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Lack of credit and forclosures
Hi there, Nest.
I'm usually a lurker, but now that college graduation is looming and married life is imminent, I'm looking into buying a home. Specifically, I'm looking at buying a Fannie-Mae owned property in Wayne County, Michigan. My fiance's family is located in Troy, so we're looking at Livonia, Dearborn, and other places near/in the Detroit metro area.
Here's the issue: I am an exotic dancer. I have little credit, just a pile of cash and student loans, and it is difficult for me to prove my employment, as I am my own employer. I also have a "straight" job, but I work for the school and that job will end prior to buying a home.
My fiance has the same job with the school, but he's obviously not going to be dancing after graduation, so with any luck he'll have steady, full-time employment. He also has investments and almost no student loans to pay back. He doesn't have a credit card, and neither do I.
We are just wondering if anyone has experience with buying foreclosed or bank-owned homes, or even HUD homes. Is it easier than buying a home that doesn't fall into this category as far as credit approval goes? Should I just prepare to pay for our first home in cash in case of credit issues? This could feasibly work, with how much I am compensated for dancing, but a renovation mortgage would be ideal.
TL;DR - How hard is it for a stripper and her man to buy a foreclosed home with no credit?
Re: Lack of credit and forclosures
Buying a foreclosed home is very difficult if you are not ready to put 20% down, just so you know. I'm learning that lesson the hard way as we speak. I would avoid it at all costs. If you're planning on buying with cash, then I'm sure you won't have any trouble buying whatever kind of house you want - you'll be a very popular buyer.
You have to report all your income to get the mortgage, and you also have to account for money in your account that doesn't correspond to a paycheck. That's because if you're receiving money as a gift, it needs to be claimed as such.
I know I wouldn't want to deal with the hassle of school/graduation, a possible wedding, and buying a home at the same time. That's way too much stress for me personally. You could take the time to build credit and potentially make the process a whole lot more bearable. Get some credit cards and just charge a few bucks to them every month and pay them off. Also, when you start paying your student loans back it will start to build up your credit.
Good luck to you, whatever you end up deciding!
Cortlandt Place - My house blog
Thanks for the help everyone.
I am thinking of renting while trying to build credit. I like the idea of rent-to-own in theory, but it always sounds a bit sketchy to me.
So maybe I should just take it slow.
I do love to stress myself out though!
I will advise you something else. What's really the hurry to buy a house? You are still both in school/paying school loans and have jobs that you said may not be for long term. Why hurry into such a huge cost as buying a house? Once you buy, there will be other costs on top of the mortgage - taxes, insurance, etc. Consdering that you don't have a good credit, and you have other loans, it may be a better idea to rent for a while, and save up the money, get on with your loan payments, which will improve your credit, and then buy.
My Blog
If marriage is going to happen soon then I would wait to buy a house. Continue to build your savings - have a nice wedding/honeymoon - get your professional life in order (ie: if you are planning to get a 'straight' job) - then start looking at buying home.
Home ownership can be taxing on a relationship depending on the situation you get into - so just be on solid ground. Weddings are expensive. Honeymoons are expensive. Buying a house is expensive - plus as soon as you graduate you'll have to start figuring in the loan repayments, etc.