Loans Answers

Will I Ever Buy a Home?

Question: I’m 37 years old, with a wife and 5 kids. I’ve always rented and after a two year near-unemployed period am deep in debt, so deep in fact that we are considering bankruptcy. Will I ever be able to afford to buy a home at this rate?

Answer: I’m aware of a 32-year-old married gentleman with no children whose credit is messed up because of some student loan default problems. The lenders he spoke with were willing to work something out in the way of an “in-house” mortgage because of mitigating circumstances surrounding the defaulted loans. He managed to avoid going through all of the fuss though, because his wife’s credit was good enough (and she had held a job for the miminum of 2 years) and her income was just enough to allow her to qualify for a $72K mortgage. They knew that getting a mortgage would be a problem because of the defaulted loans so they kept their finances separate – she had her own savings accounts, credit cards, etc.

I am under the impression that, even if the husband _had_ applied along with his wife, the banks were willing to work out loans – just at a higher interest rate. The key factors seem to be 1.) a good credit rating (doesn’t have to be *both* individuals), 2.) a steady income (they seem to like two years in the same profession – though not necessarily at the same employer), 3.) few liabilities (might be a problem for you as I suspect that both of your names appear on those loans – if so, that’s a problem).

My questions are: Is your wife employed? How long have you been _steadily_ employed? Are you self-employed? Do you and your wife share credit card accounts (ie. both of your names appear on the account)? Is there a chance you can get a consolidation loan (on your own) to put all of your debts into one payment per month (there are banks out there that will do this to help you avoid bankruptcy)? If you have to file for bankruptcy, will be be for reorganization or to wipe the slate clean? If it’s to reorganize, you are basically arranging to make payments at a different pace. You can do this _without_ filing for bankruptcy in most cases. As long as the creditor sees an earnest effort being made to pay off the debt, they should cooperate.

Maybe you can consider getting counselling on your finances. There may be progams in your area (libraries, etc.) geared toward helping folks like yourself to dig out. With five children, it seems like you should qualify for a host of family services….don’t let your pride get in the way. You pay tax dollars just like the rest of us and those programs are there to help us out when we really need it. If you’re a first-time home buyer, there are low-interest programs (usually aimed at particular neighborhoods) with relaxed qualification requirements.

Don’t lose hope. Be creative. Creativity is one of the most important factors in getting what you need.

Good luck!

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Filed under: Bad Credit