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Old 01-27-2008, 03:17 PM
 
Location: Casa Grande, AZ (May 08)
1,154 posts, read 1,934,895 times
Reputation: 793

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SO, I ve searched the forum and so far havent found any exact answers to my questions so...if this stuff has already been answered somewhere...I apologize!

Here is my goal...move into a new build (or spec - see post on that topic over in real estate forum) in summer...timing can moved as needed...mostly later as opposed to too much earlier.

Looking to buy a 100-125K house. Single family, owner occupied. Home is in AZ.

Current FICOs 674 682 701 and going up. I have one last major negative which will drop off the report in May/June and my current credit card debt ratio is about 43% (Christmas purchases! as of this report but will be about 35% (or less..thats one of my questions!) in a couple months.

Currently about 2K in savings and 2K in Health Savings account but should be able to comfortably put together 5K within the next few months (plus the 2K in HSA).

Employed in sales with base+commission with documented 2 years of income of 48-50K and this year so far appears to be on same track (in other words my paystubs for 08 should be able to show this years income will be about the same or more).

If I were to make NO progress on credit card debt my current balance is $2500.00 so the min payments would be less than $100.00 per month.

Only other recurring debt is $300.00 per month car loan. 1 year into that loan.
Questions are:

#1 - Will paying off a bigger chunk of the credit card debt make a big enough difference in my FICO to get a better rate, or would it be better for me to make min payments on those during this process so I have more liquid cash? My belief is that at current rates I wont have an issue with the 28/36 ratio and if I go FHA Im well within the 31/41 ratio even if I dont make much progress on the CC debt. Im thinking maybe better to keep what I woulda put towards that normally into bank for now?

#2 - Is the HSA account usable as reserve funds? I know 401K is, but not sure about HSA?

#3 - Should I be pushing for FHA loan (Been many years since my last home ownership) since in almost any scenario Im still gonna be pretty slim on closing cash/reserves? Or am I better off than I thought and I can get a competitive conventional loan in my situation? Isnt the FHA process much more of a pain to go through?

#4 - Anyone know if I would qualify for any down payment assistance? Ameridream or otherwise?

#5 - When buying a new build, when does the paperwork get approved and at what point do I need to be firm with how much cash I ll have to be included in the process etc. At signing of contract, or closer to close date? I know the interest rate is tough to get locked 6 months out, so Im wondering if in that case I have a little more time to put cash together etc? I read any liquid money has to show in your bank account for at least 2 months prior to closing or it cant be verified?

#6 - Finally, I see alot of back and forth as to whether mortgage broker/bank/builder finance companies are better...HELP!

Thanks for any input. I know I asked alot of questions, but hopefully the answers will be more straighforward....I do appreciate any help.

John
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Old 01-28-2008, 02:59 PM
 
Location: Casa Grande, AZ (May 08)
1,154 posts, read 1,934,895 times
Reputation: 793
Just a question for the board in general? Was in bad etiquette (sp?) to post all this together like this? Im curious since I ve rec'd no responses to ANY of the questions where other posts seem to have been responded to very quickly with similar questions?

Didnt mean to be a bad poster if I was! I ll take answers to ANY part of the questions I had.

Thanks.

John
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Old 01-28-2008, 03:20 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 11,756,958 times
Reputation: 975
I posted my answer yesterday..it was long...not sure why it didn't come up!
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Old 01-28-2008, 03:51 PM
 
3,353 posts, read 7,492,981 times
Reputation: 1406
I was waiting on someone else to respond. I would guess HSA money would be treated like 401k as far as reserves, but have never run into it. Any of you lenders out there know??
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Old 01-28-2008, 04:01 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 11,756,958 times
Reputation: 975
I dont think you can't count that account ....I think you lose it at the years end. Most of the companies I work with told me I would lose it if I didnt use it within 12months or that year.
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Old 01-28-2008, 07:55 PM
 
6,586 posts, read 16,580,531 times
Reputation: 3009
HSAs are different than flexible spending accouts. HSAs are yours to keep. Flexible spending accounts you lose at the end of the year. Our HSA rep told us if we use the HSA money for non-medical expenses it would be taxed. I know several folks who have used their HSA card for non medical expenses.
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Old 01-28-2008, 08:18 PM
 
Location: Casa Grande, AZ (May 08)
1,154 posts, read 1,934,895 times
Reputation: 793
That is correct. Health Savings Accounts work similarly to 401Ks but not exactly. In exchange for selecting a High Deductible Health Insurance plan (mine is 2500 bucks a year!), the govt allows you to put in up to 2500 bucks a year (more for families), PRETAX and tax free forever (even after 65) if used for medical expenses. Monies you dont spend on medical are invested in the fund of your choice and continue to grow tax free forever. Its a great deal for generally healthy people. You can even use the money later to pay for your medicare part b payments etc., again all tax free!

What I didnt know until I finally did the research today is whether you could use the money and then replace it one time for home purchase as you can with IRA/401K accounts. It turns out you cannot do this with HSA funds at present.

Thanks for the help on the other topics....anyone care to hazard a guess with the info listed above as to whether I ll have any problem getting FHA approved and at what level of rates?I know we cant know what the rate will be exactly five minutes from now, but think I ll be in the prime rate level, or will I be paying a premium (other than the up front PMI which Im aware of).

Thanks again for the participation that is coming in now.
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Old 02-01-2008, 06:06 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 11,756,958 times
Reputation: 975
there you go


Quote:
Originally Posted by sh9730 View Post
SO, I ve searched the forum and so far havent found any exact answers to my questions so...if this stuff has already been answered somewhere...I apologize!

Here is my goal...move into a new build (or spec - see post on that topic over in real estate forum) in summer...timing can moved as needed...mostly later as opposed to too much earlier.

Looking to buy a 100-125K house. Single family, owner occupied. Home is in AZ. Your FHA rate may have price hits if the loan amount is less than 100 with most lenders...120k with some lenders.

Current FICOs 674 682 701 and going up. I have one last major negative which will drop off the report in May/June and my current credit card debt ratio is about 43% (Christmas purchases! as of this report but will be about 35% (or less..thats one of my questions!) in a couple months.
FHA doesnt have a credit score requirement so you can have a 350..and still get the same rate as someone who has an 850. FHA looks at the last 12months...no new collections, credit lates, etc. They can overlook this if you have compensating factors such as a credit score above 620, larger down payment, and lots of reserves

Currently about 2K in savings and 2K in Health Savings account but should be able to comfortably put together 5K within the next few months (plus the 2K in HSA).

Employed in sales with base+commission with documented 2 years of income of 48-50K and this year so far appears to be on same track (in other words my paystubs for 08 should be able to show this years income will be about the same or more).

If I were to make NO progress on credit card debt my current balance is $2500.00 so the min payments would be less than $100.00 per month.

Only other recurring debt is $300.00 per month car loan. 1 year into that loan.
Questions are:

#1 - Will paying off a bigger chunk of the credit card debt make a big enough difference in my FICO to get a better rate, or would it be better for me to make min payments on those during this process so I have more liquid cash? My belief is that at current rates I wont have an issue with the 28/36 ratio and if I go FHA Im well within the 31/41 ratio even if I dont make much progress on the CC debt. Im thinking maybe better to keep what I woulda put towards that normally into bank for now? Your credit score has hits if you go over 35% over the credit limit...and over 50% over the limit. If you plan to pay this ..then do it 2months in advance of applying. Some lenders may still count this debt against you because it is 'revolving'.
Liquid cash is always the best thing to have .... although FHA doesnt require any reserves. My realtors usually have the seller pay closing costs.

#2 - Is the HSA account usable as reserve funds? I know 401K is, but not sure about HSA? FHA doesnt require reserves......this might be lender specific. Which means that each lender may have their own rules concerning this.

#3 - Should I be pushing for FHA loan (Been many years since my last home ownership) since in almost any scenario Im still gonna be pretty slim on closing cash/reserves? Or am I better off than I thought and I can get a competitive conventional loan in my situation? Isnt the FHA process much more of a pain to go through? FHA is very easy if the loan officer knows what he's doing. The first few days is where most of the work is...(If you know what you're doing) FHA only requires 2.25% as a down payment....you can have the seller pay the closing costs.

#4 - Anyone know if I would qualify for any down payment assistance? Ameridream or otherwise? Nehemiah...if it still exists. All of my borrowers have at least 2.25% to put down...

#5 - When buying a new build, when does the paperwork get approved and at what point do I need to be firm with how much cash I ll have to be included in the process etc. At signing of contract, or closer to close date? I know the interest rate is tough to get locked 6 months out, so Im wondering if in that case I have a little more time to put cash together etc? I read any liquid money has to show in your bank account for at least 2 months prior to closing or it cant be verified? You would want an approval upfront...but it maybe really hard since you will need an actual FHA Case # for a fully underwritten loan. FHA Case # is ordered with full property address...and the name of an FHA appraiser. FHA allows for gifted money....most lenders I use require the funds to have been there 1month.

#6 - Finally, I see alot of back and forth as to whether mortgage broker/bank/builder finance companies are better...HELP!
You may no choice but to go with the builder finance company if they're offering incentives for the home or closing costs. You can always talk them out of it but most ppl dont know how.

Thanks for any input. I know I asked alot of questions, but hopefully the answers will be more straighforward....I do appreciate any help.

John
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Old 02-01-2008, 06:12 PM
 
Location: Casa Grande, AZ (May 08)
1,154 posts, read 1,934,895 times
Reputation: 793
Thanks! Obviously disregard my post in "your" thread! LOL

Yeah, as for the gifting I am applying for a state of AZ down payment assistance grant that will cover 5% of the down payment AND either a 1% below market rate or 2000 annual tax credit...I couldnt believe with my income I could qualify...and I havent been officially approved, but they say I meet the guidelines...sheesh.

One last thing on the potential approval.....with those scores (to refresh 674/685/701) is it likely I ll get approved using the FHA AUS, or will those really old negatives cause to get maually approved?

Promise, thats it....for now anyway!

Thanks
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Old 02-01-2008, 06:14 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 11,756,958 times
Reputation: 975
depends on the negatives
how much?
how old?
what kind of collection? (medical, credit card, repo)
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