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Sit down and do the math to avoid financial problems in the future. Calculate how much you will be able to afford to pay for a house each months (incl. all bills related to the house - HOA, CDD, taxes, mortgage, PMI). Don't forget to factor expenses related to kids.
I really don't think you will be able to go with conventional loan due to your low credit score. To get a pre-approval, lender will have to run your credit report check again otherwise they will give you pre-qualification letter which means nothing. FHA loan - only if you have 20% down to avoid PMI for the rest of your loan life.
$$ x 2.5 income sounds good. I would rather look at it from another angle. What if you are going to loose your job, how much would you be able to pay? How long?
Also, make sure you will have enough money left on your account for closing and escrow.
We bought for the first time about 12 years ago, and I worked with a loan officer at BOA that an attorney friend referred me to. We had been quoted an interest rate of 10% by someone we had just blindly called at the same same bank. The woman I actually went in and spoke with was wonderful. She liked helping people obtain mortgages and she did everything she could to get us a lower rate, which ended up being 5.5% on a 30 year, and then helped us refinance for 3.75% on a 7 year ARM. If you can find a good loan officer at the bank from which you wish to get a mortgage or a really good mortgage broker, they will assist you with credit issues.
I realize you know that creditors look at the score and dont realy care about your unique situation but your not a good risk because you have unpaid bills despite what you may think. overall though your fine with fha, your total scores should average out to 620 thogh i have heard htey are upping fha to 640 so you may just have to shop around lenders.
yeah buying a first place is scary. when i started looking i had no idea if i could even get a mortgage but all worked out. wish you teh best of luck
Homebey6er, dmk: It doesn't make sense for me to pay those old collections from a credit score point of view, and I will be stuck with a derogatory (albeit satisfied) account for more years in the future, rather than it coming off completely rather soon. I thought that too, then was strongly advised not to do so, as it could hurt your score more than anything, and my own research supported that.
With an attitude like that, I sure as hell wouldn't approve you for a mortgage. Pay your bills, deadbeat...
It doesn't make sense for me to pay those old collections from a credit score point of view, and I will be stuck with a derogatory (albeit satisfied) account for more years in the future, rather than it coming off completely rather soon. I thought that too, then was strongly advised not to do so, as it could hurt your score more than anything, and my own research supported that.
You lost me, here. "It doesn't make sense for me to pay those old collections"? So, you know you owe the money, it is a debt that you incurred -- and yet, you somehow managed to gather $20,000 for a house, but not to pay your debts. So what if they are in collection? They ARE your debt, and you've been ignoring it for over 5 years. So, your credit score is more important to you than your obligation to fulfill your debts? Gee, that will give any lender a warm space in their heart for you. "As long as my credit report is ok, I don't care who gets screwed."
Does your fiance' work? Is yours the only income being counted, here? How is your fiance's credit?
As you explain your situation and finances, it sounds quite unlikely that you'll get pre-approval. Pay off your debts and your credit score will improve. If you put off purchasing for a few years, you will be in a better position to purchase a more desirable home.
Quote:
Originally Posted by nonpartisan1
That was a previous America. Welcome to the new one!
I suppose this is an apt description of the bubble years--Clinton/Bush's "ownership society," when even a dog could qualify for a mortgage. It's much more difficult to meet lending requirements today, as so many posts on this forum attest.
Last edited by Old Monkey; 10-10-2013 at 01:37 PM..
Reason: typo
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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I will admit I have no idea how credit scores are arrived at. I suspect black magic.
6 years and still dinged? I also suspect there are a few skeletons in the closet.
Perhaps a credit counselor in in your future.
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