Question by Robert: Wife has great credit no income Husband has income bad credit seeking a Mortgage?
Today my wife and I went to a NACA counselor in order to see if we qualify for their “best mortgage in America” program. The outcome was that I (husband) had many collections and a bad FICO (544) but a great income 95k+ my wife on the other hand has no income except some projects she does on the side that net maybe 3k a year but her FICO was (736). We want a mortgage, but I’m trying to figure out the best course of action. NACA wants me to get resolutions either dismissals or payment arrangements for my collections before they are willing to proceed, which isn’t a bad thing, except that many of them are old and are about to drop off my credit report due to the 7 year law. I’m wondering if I should “stir up the hornets nest” by fighting with these collectors or try to see if there is a way to get the loan in my wife’s name and just fix my bad credit over the next couple of years and maybe refinance or something later in our name. Any suggestions? I just find it hard to believe that we can’t get a mortgage in the above situation.
Best answer:
Answer by Judy
I think that if you try to “stir things up”, you might be resetting the statute of limitations.
I’ve heard that acknoledgement or setting up payment resets the date.
Be careful.
Also, are you sure the SOL is 7 years? In some states is less.
Google the name of your state followed by SOL or statute of limitations.
I read in money magazine that you can get a loan with 20% down with a score of 740.
Does she have any credit card debt?
That’s an easy way to give scores a big boost.
I hope you get better advice – or google resetting the SOL – be careful.
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Derogatory items age off your credit report 7-1/2 years from the date of first deficiency. If you defaulted on these accounts close to 7 years ago, you are probably better off to just let them age off your credit report. However, paying these accounts will not restart the 7 year reporting period. They will still age off.
Most mortgage companies require that all derogatory items be resolved before approving a mortgage. You could negotiate settlement of these old accounts probably for about 10% in a lump sum. But that will not improve your score. Be sure to get any settlement agreement in writing before you pay and do not give the collector direct access to your bank account.
There is no way your wife could do the mortgage in her name only — not enough income. If you want to buy now, you will have to settle the derogatory items and go with a higher interest rate mortgage. Or if you put off the home purchase a couple more years, you could work on rebuilding your credit.
I recommend that you let the old stuff just age off and concentrate on rebuilding your credit. You need a couple of current lines of credit showing consistent, on time payment history to improve your score. If your wife has credit cards in good standing, she can add you as an authorized user and that will give you some good payment history.
If you don’t have current credit cards in your name, get one, even if you have to get a secured credit card (you pay a deposit which is held as collateral against the line of credit). Use the card and pay in full every month.
While you’re taking the time to rebuild your score, you can also work on building up a nice fat downpayment.