Can my spouse buy a house if I'm undergoing foreclosure or short-sale on a property acquired before marriage?
Before we got married, I bought a house in LV, NV. My husband and I currently reside in that house but I don't know for how much longer since I purchased that house on a sub-prime loan. I'm undergoing foreclosure mediation to either negotiate for price reduction, modification, or just short-sale. In any case, my husband would like to buy a house in LA, CA as a first time buyer. Is there a way that he can use his 675 credit score and our incomes to purchase the home, without my bad credit adversely affect his loan eligibility?
I've read different posts about options, but I seek clarification and advice on the best course of action. One, he could purchase as a married man solely on the loan and title, and I quit claim. Two, he could form a corporation and purchase the property as corporate expense, which cuts me out of the picture. Three, a third party could purchase and quit claim the house to us. Four, he could purchase as an investment property (not sure if he gets first time buyer credit for that?), arrange someone to default on the mortgage so that we can get the deed in lieu. Please clarify.
- loanmasteroneLv 71 decade agoBest Answer
The best possible scenario is for you husband to purchase the house using his own credit and score. Properties are sorta expensive in Los Angeles. His income would have to be enough to qualify for the mortgage. You might use a FHA mortgage and the down payment would be about 3%-4% depending on the mortgage program he is qualified for.
Forming a corporation would not accomplish what you want as the corporation would have no history, assets, or provable income. Even if a lender did decide to allow the corporation to be the primary purchaser I am sure they would require a co-signer to guarantee the mortgage loan. This is called a recourse loan as your husband's income and credit would be used.
If you and your husband agree to purchase a property together and both applied for the mortgage loan, then both your income and credit would have to be considered. So the default or foreclosure you are currently in would be a factor as it would be on you credit report.
If a mortgage is in default and the current owner want to offer or request a deed-in-lieu of foreclosure this is for the lender to approve, this is not something that a third party would be privy to. Therefore another person could not default on a mortgage and expect to get a deed-in-lieu of foreclosure. The other thing is what person would purchase a property with the intent of losing it to foreclosure, thus having a negative impact on their credit for several years?
You might purchase the property as an investment property. You might even use FHA to purchase the investment property, however, you would not really benefit as the most favorable interest rates are given to those that purchase houses as their personal residence. Therefore there is no real benefit in purchasing the property as an investment property.
You might consider the following in the purchase of your next home. These methods of purchasing a home normally do not require a full qualifying as a lender would require. In some instances some sellers (Owners) require more than others, some sellers (Owners) less than others
#1 Owner finance (Scan the news paper very carefully for these adds)( there are there)
#2 Little or no qualifying ads in the local newspaper (This might be a come on from a real estate agent so ask many questions before you waste your time and will eventually have to fully qualify)
#3 Lease with an option to own (This is good as you have an option to purchase the property after an agreed on time normally 3-5 years.)
#4 Rent to own (The same as a lease to own with a few wrinkles)
#5 Land contract
Don't expect your local real estate agent to help you with the above type purchases as they will get little or no commission for their services.
In selecting to go this way in the purchase of homes you are pretty much on your own. You might consider checking out and reading a few books on these methods at your local book store or library.
I hope this has been of some benefit to you, good luck.
- OthnielLv 61 decade ago
It sounds like you really don't want to pay the Piper! Your scams probably will not work since the lenders scrutinize every loan application. If the spouse of someone applying to purchase a property is in arrears on their mortgage the lender will discover this fact.
Your best avenue of choice is to go through the short sale process and then rent for a couple of years in your new location. The short sale will tarnish your credit but if you handle your credit responsibly there is a good chance that in two or three years you can buy something.
You may also have a challenge in finding a rental since a potential landlord or property manager may want to know if you may be close to bankruptcy which would impact their ability to collect the rent.
Of course, you can always deal directly with property owners either for purchase or for rent. They don't have all the red tape that a regular lender has and may not put as much weight on you having a foreclosure or short sale on your credit report.
Whatever you do you have to realize that these issues are necessary information that any landlord or lender will discover so truthfulness is a better policy.
- BonnieLv 44 years ago
well the short sale can still be approved up until 7/31. At that point it will be owned by bank and then a short sale is not possible. You will have to buy directly from bank. How long depends upon what state you live in. if your state has a redemption period the bank will not list it for sale until that expires (could be 6-9 months). Google foreclosure laws for your state to see what you can find out. The bank will eventually list this for sale with a real estate agent and it will be on mls. It sounds like bank determined that allowing it to go into foreclosure would net them more money than your offer. I bet the bank is wrong.
- Big daddyLv 51 decade ago
Unfortunately your husband cannot, short sale transactions must be an arms length transaction between the buyer and seller, ie they cannot be related or married in this case. Your second scenario may have some merit, but you have to be careful as some investors will not allow a corporation to purchase the property and more importantly, your talking about hinding the fact that you and your husband are married, thus trying to defraud creditors. In times like these, that is not the wisest optionSource(s): short sale negotiator
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- acermillLv 71 decade ago
NONE of your little 'tricks' will work. Your husband cannot use your income on a mortgage, even if he is the sole signer of the mortgage. If you want your income included for mortgage qualification, your bad credit comes along with such. Attempting to form a corporation is useless, since any corporate credit standing on a new corporation will only be that of those who form said corporation. Furthermore, downpayment requirements for any such 'corporation' will be higher, since the corporation would not be considered as the entity which occupies the home.
"Three and four" are even more far-fetched. Where do you expect to find someone who will take on the responsibilities and liabilities of a mortgage with no house to show for it ? That is exactly what would occur if someone 'quit claimed' the property to you. The mortgage itself cannot be 'quit claimed' along with the property. It remains in the name(s) of those who signed the mortgage. And you expect to find 'someone' who will ruin their personal credit be defaulting on a mortgage for your convenience ???
- Big Deal MakerLv 71 decade ago
You could not use your income as part of the purchase. However a short sale with a purchase at the same time is the fast way around it. Best of luck and check with the local realtor in the area.
- AldaLv 43 years ago
Need more details
- 3 years ago
Never gave too much thought about that
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- RealtoratheartLv 61 decade ago
You are asking for legal advise. Pay for it like the rest of us.