gift of equity or contract for deed?

[babynurse31]

I'm not sure the best way to proceed so I thought I would ask the experts. Due to credit problems in the past my MIL got the loan for us on a house. The house is worth appx. 160,000 and the current mortgage is 105,000. We would like to transfer/purchase the house so that it is now in our name. Would we be better off to do it as a contract for deed and then refinance in our name in a few months or have it set up as a gift of equity and attempt to get financing now?

We make $75000 a year and our DTI is 23%

Our credit is still not great but drastically improved. My score are 563, 595, 626; DH's are 613, 621, 647. We both has 3-4 cc with no lates in last 2 years. 1 car loan 7 months old-no lates. 1 car loan with several 30 day lates in late 2004 (has 2 payments left).

Baddies-
DH-cap one settled for less 6/04, 2 medical co $898 12/02, co $200 7/04
ME-2 medical CO $1095 7/01, 1 co $85 4/04

What would be the best way for us to go? Could we even qualify for a mortgage at this point?

I could pay these co if I had to, but prefer to do it at closing if allowed so as to not risk tanking my score even further before the mortgage loan.


Sorry to ramble so much :lol: I would appreciate any advice you could give me.

[firstsource]

You will have no problem getting a loan in your own name now. Your scores are good enough and the LTV (Amount of the value of the home vs the amount of the loan) would be low enough to make it work with decent rates also.
Charles

[babynurse31]

Oh great thanks! What ballpark are we looking at rate wise? Also, how much money do we need to have available for closing costs & cash reserves?

Thanks!

[firstsource]

It is hard for me to quote rates without all the details, so I don't on the board.

I would probably go the "gift of equity" route. Be careful to have the sales contract include closing costs, up to 6% of the sales price. That will cover all of the costs, and if the costs are less than that (and probably will be) your Mom will probably give you the excess.

Charles

[AaronE]

I would also go the gift of equity route. You've got enough compensating factors that DU (automated underwriting) should take you but once again, I don't have anything in-front of me just as Charles said.