Posted by So Cal Don on September 07, 2003 at 21:39:19:
Great information Bruce. I am very impressed with the resources on this website and of the general helpful attitude of the people who take the time to help a newcomer such as myself. Thanks!
credit criteria and qualifying - Posted by So Cal Don
Posted by So Cal Don on September 07, 2003 at 02:30:52:
I’m a newcomer to this wonderful board and am busy rebuilding my credit. My business went south when CA state froze its funding and canceled 2 pending contracts after 9/11. My fault because I put all my eggs in one basket. I had to run my business and personal on credit cards. My revolving debt reached 45k but is now about 14k.
My wife has good credit and we want to use hers to buy Fannie Mae properties to flip. Can we use hers alone or will they want to see mine too? We don’t know her score (we’re getting it) but it has 13 good marks and 0 bad. How bad are numerous inquiries to the score? Does salary affect the score? She is a full-time student and part-time worker.
My credit used to be well over 700, and its now about 570.
Since I own my own corp, will it help my qualifying to just start paying myself a lot, or will they go by last 2 years where I paid myself little? Are we better off putting her on the payroll?
I am a beginning investor but am very motivated. I would apprecitate any input.
Re: credit criteria and qualifying - Posted by Bruce Lawson
Posted by Bruce Lawson on September 07, 2003 at 12:44:56:
Hi Don,
If your score is 570 I believe you could still get the loan for the properties granted not at prime rates, but it will get you started and a mortgage is a fabulous way to rebuild your credit.
Salary can affect the score only if the debt to income ratio’s are high for example if you owe $12,000 debt and you earn $50,000 your D/I ratio is 24% which is below the required ratio for a mortgage on a conventional loan. Inquiries can affect the score when there are many of them for various products such as cars, furniture and so on, if you are shopping for a mortgage those inquiriies will count as one. When you start making multiple home purchases then the inquiries start adding up. Now they do not count against your score forever they are only counted for the past ninety days.
Paying yourself more is always a plus when they go back and see you were not paying yourself as much as you are now that will be in your favor.
I would suggest you try for the loan yourself since your employed fulltime and if you are turned down then consider using your wifes score, but see why the loan was denied it may not be the score.
Bank owned properties can be hard to do for your first deal. Consider joining a real estate investing association in your town that way you will have people who have been where you are and can show the best ways to make deals happen.
Feel free to e-mail me if you care to discuss anything about the financing and credit aspects of buying.
Sincerely,
Bruce Lawson