How to structure mortgage with bad credit?
I would appreciate your help dealing with my poor credit, as I apply
for a mortgage on a new house.
Due to simple neglect (I was never short of cash), I have several 30-
and 60-day past due mentions on an existing mortgage, with the result
that my credit score is 566. That is going to cost me at least three
percentage points in the mortgage, like 9.875 is the best I've turned
up so far.
I am wondering if I can somehow structure a trust (let's say) so I'm
putting down the money and a friend/partner is the one who applies for
the mortgage, so his credit is what's relevant and we get the good
rate. I would retain 99% ownership and have the option of buying him
out for a dollar, or something.
The goal is to leverage my friend's good credit rating to get a good
rate. I do NOT want to do anything that could amount to bank fraud or
anything ELSE illegal, however.
The property is a single-family on a lake in New Hampshire. I intend
to occupy it as my primary residence, but not necessarily immediately:
I would like to have the option of renting it out for months or years,
AGAIN without commiting any bank fraud. If I have to "live there"
(weekends only, probably) for a while, before I rent it out, to be
strictly legal, then I guess I would do that (and take the cash flow
hit of maintaining the house plus my current apartment).
I have a couple properties, one a paid-off condo worth $425,000, and
one three-family worth $600,000 with a $190,000 balance on the
mortgage. I earn about $120K from my job, plus roughly $50,000 from my
rental properties. I am in no way a credit risk!
Any ideas? Trust? Something else?
Basically, you want it all, and for free. That about sum it up? Don't drag your
friends in to this, pay the high rates for a couple years and then re-fi. As for
not living in the property, that is fraud unless you "intend" to live in it for
the first year, (per most mortgage agreements). Nobody is going to believe that
you let your house payment slip for 60 days. You most definitely ARE a credit
risk. You screwed up your credit, now you have to fix it. Do you want your
"friend" to suffer from your upcoming tardy payments?
You might look at doing a sell-lease-back on the condo that is paid for, or take a
equity loan on it and go for a 60-80% mortgage on the new property with a lower
rate. One other idea, convince a lender to take the condo as security on the new
mortgage at a better rate, or find a private lender to do it. Any way you slice
it, you need to pay for your bad behavior, in the eyes of a lender.
Do you sound like a customer i've had in the past. there are a few issues
you are dealing with here; credit- slow pays, intent to occupy, loan pricing, a
trust?
1st credit you have no excuse for bad credit noone does - there are only
reasons that make slow-pay acceptable (not trying to sound ugly, its true) come
up w/ some.
2nd decide now if you will live there or not and exactly when - lots of rules
here - if you will live there you should be moving in right away - by the way
it must not be within too few a mile from any other property you own if you
call it primary.
3rd loan pricing= shop shop shop - you already know your credit scores (you
need to know all three) call some lenders and tell them the scores and get
their price.
4th forget the trust thing to many issues that can be avoided by just paying
the higher rate unless this person can buy it by themself and then sell it to
you w/ owner financing.
I hope that helps and good luck
now for my plug ----check out this web site and consider buying this book. Its
going to give you a big return on your investment---guaranteed to save you at
least $200 on your next mortgage!