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Old 03-01-2010, 09:00 AM
 
Location: Steilacoom, WA by way of East Tennessee
1,044 posts, read 3,524,887 times
Reputation: 692

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Howdy,

Until recently I was a full time student, now myself and wife have better jobs making $100,000 per year, we have a $3000 car note (keeping to rebuilding credit score), other than the car we have no debt, no credit cards, no mortgage, nothing.

Problem, due to 1 late payment a previous credit card went to 30% interest, in a stupidly stubborn move on my part I refused to pay that 30%, yes stupid. Went to collections and paid off less than owed (interest charges that were added). So my credit score is in the 500's now.

We live in a double wide on 8 acres (paid for) which is getting smaller by the day (1260 sqft) and we also own 26 acres (paid for) and another lot in a subdivision (paid for).

What we would like to have is a house in the 1800-2500 sqft range, that is paid for, but unless we can sell some of our land (no luck on that) we need to get a loan. Unfortunately a low fico score trumps, $100k income and $300k of paid for property.

Options? Wait for eventual better credit score, get a private loan in the meantime until score improves and refi later? Buy existing or build on land that we can't sell anyway?

Thoughts and opinions? We would really like to be in a larger place and finally unpack, we had moved from a 3000 sqft place into our current 1260 sqft while going to school and cutting expenses. I can't go back in time and fix the credit card issue, so what do I do now?

Thanks

Tony in TN

p.s. I have enough cash for 20% down on a new home and I'm a veteran (VA loan option)
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Old 03-01-2010, 09:06 AM
 
Location: Tempe, Arizona
4,511 posts, read 11,554,091 times
Reputation: 2179
You can't go back in time, but looking forward, you need to work on improving your score to at least 620 to have a shot at a loan. Consult with a lender on things you can do.

Also suggest you post in the Mortgage Forum.
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Old 03-01-2010, 09:18 AM
 
Location: DFW - Coppell / Las Colinas
29,920 posts, read 34,517,946 times
Reputation: 35918
Find a good local lender or independent bank who you can sit down and discuss your situation. Find someone who can see past your FICO scores.

Many large lenders have brainless clerks who process the loans. You need someone who can think outside the norm and doesn't base their entire decision on a credit score.
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Old 03-01-2010, 09:22 AM
 
Location: Steilacoom, WA by way of East Tennessee
1,044 posts, read 3,524,887 times
Reputation: 692
Thanks, in the days when I had a 780 score nobody cared what the score was, you could get a loan with no income shown. Now that I have plenty of income, all the lenders care about is the score. My fault for being stubborn, but I refuse to pay loan shark rates, now I'm paying in a different way

If I could sell that land I wouldn't need a loan anyhow.

Thanks again, and lessons learned the hard way are lessons in deed.

Any idea on length of time for a score to rise from mid 500's to mid 600's?

Tony

p.s. Moderator can move this to mortgage forum if more appropriate.
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Old 03-01-2010, 09:47 AM
 
Location: East Bay Area
165 posts, read 519,875 times
Reputation: 94
You might qualify for an FHA loan
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Old 03-01-2010, 10:40 AM
 
39 posts, read 104,449 times
Reputation: 36
You said you have no credit cards or no credit card debt? If you don't have any cards at all, then get a couple and use them twice every month for small ticket items. Make sure you pay them off each month! You will build credit fast.
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Old 03-01-2010, 02:40 PM
 
Location: Cookeville, TN
179 posts, read 380,068 times
Reputation: 143
I would go the hometown lender approach. Go to your local bank, or one that has a good reputation for community outreach, and sit down with them. Hopefully, they can do the real math and see that you're a good risk.

As far as building on your land, if you started today, you're at least six months out of moving in, maybe in that time you could rebuild your score enough to get your loan...
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Old 03-01-2010, 02:56 PM
 
Location: Salem, OR
13,740 posts, read 31,550,338 times
Reputation: 12105
I agree that you might qualify for an FHA loan. They will take less than 620 with a 10% downpayment...in theory. Finding a lender to do the loan is a whole other matter though.
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Old 03-02-2010, 06:44 AM
 
Location: North Carolina
1,764 posts, read 2,223,841 times
Reputation: 1866
I agree with the suggestion of getting a couple of credit cards and pay them off. I was in your situation after college, except I didn't have a spouse or a 100K+ job. I was tired of paying rent, though, so I applied for a few department store cards and paid them off each month. In fact, I paid them off before the due date so I did not incur any finance charges AND it built my credit score. Make sure you cut the cards up once you get the mortgage. It's very easy to shop when you have plastic in your pocket.

All the best to you.
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Old 03-02-2010, 07:28 AM
 
1 posts, read 6,588 times
Reputation: 11
Negotiate a contract for deed w/ the seller of the home, on a term negotiated of say 5-10 years max, and then you just re-finance the home once you experience the balloon effect. It's golden, in todays risky market, it works well for both parties involved
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