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Old 10-03-2009, 02:23 AM
 
Location: Phoenix
162 posts, read 304,323 times
Reputation: 44

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My fiance and myself are looking to buy a condo, townhome, or possibly a house. We have worked on our budget for the last few months, and we feel are ready to take the next step and purchase a home.

We have used a few online calculators, and it looks like we can afford around $80-$90k for a mortgage no problem, and we found a ton of condos in our price range in the areas we like.

Our concern is if we will even qualify for a mortgage? We both have a few years of credit history, hers is better than mine, with a score of around 600, and mine is around 450 but continusously going up since I got my debt in order.

We are looking to buy before the end of the year and take advantage of the current tax credit of up to $8,000.

We bring in around $2200 a month after taxes between the two of us, so we are looking to spend around $800/month tops for mortgage, tax, and insurance.

Thanks in Advance!
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Old 10-03-2009, 06:52 AM
 
Location: Fairfield, CT
5,533 posts, read 8,190,931 times
Reputation: 5775
A credit score of 450 is pretty low, so I'd be concerned about qualifying. Even 600 is not a great credit score, but it's decent and could probably qualify you for a mortgage, even if not at the most attractive rates. But with a 450, you might have to wait a bit to get things in order before you can be approved. The only way to find out is to talk to your bank, or a mortgage broker.
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Old 10-03-2009, 07:56 AM
 
Location: Phoenix
162 posts, read 304,323 times
Reputation: 44
I know it's low, and I am surprised how quickly it dropped to 450, I used to be at 720 just over a year ago. I lost my job, got behind on bills, and paying rent to keep my place came first, which meant no money for CC bills, so I got 90 days behind on 2 of my cards that were maxed out, and I am now finally getting the balances back down below the max.
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Old 10-03-2009, 08:05 AM
 
11,151 posts, read 13,797,303 times
Reputation: 18791
One thing to remember with condos is that there will be an association fee to pay on top of the mortgage. These can range from a low of under $100 to upwards of several hundred dollars per month. Given the price range of the units you're looking at, I'm sure the fee would be on the lower side -- but make sure you know what it is and add it to your budget.
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Old 10-03-2009, 08:43 AM
 
Location: Fairfield, CT
5,533 posts, read 8,190,931 times
Reputation: 5775
Quote:
Originally Posted by Sensimilla View Post
I know it's low, and I am surprised how quickly it dropped to 450, I used to be at 720 just over a year ago. I lost my job, got behind on bills, and paying rent to keep my place came first, which meant no money for CC bills, so I got 90 days behind on 2 of my cards that were maxed out, and I am now finally getting the balances back down below the max.
Losing a job is hell on the credit rating, especially if you go into the situation with debt and little savings.

I don't know your situation well, but might you be better waiting until you save more money and get completely out of debt? A house is a big commitment, and if something else happens with your job, and you didn't take the proper precautions, you could easily end up in foreclosure. The fact that you got into trouble so quickly after losing your job could indicate that you're not quite ready to take on this big commitment. Sometimes waiting is better. Many of the people who got into trouble with foreclosures were people who didn't want to wait until they were truly ready to buy.
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Old 10-04-2009, 06:41 PM
 
Location: MID ATLANTIC
7,598 posts, read 17,629,190 times
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I agree with the other comments, most lenders are going to want to see that you are back on your feet with 12 months of "on time" payments.
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Old 10-05-2009, 02:12 PM
 
Location: Niceville, FL
7,282 posts, read 15,293,603 times
Reputation: 7029
I'll agree that waiting and saving for a year or two is probably the best thing for you to do right now. It's unlikely that the housing market is going to see 20% gains anytime soon, and as for that whole 'you throw away money on renting', if you go look at the amortization charts, you pay down a very marginal amount of principal in the first couple of years of a 30 year loan.
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Old 10-09-2009, 06:58 PM
 
4,248 posts, read 10,233,448 times
Reputation: 3110
Owning isn't all that.
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Old 10-09-2009, 08:47 PM
 
Location: I think my user name clarifies that.
8,293 posts, read 22,466,140 times
Reputation: 3869
Quote:
Originally Posted by Sensimilla View Post
My fiance and myself are looking to buy a condo, townhome, or possibly a house. We have worked on our budget for the last few months, and we feel are ready to take the next step and purchase a home.

We have used a few online calculators, and it looks like we can afford around $80-$90k for a mortgage no problem, and we found a ton of condos in our price range in the areas we like.

Our concern is if we will even qualify for a mortgage? We both have a few years of credit history, hers is better than mine, with a score of around 600, and mine is around 450 but continusously going up since I got my debt in order.

We are looking to buy before the end of the year and take advantage of the current tax credit of up to $8,000.

We bring in around $2200 a month after taxes between the two of us, so we are looking to spend around $800/month tops for mortgage, tax, and insurance.

Thanks in Advance!
First of all, don't disregard the age-old rule of thumb: NEVER spend more than 1/3 of your monthly take-home pay on housing - and that includes all escrows, utilities and repairs.

It sounds to me like you're kind of bumping at the top end of that.

Second, both your credit scores are fairly low - especially yours.

Third, you won't know unless you go to a bank and talk to a mortgage loan officer. We can all sit here and speculate, but we're not the ones making the decision.


My guess is that you're about 50-50 candidates for getting a mortgage loan.
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Old 10-10-2009, 12:46 AM
 
Location: Phoenix
162 posts, read 304,323 times
Reputation: 44
Quote:
Originally Posted by danieloneil01 View Post
Owning isn't all that.
Why? I can make modifications to the condo, and hopefully sell it in 5-10 years to buy a house.
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