Need advice on buying house in Texas

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Submitted by Sandi Egan on February 25, 2008 - 8:02pm

Since the crunch started my status among the extended family and friends has elevated from "a bitter doomsayer" to "know-all housing expert". People are asking advice all the time -- and even follow them when given!

As many of you know, I am far from being an expert and rather a curious dilettante in these matters, so I thought I should take this question to the real experts on this board.

So here it comes.

A friend wants his 20-something son to buy a small house as a primary residence in rural Texas for $40-50K.
The young guy is currently renting an apartment for about $500/month and has a gross income of $1000/mo, so buying a house will save him quite some money. My friend is willing to pay the down payment, 10K or so. The problem is, the boy's credit score is somewhere in the negative territory. No bankruptcies or foreclosures, just LOTS of late bills.
So, my friend's questions are:
Is it possible for the boy to get a 40K mortgage without a co-signer?
If not, what can be done to improve his credit score ASAP? How long will that take?

I'd appreciate any thoughts on this matter.

‹ Case for Moving $$ Into RE This just makes me sick... ›
I don't see how this will
Submitted by Wickedheart on February 25, 2008 - 11:07pm.

I don't see how this will save him money. Texas property taxes are a killer and at 12000 a year annual salary he's not going save anything on his federal taxes. My daughter pays nearly $4000 a year on a house valued at $156,000. His utility expenses are going to be higher in a house and how's he going to pay for repairs and homeowners insurance.

I'm not trying to be mean here but who came up with this brilliant idea? This kid is broke he has no business buying a house, not even in Texas. I don't wonder he's late paying bills he's paying half his gross pay in rent. I don't know how he's scraping by. He doesn't need a house he needs a better job.

Time and Twenty Time is the
Submitted by Deal Hunter on February 25, 2008 - 11:52pm.

Time and Twenty

Time is the only thing that will improve his credit score - provided he starts paying and continues to pay bills on time.

Twenty - even someone with poor credit can get a home loan with 20% down. If parent doesn't want to co-sign, they can lend the son $8K for his downpayment and put a lien on the property after closing for $8K plus interest.

Note: With a score of less than 700, he'll end up with a higher interest rate.

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Oh and also, TX prop taxes may be high, but property taxes as well as mortgage interest is tax deductible, while rent payments are not. I suggest doing the numbers to see how it pans out. Take total of property taxes and mortgage interest for 1 year and divide by 3200. The result is the number of exlusions he can claim on his W4. (For instance, if the answer is 6, that equals 6 dependents he can claim on his W4. So he gets to net more from his paycheck each month.)