Brent Said:

I am trying to buy a family home from my uncle, but I have credit problems.?

We Answered:

Well,
You at first may want to assess your financial/credit situation before making any hasty decisions. We as lenders look at four major parts when we are approving someone for a mortgage-Income, Assets, Liabilities, and Credit. Your credit score is a number that we, as lender's, look at to determine one's ability to pay back a debt. How did your score get to 520? If you're "unemployed", then how do you plan on making the monthly mortgage payments?
These are things that we look at when making a decision to loan or not to loan. If you were a bank, would you lend around six figures to someone who has a terrible credit track record and no job?

If this is something that you still would like to pursue, there are options. With your credit score where it's at, most lenders could get you about 75-80% of the value the home. You could obtain this mortgage, and then talk your uncle (if he has enough equity) into financing you the 20-25% portion of the purchase price. It's called "seller's second financing".

This is how it would work:
Your uncle wants $100K for the property. I know you say it's worth $175K, but if it needs work it will most likely not appraise for that. But let's say that it appraises for $150K. You secure a loan for $120K (80%) and your uncle finances you the $30K (20%). Since your uncle only wants $100K, he gives you the difference back, and you walk away with (in a perfect world) $20,000. The "seller's second" financing is just to show on paper that you have 20% down, since lenders can only qualify you for 80%, otherwise you would have to come up with the 20% in cash, and from the sounds of it that won't be possible. Your uncle "throws out" the second mortgage at closing. It only has to be notorized at closing, it doesn't have to be recorded with the county or state. Since you bought the place for "$150,000" it doesn't hurt the surrounding homes values, because if it sold for $100K it would bring down the values of neighboring homes.

I would honestly tell you to re-think your motives here, I think you are putting the cart before the horse and are looking to acquire a LOT more debt just to get a dump truck. How much is a dump truck? $10,000? So, in essence you want to take on a six-figure debt to buy a $10,000 dump truck? Doesn't make sense to me...