Mortgage Strategy

[Paul Farley]

Hi all,

I am trying to make a game plan for the next 2 years or so. I have two questions/topics I would like to get some advise on.

1. Current Mortgage

My mother passes away about 2 years ago and probate is finally coming to a close. My sister and I will be awarded the home. I am currently living in it and paying the mortgage. There is approximately $6,000 left on it. My sister just moved out of the home and did not want to continue paying the mortgage, so we drafted a quit-claim deed and I now will own 65% and she will own 35%. I was wondering if I should take out another loan to pay off the mortgage and make payments to the other loan or if I should just continue paying the existing mortgage the way it is set up now. The mortgage is in my mom's name and doing me no good in terms of gaining credit. Either way, I would wait until Probate is over and the deed is in my name. What would you do in this situation?

2. I am wanting to buy my own home. My goal is for something in the $200,000 range. I don't want to spend $120,000 on a home and sell it 2-3 years later because of outgrowing it. My fear is I don't make enough or my credit isn't good enough. Here are some factor that may help lead me in the correct direction.

-I have a 640 credit score - 1.5 years ago it was HORRIBLE at a 490, so I have been working really hard to get it in decent shape, though, I still have a ways to go.

-I make around $32,000 a year. I enrolled back into school to and am 2 classes away from my Associates degree which will allow me to at least get a little better paying job. Most likely in the $40,000 range, but I will lose longevity. On my resume it would show I stay with companies for a long time; not sure if that would help.

-Even though my income and credit aren't the best. I will have anywhere from $40,000-$50,000 I can use as a down payment. The only debt I currently have is student loans and 15% credit card utilization. 

So my question for this topic is what would I have to do for a lender to allow me to be approved for a $200,000 home? Is my income the largest determining factor that I need to increase or what would it be? I'm looking to be pro-active to allow myself to be able to purchase a home I want to be in for some time.

Thanks!