Looking for Mortgage Thru Non-Traditional Means

Updated on April 01, 2010
C.F. asks from Fort Worth, TX
7 answers

My husband and I are in a lease to purchase contract on a home that we love. Scenario 1 is we have till Dec 1st of this year to purchase this property and get the benefit of an additional 30% rent credit towards our downpayment. Scenario 2 is to enter into a full fledged sales contract by April 30th and settle on home by June 30th to take advantage of $8000 first time homebuyer credit.

Here is the problem..due to loss of jobs, etc in the past, our credit is not good enough to obtain a mortgage thru traditional means. Yes, I have explored that option with a big lender just to make sure. We have also met with someone that was referred to us that supposedly could help us get our credit back in shape within 6 months. I am not comfortable with this because not only do they want $400 up front they also want $283 per month for 6 months which works out to about $2100 and I haven't heard anything positive about companies like this.

It is not possible for us to go back and take care of each and everyone of these creditors from our past. Financially we just can't do it and realistically from what I have read it doesn't seem to really help your credit as much as you would think as the accounts will still show late although with a note that it is paid or settleed, etc. What we need is time for the items to basically "fall off" the report and continue to pay everything that we have currently on time which we have been doing for the past couple of years.

All that being said..does anyone know how to go about getting legitimate financing from a private individual or company? I understand that interest rate is higher, etc. but we don't want to lose this property or the current incentives of rent credit and 1st time homebuyers credit.

Any help and advise is appreciated. Thank you!

We don't qualify for FHA loan due to low credit score. The seller is not interested in financing property himself nor is he interested in us assuming the loan even if it was assumable you still have to qualify. A mortgage broker is not going to be helpful as I have already been there with a major mortgage lender and credit score is too low for conventional financing. I really need suggestions on how to locate non-conventional financing. Thank you.

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answers from Chicago on

Private mortgages are basically unheard of these days. With that being said, you're better off trying to renegotiate your lease to try to stay in the property.

A little something about your "rent credits". The ONLY time rent credit can be applied towards down payment and closing costs is if you have evidence you've paid that money to the landlord (usually needs to be documented through a title company) AND the amount that is being credit back from the seller exceeds the market rent for your home which is determined by an appraisal. For example, if you pay $1000.00 rent per month and the appraiser determines the market rent for your home is $900.00 per month, you would be entitled to receive $100.00 per month towards your down payment. A $30,000 "rent credit" would not be acceptable to any mortgage lender if you did not pay that money over and above the market rent. That $30,000 would be considered a sales concession (inducement to purchase) and is not legal.

If you are considering renegotiating your lease in order to stay in the property, get yourself a VERY GOOD mortgage banker/loan officer who can advise you on how the contract needs to be written. Make sure that person reviews the guidelines with an actual underwriter and don't take his word for it.

Good Luck



answers from Dallas on

I totally agree with Kim S. I've been in the mortgage business for 11 1/2 years and there isn't a mortgage company around today that is going to give you a loan if your credit score is too low for FHA.

I also agree 100% with Kim S. regarding the rent credit.

I'm sorry that I can't give you a more favorable answer, but times have changed the mortgage industry drastically.



answers from Harrisburg on

I'm a single mom and I financed my first house recently through USDA, it was a lengthy process and I had to take home buyer education classes, but it was all worth it in the end. My interest rate is insanely low.



answers from Philadelphia on

Not sure that I can actually help you with this question but have you checked Suze Orman's web site? She is a wealth of knowledge, I'm sure you can find some info there.



answers from Dallas on

Try the RDA. Go to USDA.gov and find thr rural development housing loan dept.



answers from Toledo on

Usually if you enter into a contract like this, your landlord has to record your rent payments with the county. If in fact, this took place, that should give you a positive payment history and should help you get financed. Look into this and maybe there is a mortgage company that specializes in this kind of mortgages. That is the point of land-contracts and leases with the option to purchase. Good luck!



answers from Tampa on

You need to speak to a Mortgage broker, if you are in Florida I have one. I will warn you that the USDA is very backlogged, it is taking them a very long time to get things approved. If you work with a Broker though they should be honest with you and can tell you what you need to do to get the financing. Have you seen if it is possible to do a Seller Financed Mortgage or to Assume their loan?


You might want to try talking to a Mortgage Broker that is NOT with a Major Lender but an Independent one that deals with MULTIPLE Companies and one that has been in the business for awhile. They will be able to better guide you into what you need to do and what your options are. I will tell you we had our score jump 100pts by doing what our broker told us to do, down to the letter (FYI it was NOT one of those credit repair scams). Sadly, there are not many non-conventional/traditional options left out there

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