Can I buy a house with a repossession?
I know the situation is worse now for people with ok - bad credit trying to buy a house, but is it impossible? I have a repossession from three years ago. I still have about $5000 to pay on it. My credit score is about 640. What do you think? I don't want to waste my time going to the bank/lender if there's no chance.
Well, you can buy a house with no money down and a 640 score, however, I would recommend that you do the following first:
1) Start putting money into a savings account. Chances are, your house payment, taxes, insurance, and maintenance will be much more than you currently pay for rent. Prove your mettle by putting this extra money into savings each month. This will show that you can really afford the house payment, and it will provide the reserves that you need to qualify for a loan.
2) Pay-off the repossession. You might be able to settle this for a lower amount, but be sure that your creditor will remove the item from your credit report. If it is a judgment, this can be easier or harder, but I would recommend that you find a way to get this thing off of your credit.
3) If you don't want to take my advice, you can probably qualify for an FHA loan at 97%, if you are a First Time Homebuyer, which I imagine describes you. It would still be imprudent to move forward without cash reserves, because you can quickly get into a bad situation in which you can't make your payments. A mortgage foreclosure looks even worse than a repossession on your credit.
Good luck to you, whatever you decide.
4 Responses to “Can I buy a house with a repossession?”
Well, you can buy a house with no money down and a 640 score, however, I would recommend that you do the following first:
1) Start putting money into a savings account. Chances are, your house payment, taxes, insurance, and maintenance will be much more than you currently pay for rent. Prove your mettle by putting this extra money into savings each month. This will show that you can really afford the house payment, and it will provide the reserves that you need to qualify for a loan.
2) Pay-off the repossession. You might be able to settle this for a lower amount, but be sure that your creditor will remove the item from your credit report. If it is a judgment, this can be easier or harder, but I would recommend that you find a way to get this thing off of your credit.
3) If you don't want to take my advice, you can probably qualify for an FHA loan at 97%, if you are a First Time Homebuyer, which I imagine describes you. It would still be imprudent to move forward without cash reserves, because you can quickly get into a bad situation in which you can't make your payments. A mortgage foreclosure looks even worse than a repossession on your credit.
Good luck to you, whatever you decide.
Comment made on March 19th, 2009 at 6:13 amReferences :
Over 10 years in the mortgage business. See profile for a more complete background.
In most cases the repo would have to be paid off in full and the applicant would have to provide a letter of explanatio as to why it happened. Lenders look for the causes of these types of bad debts as somthing having occured beyond their control and not likely to occur again in the future. Hope this helps
Comment made on March 19th, 2009 at 6:46 amReferences :
FHA DE Underwriter and credit analyst since 1979
There are many rent to own programs available. Also your credit score is not good or bad. Now if you are in Georgia all you need is a 540 to qualify for a loan. Otherwise google rent to own programs. Read about it and you decided.
Comment made on March 19th, 2009 at 7:03 amReferences :
I think a part buy and rent scheme would be appropiate in this case. If you are still paying back this will keep your outgoings lower.
Comment made on May 14th, 2009 at 5:29 amLeave a Comment