In my pesonal, humble opinion you don't sit too well. The biggest issue I see is that judgement. As long as it is out there you will not get a loan until it is paid as it can be slapped on your property.
There are many ways to get it paid, find out who has it and offer to pay them off for $0.25 on the dollar (maybe even hint you are about to file bankruptcy if they can't take this offer). By not paying it, they can sell the judgment who can report it and it COULD potentially be on your record for another 7 years. Also it DOESN'T matter that it is in a different county or even state, most courts recognize judgments from other courts for a small fee.
The 2nd thing you need to do is to pay down the rest of that debt as much as possible while still putting some money aside in saving. Your debt almost equals your annual income and you don't even have a house. I am not sure what you payments are on these loans but I am guessing anywhere from $700 to $1000 a month. You will want to be at less than a 50% debt to income ratio including your new house payment to get a high interest rate loan approval.
And the 3rd thing which you already said you were doing is to pay your bills on time. If you have at least a year of good payments on several credit lines with no additional derogatory information your credit scores will go up. Put as many of your accounts on automatic payments as possible to keep your record clean.
I own a small business and nearly went bankrupt after 9/11. I didn't file, and instead, started paying down debt while my business rebounded.
Today, I still have over $100K in debt, two judgments and a credit score below 500.
But I also just bought my first investment property on a lease/option deal, fixed it up and sold it....I cleared $30K.
When I approached the seller, I leveled with him about my credit and he agreed to deal with me if I would fix up the house. This way, if he had to take the house back, he had many repairs done at my expense.
You certainly need to work at repairing your credit, but
you CAN buy a house if you find the right deal, even with terrible credit like mine. There are RE Investors in every town, even small ones. Look for people who post those signs that say "We Buy Houses For Cash". Call them up, ask what they have and explain your deal.
I used to believe that my credit score was everything...now I know it means nothing if you find the right seller and are willing to work.
First and foremost, you have to find a house you like and a flexible seller. This in itself can be difficult, so you need to be prepared to take a house that's not your 'dream' house in exchange for ownership.
In my case, the house was a wreck, but huge. But I wanted space, so I was willing to put the money/sweat into fixing it up. The seller knew he had a tough sell ahead because of the house's condition. So when he found me, he jumped. (He also saw that I was willing to rebuild my business rather than go bankrupt....this impressed him.)
Anyway, my advice is this: Once you find a willing seller and a house you can live in comfortably for a while, find a lease/option agreement (or lease/purchase agreement) and have your attorney tweak it to suit your needs, then make an offer.
NOTE: In lieu of a down payment, I agreed to pay for the repairs myself, out of pocket. The seller loved this idea.
One final thought is this: If you're buying a fixer-upper, be sure to ask about the roof, foundation, plumbing and electrical. These can be WAY expensive to fix, while cosmetic stuff such as paint, cabinets and flooring are somewhat cheaper. I put in carpet, new cabinets, and vinyl floors througout my house (2500 sq ft.) for $5K, bought the supplies at Home Depot and had a handyman help me install.
Thanks, I know i wont end up in said dream house now. I do want space more than cosmetics as long as the house is safe and structurally sound.
Could you explain more the lease/option, lease/purchace agreement or point me in the right direction for resources on the subject? I'm mostly interested in how this will affect monthly payment, interest, title, and insurance. Probibly other things i'm not considering too.
Also, during the year lease period, the seller paid all insurance, etc. since i was technically a tenant, although I agreed to buy the house after a year of leasing.
Total down after a year = $6200
HOWEVER: after the repairs and a year of appreciation, the house was worth over $200K.
So I closed on the house for $163,800 (plus closing costs) and had roughly 40K in equity at closing.
One final word of advice. When dealing with an investor of For Sale By Owner...CASH TALKS.
I don't care if you have a 300 credit score and ten judgments. If you can save up ten grand and use half for a down payment and half for repairs, you will find MANY sellers willing to talk.
Yes thanks, We will have cash when we plan to do this. I figure about 10k. Last yea i had an offer to buy a decent size house for 50k w/5k down and owner would finance. unfortunatly the house needed roof and siding. worst part - right next door to inlaws, location, location, location.
I live in a college town and often are houses that are trashed cosmeticly but otherwise ok and owner gets sick of renting. That was the deal i mentioned above.
Dont bother if your short on time but what would be a scenerio on 80k property.
After the year lease, I had a year of consistent payments and 40K equity.
On a house valued at $200K, I only needed a mortgage on $163K. On paper, I had nearly 20% down, or in other words, the mortgage company only had to finance 80% of the FMV.
The seller wrote a note to the lender stating that I had a year of good payments and this helped.
I got a standard mortgage and moved on. (I stayed in the house a while before selling.)
I'm taking off for a biz rip now...hope all works out.
A lien can be placed on your home if the credti card company takes you to wourt and win a judgement. They file the lien in the court and you cannot sell the property until they are paid.
Regardless of whether you own anything else or not, regardless of whether or not the house was used as collateral, if he is a part owner of the property and has a judgement against him they can put the lien against the house. They would be in a position junior to the mortgage lien.
Judgements vary state to state but I know in Florida you can renew it every 10 years
that s correct. people never pay their debts and ignore the fact that they made a legal and binding contract. get summoned to court never show up and bam Lien Placed on Property. Must be paid or settled . good Luck
In my pesonal, humble opinion you don't sit too well. The biggest issue I see is that judgement. As long as it is out there you will not get a loan until it is paid as it can be slapped on your property.
There are many ways to get it paid, find out who has it and offer to pay them off for $0.25 on the dollar (maybe even hint you are about to file bankruptcy if they can't take this offer). By not paying it, they can sell the judgment who can report it and it COULD potentially be on your record for another 7 years. Also it DOESN'T matter that it is in a different county or even state, most courts recognize judgments from other courts for a small fee.
The 2nd thing you need to do is to pay down the rest of that debt as much as possible while still putting some money aside in saving. Your debt almost equals your annual income and you don't even have a house. I am not sure what you payments are on these loans but I am guessing anywhere from $700 to $1000 a month. You will want to be at less than a 50% debt to income ratio including your new house payment to get a high interest rate loan approval.
And the 3rd thing which you already said you were doing is to pay your bills on time. If you have at least a year of good payments on several credit lines with no additional derogatory information your credit scores will go up. Put as many of your accounts on automatic payments as possible to keep your record clean.
I own a small business and nearly went bankrupt after 9/11. I didn't file, and instead, started paying down debt while my business rebounded.
Today, I still have over $100K in debt, two judgments and a credit score below 500.
But I also just bought my first investment property on a lease/option deal, fixed it up and sold it....I cleared $30K.
When I approached the seller, I leveled with him about my credit and he agreed to deal with me if I would fix up the house. This way, if he had to take the house back, he had many repairs done at my expense.
You certainly need to work at repairing your credit, but
you CAN buy a house if you find the right deal, even with terrible credit like mine. There are RE Investors in every town, even small ones. Look for people who post those signs that say "We Buy Houses For Cash". Call them up, ask what they have and explain your deal.
I used to believe that my credit score was everything...now I know it means nothing if you find the right seller and are willing to work.
Good luck.
Writergig,
Is there anything, any kind of deal i should stay away from?
Or any deal or situation that may be best?
Thanks for your advice
Well, that's a hugely subjective question.
I'll try to answer in the context of my deal.
First and foremost, you have to find a house you like and a flexible seller. This in itself can be difficult, so you need to be prepared to take a house that's not your 'dream' house in exchange for ownership.
In my case, the house was a wreck, but huge. But I wanted space, so I was willing to put the money/sweat into fixing it up. The seller knew he had a tough sell ahead because of the house's condition. So when he found me, he jumped. (He also saw that I was willing to rebuild my business rather than go bankrupt....this impressed him.)
Anyway, my advice is this: Once you find a willing seller and a house you can live in comfortably for a while, find a lease/option agreement (or lease/purchase agreement) and have your attorney tweak it to suit your needs, then make an offer.
NOTE: In lieu of a down payment, I agreed to pay for the repairs myself, out of pocket. The seller loved this idea.
One final thought is this: If you're buying a fixer-upper, be sure to ask about the roof, foundation, plumbing and electrical. These can be WAY expensive to fix, while cosmetic stuff such as paint, cabinets and flooring are somewhat cheaper. I put in carpet, new cabinets, and vinyl floors througout my house (2500 sq ft.) for $5K, bought the supplies at Home Depot and had a handyman help me install.
HTH.
Writergig,
Thanks, I know i wont end up in said dream house now. I do want space more than cosmetics as long as the house is safe and structurally sound.
Could you explain more the lease/option, lease/purchace agreement or point me in the right direction for resources on the subject? I'm mostly interested in how this will affect monthly payment, interest, title, and insurance. Probibly other things i'm not considering too.
Thanks
There's a lease/option forum on this site...you're best off surfing there to find info and sample deals, contracts, etc.
All deals are unique, as are all contracts.
In my case, I did a year lease/purchase agreement.
The simple breakdown is this:
Purchase price: $170,000
Down payment in the form of repairs: $5K
Monthly payment: $1100 with $100 going toward
sales price or, $1200.
Also, during the year lease period, the seller paid all insurance, etc. since i was technically a tenant, although I agreed to buy the house after a year of leasing.
Total down after a year = $6200
HOWEVER: after the repairs and a year of appreciation, the house was worth over $200K.
So I closed on the house for $163,800 (plus closing costs) and had roughly 40K in equity at closing.
One final word of advice. When dealing with an investor of For Sale By Owner...CASH TALKS.
I don't care if you have a 300 credit score and ten judgments. If you can save up ten grand and use half for a down payment and half for repairs, you will find MANY sellers willing to talk.
Your part time job may facilitate this.
Good luck-
Writergig
Yes thanks, We will have cash when we plan to do this. I figure about 10k. Last yea i had an offer to buy a decent size house for 50k w/5k down and owner would finance. unfortunatly the house needed roof and siding. worst part - right next door to inlaws, location, location, location.
I live in a college town and often are houses that are trashed cosmeticly but otherwise ok and owner gets sick of renting. That was the deal i mentioned above.
Dont bother if your short on time but what would be a scenerio on 80k property.
Thanks again
I will check out the forum
also, i still dont understand how the financing works after the lease period.
Financing is pretty simple.
After the year lease, I had a year of consistent payments and 40K equity.
On a house valued at $200K, I only needed a mortgage on $163K. On paper, I had nearly 20% down, or in other words, the mortgage company only had to finance 80% of the FMV.
The seller wrote a note to the lender stating that I had a year of good payments and this helped.
I got a standard mortgage and moved on. (I stayed in the house a while before selling.)
I'm taking off for a biz rip now...hope all works out.
W
A lien can be placed on your home if the credti card company takes you to wourt and win a judgement. They file the lien in the court and you cannot sell the property until they are paid.
Regardless of whether you own anything else or not, regardless of whether or not the house was used as collateral, if he is a part owner of the property and has a judgement against him they can put the lien against the house. They would be in a position junior to the mortgage lien.
Judgements vary state to state but I know in Florida you can renew it every 10 years
that s correct. people never pay their debts and ignore the fact that they made a legal and binding contract. get summoned to court never show up and bam Lien Placed on Property. Must be paid or settled . good Luck