Novice seeking credit line with less than perfect credit

[caden04]

I have been sitting on the fence watching others do well in real estate. All because my credit is less than perfect (620 to be exact)! I am willing to devote as much time and energy necessary to achive my goals but I need some assistance. I am ready to get off the fence but I need advice with less than perfect credit, HELP were do I start??

[Aldo]

I agree. 620 is not great.

I disagee, 620 is acceptable.

With both of those things said, get your butt off the fence and look for your first investment property. While your ideal property is out there, it's not going to knock on your door. You appear to have the drive needed to succeed, so the only thing stopping you is yourself.

[Dan Auito]

Read and engage our lenders here. Fill out an assets and liabilities worksheet otherwise known as a loan application and see what you can do to clean up your credit once they run a credit report on you. Start restructuring a little debt and correcting any errors on the credit report that the lender has found. Work with a local financial professional to start tweaking where you can while you read all about the real estate trade here. It is nice to have you on the field. Now we can begin to help you get at least a field goal to start!

[Peter Forest]

620 is a sufficient credit score to get financing for a property. You can even go stated-stated and get 106% financing, as long as it's your first home. Now that I have pre-qualified you, you can go out and find a property. My knowledge of bank policies and guidelines allows me to execute creative financing such as this.


Peter Forest, Licensed Mortgage Banker who is not only a banker but an investor as well. :SM083:

[dplegacy]

One of the best books I've seen on credit repair was written by Donna Fox. The name of the book is "From Credit Repair to Credit Millionaire". www.credit-millionaire.com
She does a great job at teaching people how to go about restoring their credit in the correct manner and she also teaches you how to establish business lines of credit which can ultimately provide you with all the capital you need to get started relatively quickly.

Successfully,

JD

[dplegacy]

Just received an email that Donna is doing a live conference call tonight at 8:30pm EST. If anyone is interested in listening in, send me an email and I'll get you the conference bridge numbers.

Successfully,

JD

[Ron DeMuro]

Just to let everybody know who doesn't already. Creditboards.com is the best site for anything that has to do with credit, be it fixing it or maintaining to basic do's and don'ts. I know that dan has posted it in his usefull links section but it can be hard to see if you aren't looking for it specifically. Go there and read everything you can, and if you have any questions don't be afraid to ask, the people over there are incredibly knowledgeable and helpful. So for all of you who have a little credit problem or a big one, don't be fooled by some of these companies that take your money for something that you can do a better job of yourself, head over there and handle some business.

[Dan Auito]

Hey Ron just a note here. Whenever you can post up a link to anything useful on the web that isn't ADVERTISING based! Feel free to include it with your posts that way once someones done reading your post they can click on over and have a look. Not to mention they can add that link to their own personal links file. Thanks again for the reminder on the credit repair folks above!

[Ron DeMuro]

No problem Dan, I'll make sure I add a link next time.

[David Leach]

I have been sitting on the fence watching others do well in real estate. All because my credit is less than perfect (620 to be exact)! I am willing to devote as much time and energy necessary to achive my goals but I need some assistance. I am ready to get off the fence but I need advice with less than perfect credit, HELP were do I start??

First of all, a 620 credit score isn't all that bad. Just about any score over 600 will get you prime rates and up to 100% financing.

That said, I have a question....

Why are you using your personal credit to get started in real estate? There are many ways to get started in real estate without using your own credit or cash.

I would advise against any newbie using their personal credit or money to when first starting out. You could easily find yourself facing a foreclosure or bancruptcy if you don't know what you're doing.

Do some more research about how to be successful as a real estate investor before you begin.

Best wishes,

David

[Collusion]

I agree you do not need cash or credit. I bought my house with zero down and a 480 Fico score. I had the seller finance it 100% and even paid out of pocket for the realtors commission and closing. Go get a book titled "Nothing Down" by Robert G Allen and "How to write a nothing down offer" by Richard J Allen. These two books will be very useful as they guided me in my first purchases. I am negotiating right now for a couple no down deals and I will walk away with over $50,000 just from buying one of the buildings.

[moodykitty.com]

so thankful to have found you all....


I just ordered a free credit report from Equifax for myself & hubby. Our credit score is 695. We used to have excellent credit until we lost our business 2 years ago & had to file Chpt 13. We have now started over and are making a decent income. But I'm wondering, Is our score accurate? or should I get it form another source?

We are total newbies at this.

We weren't planning on buying anytime soon (didn't think we would qualify) but now we are faced with possibly buying the house we're renting (landlord is selling - we want to buy it). We feel it would be a good investment, but we're not sure of the next step to take.

Where do we go? What do we do?
We have a lot of reading to do :)

Thanks for any advice you have.
God bless,
Christine

[Collusion]

I would suggest you find out if there is a current mortgage on the property. If it is free and clear you can not only buy it but make a profit from the sale as well. Say it is $150,000 owned free and clear. Offer $150,000 with the following terms: Seller to get a new 1st mortgage of $120,000 while he keeps $100,000 and gives you $20,000. You buy the property subject to the new financing and the seller takes back a second mortgage of $50,000. This way you walk away from closing with $20,000 in your pocket, he gets a large amount up front with a second as security. Everybody's happy. It is not really hard at all to convince sellers to do this. I am working on a few multi million dollar properties right now where I may get well over $200,000 from buying the property. I shall know tomorrow.

[moodykitty.com]

Hi,

there is a current mortgage of $200,000 and he just took out a 2nd for $125,000, so total of $325,000, since then he's had some financial probs & wants to sell. He got an appraisal on the house and told us it was appraised at $500,000 but all the appraiser did was a walk thru - no real inspection or anything (not sure how that all works)

The place is a fixer upper, needs a roof & plumbing work but is definitely livable - we've been here over a year.

What we want to do is fix it up while we live in it and sell it within 1-5 years.

The house is on 1.25 acres, presently it is not subdividable but may become dividable as there is a large housing track moving this direction. So while the property is speculative it shows good potential.

The landlord is willing to do some creative financing with us. We would take a loan for $400,000 with a later balloon payment to him of $100,000 so that would put him on the 2nd. But it's our opinion that this place is going to be hard for him to sell because he lives in another state and it would have to be sold as an as-is which may give us more bargaining power.
we feel like a price of $450 - 480 would be more appropriate.
Another issue for us is the loan amount. We don't really have much for a down, maybe a couple thousand.
We were thinking of an interest only loan being that we are not going to be here long term.
Any advise is appreciated.
Thanks!

[Collusion]

Offer him $450,000 with the following terms and see what he says:

Seller to refinance first and second into one 1st mortgage in the amount of $425,000 for a 30 year term. Use your best judgement on the interest you can give him and that rate is what he must get on the 1st. He keeps $405,000 of that money and gives you $20,000 for a cushion to cover expenses, hardship etc.. He takes back a second in the amount of $45,000 payable over 30 years with a 7 year balloon and again use your best judgement on the interest rate for what you can afford. Anyway, this will take care of his 2 current loans by putting them into 1 loan which you are making the payments for. He is also getting an extra $85,000 cash from the refinance. If he is smart he will accept these terms. Of course you can bring up the sales price and adjust all of the other numbers accordingly if necessary. Just make sure you walk away from the sale with cash in your pocket just in case.

[moodykitty.com]

huh?

lol! I am going to print out your advise and show it to our friend who is a REI.

Thank you so much for your advise!! :)

[Collusion]

Please keep me updated and let me know if the deal goes through. It is always exciting to see another person get into creative finance. Anyways, my email addy is brandon@equitybegone.com so keep me posted. :thumbsup:

[moodykitty.com]

He was originally going to ask $625 for the place (I guess he's looking at future value of the property) but we don't see how he's going to get that and I think he's starting to realize it's going to be difficult for him to sell, especially being so far away and all the repairs that need to be done.