wondering if i would qualify for an fha loan? (low income, for sale)

[rbell41]

My husband and i have recently decided to try and get a home maybe,,, my beacon is around 620 and his is probably around the same thing we make 54,000 a year together and have alot of good credit with finance companys and kay jewelers and badcock, but we do have a couple of small credit cards that recently went bad (not charged off yet) when i was between jobs about 6 months ago and i gave my suv back (gas cost and high payment made it impossible to afford) but i got another car at the same time and payments have never been late, i can possibly pay off the small credit cards and i have 6000 dollars to put down. does anyone think i can still get financed???

[jlboney]

It's hard to say for sure, because I am not a lender. Lenders have different programs depending on which bank they are with, so you may want to speak with one and see what they can do for you. I have seen a few people get approval here lately that I didn't think would be able to, but we found a lender that could do it. Call around and see if there is one out there that can help.

[waccamatt]

I have worked in banking for 20 years. The first thing to do is to stop borrowing from finance companies and furniture and jewelry companies as soon as you payoff the loans that you already have. Become a credit union member if you aren't already and move your borrowing there (at much, much lower rates) and after a year or two you'll be ready to get a reasonable home mortgage. I don't want to sound harsh, but good credit and finance companies don't go together. If you have recently had credit cards go bad you should not be buying a home you should be getting your credit in order.

[rbell41]

I guess the ? is now, if i pay off those credit cards which is only about $2000 and have them put it in writing that they will change the info on my credit report to paid/$0/closed instead of late and then i settle with the company that i turned my suv into and have them do the same and and i only owe about 4 more months on my finance companys, how long will it take before i could be considered for an fha loan?

[jlboney]

I'm sure that waccamatt might be able to give you a better answer on this one, I hate to speculate. You may want to contact on lender or bank and see what they have to say and when or if they can qualify you.

[waccamatt]

Originally Posted by rbell41

I guess the ? is now, if i pay off those credit cards which is only about $2000 and have them put it in writing that they will change the info on my credit report to paid/$0/closed instead of late and then i settle with the company that i turned my suv into and have them do the same and and i only owe about 4 more months on my finance companys, how long will it take before i could be considered for an fha loan?

It doesn't happen overnight. "Settling" a past due loan, but not paying it in full may not remove the fact that you've had late payments on that loan. You will need to have a period of good credit (no late payments) before you're going to qualify for a mortgage with a reasonable interest rate. Even if you payoff that SUV that you turned in, the fact that it was a repossession will not change, it will just show that the deficiency balance has been paid off. Turning your credit around is not a 4 month process, it will take patience and a couple of years of all timely payments.

[Brandon Hoffman]

OP, to really find out you need to talk to a lender. If you don't qualify at this time, the lender will be able to counsel you on the best way to get a qualification. It may not be to your benefit to pay off the full amouts. With your credit cards you just want the balance under 50% and show a low income to debt ratio. WaccaMatt is right about all the open credit lines and the repossession however with an FHA loan that alone does not disqualify you if your credit score is high enough. It really depends on what is showing.

I disagree with Matt on the interest rate bit because with an FHA they aren't going to jack the rates up like they would with a subprime conventional. Some other loans to consider are State Housing or USDA. It doesn't have to be a couple of years, it could be a 4 or 6 month process depending on your assets and ability to put down a good down payment. It could be that you can get a loan now. Go find out.

Your next step should be finding a Realtor you like and have them get you in touch with a lender that would fit your needs. Don't just walk into a bank and ask for a mortgage. That's a great way to get a terrible loan officer.

[seamama]

In response to the previous post, I would personally feel more comfortable going to my credit union and asking for their help in assessing whether and how much I could get a loan for rather than getting the realtor first. The realtor is hoping to make a comission off a sale so of course they're going to try to help you find something to buy and I wouldn't trust that they had my best interests in mind when referring to me a lender. My credit union, however, I trust more- they don't want to take on a loan if they think I can't pay it b/c then they'll get stuck w/ having to foreclose on the house. Now of course under that logic we wouldn't have gotten into this whole housing crisis but I do believe that in general, esp. a smaller local credit union is going to be more trustworthy.

[jlboney]

A lot of that depends on the credit union. I have heard some horror stories about those also. Most Realtors, like myself, are not really concerned with what lender you go to. I have a lender that I work with the majority of the time, but if someone I am working with would rather talk to another lending institution, I have absolutely no problem with it. I just require that people I am about to work with talk to someone on the lending side, since there is no reason to run around looking at a ton of homes for sale only to find out that the buyer can not qualify for a loan.