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Needing to get a loan for our first home

Here is my question. My mother just recently passed and has left her home to her 3 sons ( I am one of them). She bought the home about 5 years ago for about 127,900.00. My brothers and I have all decided that we want to keep the house in the family. So I would like my family (wife and kids) to buy it. We have all agreed that I will but it for the amount she paid for it. So what I will have to come up with financing for 85,267.00. Plus I will be able to put about 20,000 down on it. So I would in turn need to finance 65,267.00. Now my credit score is not the best, I would have to say around 625-650. What would my best options be? by clhack from Normal, Illinois. Jan 7th 2010 Reply


Leo Harvey (LHARVEY)
#6 ranked lender in Pennsylvania - 149 contributions

This sounds like it is certainly a loan made for FHA. Since you and your brothers already own the home by inheritance the only thing necessary to have completed is a new deed which the lawyer handling your mothers affairs can complete.there is no need to buy the property. There will be the matter of estate taxes etc but this will have to also be handled by the lawyer. In order to pay your brothers for their share of the home, assuming they do not want to be on the deed, you can do a cashout re-finance and receive up to 85% of the value. This would of course depend on your income and debt ratios and meeting other guidelines to qualify for the loan. If your credit scores are indeed in the 625 or higher range you should qualify for FHA financing. You should discuss this in detail with an FHA approved lender whom you feel comfortable with.

Jan 7th 2010
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Chris Burns (chrisburns)
#34 ranked lender in Florida - 9 contributions

With scores like that I would recommend an FHA loan depending on exactly where you fall. With conventional financing there will be no mortgage insurance, but they will need higher scores. FHA may have a small monthly mortgage insurance fee, but would do the loan with scores on the lower end. This is assuming your income and work history are acceptable.

Jan 7th 2010
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Sunny Miceli (sunny@sunnymtg.net)
#2 ranked lender in Mississippi - 5 contributions

Since this is an inheritance situation, you should be able to obtain conventional financing with no mortgage insurance as your brothers could provide you with a "Gift of Equity". You would be PURCHASING the property for $127,900 from your brothers, they would "Gift" you the equity in the home of roughly $42,000 leaving you with less than 70% LTV (your credit score should work at that LTV). You could even reduce the "Gift" increase the loan amount and have them pay some closing cost on your behalf. You would avoid private mortgage insurance and minimize cash out of pocket. Good Luck.

Jan 8th 2010
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Well here is an update, I was talking with PNC mortgage and when they ran my score it turned out I was at a 541!!!!! So they told me to piss off. Now I did get copies of my report and there are many things that should not be there, so I spent last night disputing them. So now I guess the next question I have is will my score take a hit again if they run another credit check after these items are removed?

Jan 13th 2010
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Dianne Joaquin (Dianne)
#87 ranked lender in Texas - 11 contributions

Good Morning - our minimum credit score for most programs is 620, so you should be fne there.. if you are in Texas i can assist in your Purchase transaction to "buyout" your brothers.if you are not in Texas... i would recommend a local banker such as a W R Starkey in your area. if you would like... email me your location and I will look around for you.my email address if djoaquin@wrstarkey.comThanks! Dianne, Sr. Loan Officer

Aug 2nd 2011
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