I'm trying to get pre-approved/qualified for a mortgage loan (home equity loan?). The house I live in is owned by me free and clear, but it was purchased on contract many years ago and was paid off many years ago as well. It is a bad state of disrepair and is only worth about $10000. I am on social security disability and only get $850 monthly. All the conventional lenders I've spoken with in Indiana have a really large minimum amount, usually $50000 on up. I've found some very cheap older homes in distant counties from where I live for under $20000. These are the ones I can afford with a 30/40 yr fixed rate loan. I was told to get a home equity line of credit for small amounts like these. My credit is only fair to poor, what are my options as far as what type of loan/lender to pursue in my case?

Thanks for any suggestions you may have for me!

J.
Gary
Indiana

Answer:

J., since your local lenders told you they have a minimum loan amount of $50,000, then I assume you have some credit issues. There are a few lenders that will make mortgages for less than $50,000 for people with damaged credit, but not many.

You mentioned Social Security Disability. Are you over 62 years old? If so, you may qualify for a Reverse Mortgage. You can get some of the equity out of your property and never have to make a mortgage payment (unless you move out).

If you are convinced you want to buy a $20,000 home in another county, you might qualify for an FHA loan, even with less-than-perfect credit. However, you won't be able to get a home equity line of credit for the equity in a home that you don't own yet.

Check with several mortgage companies in your area. Good luck.

Rick Lanicek
Mercantile Mortgage Corp
17950 Preston Rd Ste 50
Dallas, TX 75252-5657
(972) 705-9721
(800) 256-0817 Ext 202
Mobile (214) 552-6125
eFax (972) 692-7260