I was wondering if anyone has any advice or knows anything about buying your first home? Here is my dilema: I am planning to purchase a home with my partner within the next year. I have excellent credit, however she has really bad credit. Will her bad credit hinder us from getting the perks of being a first time home buyer like no money down? And from getting a lower rate mortgage? Is it worse for her to leave her credit alone (really bad) or to claim bankrupcy? She has so much over due debt on her credit report she'd never realistically be able to clean it all up.
Depends on her income Can you get the mortgage with you're income alone? If it is possible to get the mortgage on you're income alone, you would be able to qualify for the best rates. If you need to use her income, it becomes much more complicated. If her debts can't be paid, it is likely that she would have to declare bk. If you have to go with the second option, I'm not sure how they look at the credit when filing for a joint mortgage. Not sure if the use the higher of the two middle scores, if they average them, of if they use the lower of the two middle scores. I would think that they use the higher of the two scores as long as neither credit report has outstanding balances.
If she might have to delare bankruptcy, you would not want her on either the mortgage or the title, either. Her creditors would have a claim against the equity of the house, and her bankruptcy could result in bankruptcy notations on your credit reports too.
As a first time homebuyer, I think because your friend has bad credit you should go in at it alone because you cannot proceed to with her. I deal close with a company that deals in the first time homebuyers program. if you both try and get a the downpayment assistance, you both would have to pay everybody on your credit report. I hope this is of some use to you.
