Your Advice Please

[Dave]

Hi,
I recently registered with my city for home buyer's assistance for low income individuals. I make approximately $13,000-$17,000 a year. My credit is fair, I have about a 600 as my credit score and I want to proceed with the process for getting a mortgage.

I have some money in savings (amounting to just over $2000) and I have met all the city's minimum requirements, in terms of employment history savings etc. The thing is the city now requires I show them three letters of recommendation to proceed with the loan application and I only have two letters of recommendation. They are saying I won't qualify with 2 letters although I meet all the other requirements. They say the bank who processes my application will need three letters and besides my income is really low. My thought is, I know my income is low, that is why I went through the city's program for home buyers assistance. Can they actually disqualify me because of that final letter of recommendation being missing?

I was thinking that based on my credit/income and by virtue of the fact I'm buying through the low income program my city has, I would qualify for a mortgage to buy a condo at least. The city is sounding like they don't want me to go further with the application. What should I do? Do you think I could qualify for a mortgage for a condo?

Looking forward to your response.

Dave.

[doyle]

Dave, personally speaking, I would give you the loan based on one fact alone....you know how to spell and form proper sentences. That's getting rarer and rarer these days.

But seriously, a lot depends on the condo price, and whether you have other outstanding loans. I don't think them asking for a third letter of recommendation is asking too much. The lending institution is really sticking their neck out by making such a risky loan. To you it may not seem risky, but in reality it is.

Having saved $2,000 with your income is quite commendable, but I don't think a lender in the open market would finance you, at least not without a high interest rate. Try and get the third recommendation, if that's your only hurdle towards owning instead of throwing your money away renting.

Keep us updated.