Suggestions on getting loan for home when bank says no

[sancraft]

I have several credit issues and the banks are turning my down faster than a hotel maid at quitting time. The place is only 39K. Anyone have any suggestions on getting a loan from alternative sources?

[AR Transplant]

yep;

It depends on what your credit issues are. But if it is something that can be logically explained, then go to a community bank. One that is locally owned and not part of large chain.
Be willing to spend some time talking to the loan officer. Convince him that you will be paying the money back. And that you have a plan that is reasonable.
You will probably have to pay a larger interest rate than someone with fantastic credit.
You also should be willing to show that you have a contingency plan in case you have an accident or are out of work.
The loan officer will not be impressed if he/she senses that any hiccup in your income would set your reeling and unable to pay.

A good rule of thumb is this, if YOU had 39,000 that you would be able to loan, what kind of person would YOU loan it to? Then, become that person.

The reason a local bank is more likely to take a risk like this is because they are probably not publically traded. That means they do not have to account to stock holders that continually pressure the bank to return higher dividends.
Also, if this bank makes this relationship with you, they hope that you will continue to do business with them in the future. It's kinda like, I will help you when you are little, and when you become big we hope that you will continue to stay with us and make more money from you. After all, if the bank doens't make money it will either close or be acquired by a bank that will.

One more important thing, and it's kinda simple, is the property worth 39K?
Good Luck and hope you get it worked out.
Arkansas Transplant

[Cornhusker]

You'll also probably have to come up with a down payment.
Banks are more willing to risk if they see you risking your own money too.
I don't know of any bank that will loan 100% on real estate.

[Mel-]

my brother and his wife were able to secure a bank loan by putting a large downpayment on it. I THINK it was around 33% and the bank didn't even check their credit and the percentage rate was about 1/2% higher also.

you might also check out some of the credit help boards on the net, they can give you some tips to improve your credit scores.

Mel-

[Ann-NWIowa]

If you have credit issues, you probably shouldn't do business with any lending company that will offer you a loan. SHARKS the whole lot who prey on people unable to get conventional financing. A better option would be a real estate contract with the seller holding the contract. If you can come up with a reasonable down payment this could work. If you don't have a down payment try to find a rent-to-buy situation where your first year's rent counts as the down payment. DO NOT GET INVOLVED WITH THE SHARKS -- YOU'LL LOSE.

[sancraft]

I'll have at least 5% down payment and possibly more. I'll try the local bank. Thanks.

[goatlady]

Have you talked to the seller of the property you are interested in? Maybe the seller would carry a contract and you would not have to deal with a bank loan at all - just pay the seller direct and he gets interest in addition to the sales price.

[AngieM2]

Sandra
sent you a PM that might be of some help. I hope.

AngieM2

[Gypsy]

Don’t know if your situation is anything like ours, but Linda and I are also applying for a mortgage. We are applying for a special mortgage loan for first time home owners – FHA I think it is called and if we are approved we would receive a grant for the down payment so effectively we would put 0% down. There are some limitations though – must be your first house, will be your primary residence and has to pass a FHA appraisal, etc. Our real estate agent (who has been amazing) suggested it. She also mentioned a number of other special mortgages, most of which I don’t remember because we choose this one. There were some for lower income, some for folks who wanted extra money to fix up the place once they bought it, I think some for farms and some others which I can’t remember. Are you working with an agent? There usually pretty savvy about getting loans – they don’t get their money until you get your money. Don’t know if this will help with your situation but I figured it worth mentioning.

Oh, I’ll mention one other thing I learned by going through all this, just in case you were not aware (I had no idea). They told me that you must be careful about applying for too many different mortgages, or more to the point – having too many credit checks (assume that every time you give someone your SSN, they will perform a credit check). I guess that each credit check reveals previous credit checks which (I’m not sure why) have a negative impact on your credit rating.

Hope that it all works out for you, because we know how rough it is to fall in love with a place and then sweat-it-out waiting to see if you qualify. Linda and I are waiting for the house inspection. We’ll keep our fingers crossed for you! Hope you’ll do the same for us.

[mistletoad]

Too many credit checks (non mortgage) lower a credit score because there is no immediate way of knowing if each of those checks resulted in additional credit being granted. There is also an assumption that mulitple credit checks indicate a problem with repayment. Credit checks for a mortgage are generally ignored for the first 30 days and then bundled together so all inquiries in 14 days are counted as one.

[sancraft]

The owner doesn't want to do an owner finance or lease purchase. They are wanting to be done with it.

[agmantoo]

Is there anyone in the family that is capable of buying the place outright then reselling it to you on terms?

[Jena]

Is there anyone who will co-sign for you?

FHA loans can be a good deal, if the property will qualify for one. Most conventional loans want at least 10% down, with 20% preferred. FHA is much lower.

Can you take care of any of the past credit issues? Are there outstanding balances you could pay off? Have you seen your credit report and is it accurate?

Jena

Please don't take this wrong, but no one with any sense will co-sign for someone with credit issues. Too many times that comes back to bite the co-signer, who 99% of the time has no interest whatsoever in the item being purchased.

A credit union might be better for you. And of course, be prepared to do all your banking there--sometimes you can also secure a better rate if you sign up for automatic transfer every month.

[TinaNWonderland]

I mainly wanted to say good luck and don't give up! We recently bought our house and it took 6 WHOLE MONTHS for us to get a loan to go thru! So keep trying!

Also, you might consider cashing in your retirement plan at work if you need a big downpayment. Just an idea.

Good luck!

I live in a major city and just took a course on getting a mortgage. The course was taught by a Mortgage Broker.

Mortgage Brokers establish relationships with banks and know which bank is more likely to make a loan under different circumstances. They can do a "no paper" loan - i.e., no documentation.

Look in your local yellow pages telephone book under mortgage brokers.

Good luck.

Originally Posted by sancraft

I have several credit issues and the banks are turning my down faster than a hotel maid at quitting time. The place is only 39K. Anyone have any suggestions on getting a loan from alternative sources?

[Hogsubie]

You have to watch out for some of those grants. I went to one seminar for a "grant" which actually turned out to be a second mortgate. Plus, you were required to occupy the residence for 9 years, otherwise you faced penalties. You couldn't rent the residence either.

[Ann-NWIowa]

Also, on those "grants" often times they are simply reducing your interest based on your income. The bite comes when you sell the property you have to repay the interest they've reduced or when your income increases and so does your mortgage payment.

[moopups]

Get in touch with the USDA Rural Houseing program, they offer no down payment places financing for property that meets their requirements. There is usually one office for each 5 counties. They are in the blue pages of your phone book, government listings.

As you figure out how to get a loan, you may find the following of interest. I read about them in our newspaper.

http://www.ameridream.org/

http://getdownpayment.com/

Both organizations provide down payments.

Hope this lightens your load a bit.