Mortgage Help

[LateNight72]

I'm trying to help some friends purchase another home. They moved a few years ago and have been renting houses since.



PLEASE DON'T: Tell me the obvious. I know they're the reason why people like you, me and this country are in this credit crisis, etc. This thread isn't about that, if the thread turns to that, hopefully a Mod can help it stay on track.

The problem: They have terrible credit. When they moved they had to short-sell their house. They had a 2nd Mortgage on the house also, if that matters. They also had a few personal loans and credit cards of various degrees which they defaulted on, due to being laid off. One of which they are still dealing with. They also only have a 5%-10% down payment.

The situation: They are looking at a house that is for sale around here that is likely to be short-sold. The asking price is below what my friends are making in a year's salary, combined. My friends have rented two separate houses now on 12-Month contracts, and have perfect payment history for both. I imagine it wouldn't be hard at all for them to get signed/notarized affidavits of their payment history.

The question: They obviously can't just walk into a Mortgage brokers office and get a loan, can they? What (if anything) can they do to get a loan for the house?

The big problems I see is that they can probably only scrounge up a 5-10% down payment, and they have s*** for credit history. Does anyone have a recommendation as to what they can do? I really have very little knowledge of the mortgage industry. There's something in the back of my head that says "their screwed for a long time".

Even doing a 15 year FRM @ 15.00% interest, they can still afford it, as it's less than they're paying for rent right now! They can afford up to 20% interest, if they really needed to.

Thoughts?


I appreciate all serious feedback. I'd love to get them into a house of their own, but their previous poor choices might prevent that.