[Moneyhelp]

I need help with mortgage options.

My fiancé has TERRIBLE credit, like the worst it can be from old collections agencies, and he’s never had a credit card. He is the sole money maker as we just had a baby..I have amazing credit (850) but no income.

He is getting a large inheritance (50000), and his father has suggested they buy a home together for us to live in, or just his father buys.

What is our best option?

Thanks

 

[Mukhang pera]

Not much info to work with, but another possibility would be you and fiancé on title and as mortgagors, with dad as guarantor. But then, perhaps neither fiancé nor dad want you on title if you are not contributing purchase monies. A marriage agreement might address concerns in that regard.

 

[dougbos]

What is your fiancee's credit score? There are some lenders that will go as low as 550. Have his father take on a 1-year mortgage if he qualifies.. He pays it and you pay him each month. Take part of the $50000 and pay off old collections. After 1 year his credit may have improved enough for your finance to be able to be approved by "B" lender. Take 3 year term and continue to work on improving credit.

 

[OnlyMyOpinion]

Your best option at this time is to rent. Why would you consider buying a house with one income from someone who has bad credit. With the expenses of a new baby as well.
You say $50,000. Sorry but that is not a lot of money.

I'm not saying you should never buy a house, but at this point, from what little we know, it is too much of a commitment.

Save the $50K, sheltered in TFSA's, add to it and save more. Establish a 'saving habit' and get past the 'spending habit'. The credit score will improve in several years. Revisit home ownership then.

Let father do whatever he wants, but entering into a purchase with him is not likely to be a good idea either.

 

[Mukhang pera]

You say $50,000. Sorry but that is not a lot of money.

I was thinking maybe a typo, and she meant $500,000, and the plan is to buy in Vancouver or Toronto.

 

[marina628]

My housekeeper had horrible credit ,could not even keep a $500 credit card out of collections and even had a car repossessed .Last year she made a deal to pay the collection agent about 15% of what they were after in lump sum .Just removing that bad car debt got her over 600 fico ,the other 2 bad debts were under $1000 each and they just took $200 and part of the deal was REMOVING it from her credit.With a bit of cash you can probably repair and remove some of these old collection debts.She had these bad credits from 8-9 years ago but was paying small amounts here and there which is why they never did get off her credit.If it is $50,000 that is not alot of money given your circumstances and if Mukhang is correct that it is $500,000 then stay where you are and fix his credit first .He can get a Capital one card and most banks will give you a card if you can put the cash up as security , in fact knowing you will need a mortgage it gives them incentives to assist in rebuilding that bad credit file.

 

[AltaRed]

I echo staying away from home ownership for at least a few years, maybe several, yet. $50k is better spent investing it in a TFSA for a future down payment, or as an 'emergency fund' for unexpected expenses or a job loss. Babies can be expensive.

Sorry, but your finance is going to have to show he can manage money by getting rid of bad debts and building his credit rating back to reasonable levels. If it takes 5 years, so be it. Rent until you, as a couple, really have the resources to purchase and sustain a home purchase. His father's offer is precisely what is NOT required at this point. If nothing else, it enables past bad behaviour with no certainty it won't continue. Repeat, do NOT, encourage this idea.

 

[Zipper]

The Zippers have a FICO score of 845. We have been married 49 years next week. We have always paid all bills on time and have been mortgage free for decades.

I have no pity for scofflaws and deadbeats.

What are you doing with this guy? Do you really think he will change?

 

[AltaRed]

What are you doing with this guy? Do you really think he will change?

We shouldn't assume the fiance has not changed his stripes, nor do we really know current earning power. It just is irresponsible to think a $50k inheritance is enough to make changes in life decisions. It is a pittance in most regions of Canada (buying a house in a $170k* place like Saint John, NB could be exceptions).

* Average house price in Feb 2018 for Saint John was $171,596.

 

[OhGreatGuru]

Depending on the regional market, $50K could be a sizeable downpayment on a house, and father-in-law's thinking may be that his son is better off making payments on a mortgage than paying rent.

Paying off the old debt (if they are still outstanding) might be a better solution in the long run.

The more awkward question in all this is the OP's rights in the prospective property. This gets into hard questions about the stability of the relationship and whether or not she needs a cohabitation agreement.

As another comment to OP, I think your "good credit rating" is useless for determining mortgage qualification if you have no income. So, your fiancé and father-in-law have to come up with a financing solution if they proceed down this path.

 

[AltaRed]

Assuming 'fiance' means the couple is getting married, most provinces will bestow some property rights to her in the marital home in event of a split, especially if she is on title. If neither her or her fiance is on title, then they are effectively paying rent to the father on an investment property. Doesn't seem like this has really been thought through at all. At this point, we don't know if the fiance is still irresponsible with finances or not.

Nor have we heard anything from the OP since the first post.

 

[Mortgage u/w]

Zipper had the best post and advice.

Fiancé needs to either shape up or ship out. Poor credit usually means poor money management skills which is toxic in a relationship.

Good lucK!