19th 2012
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