1st time home buyer..Do you think we would be approved? NJ

[stefnian0426]

Hello everyone. 

I am looking for adivce/tips or just your thoughts. We are about to begin applying for a home loan but i want to make sure we are 100% ready to do so.

We currently rent a house (for the past 4 years now) and have found a house that is actually cheaper then what we pay now. ( $94,900 with $3,800 taxes) My husband is the one applying for the loan since i am working on paying a old medical bill (well fighting it first since i had insurance) He makes $43,500 yr. Self employed but doesn't deduct anything because he boss does. He has been at this job for over 5 years now.

We are going with a FHA loan and have 3.5% to put down which is a gift from family. Closing costs, we are hoping to add them to the loan. 

His credit score is 656, 645 and need to check on the last one. He has 3 things on his report..

1.bank of america 2013- 3 late payments- paid in full/closed (credit card)

2. capital one secured card $200- opened april 2014

3. victoria secret- through shopping cart trick $750, opened May 2014 i believe.

All toghether he has 3 inq.

We are going with our sisters broker and are able to provide last year of cell phone bills, last year of car insurance, last year of motorcycle insurance, last year rent rec. (money orders)

We dont have a savings account but are going to try our best to have at least 2 months mortgage payments before applying. 

I am the type that likes to be 100% ready and because this is a big step i am a little nervous i guess. Just wondering if anyone out there who works in the field, thinks we have a shot at getting approved.  Also if there is anything else we can do to improve our chances. 

[DallasLoanGuy]

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@stefnian0426 wrote:

Hello everyone. 

I am looking for adivce/tips or just your thoughts. We are about to begin applying for a home loan but i want to make sure we are 100% ready to do so.

We currently rent a house (for the past 4 years now) and have found a house that is actually cheaper then what we pay now. ( $94,900 with $3,800 taxes) My husband is the one applying for the loan since i am working on paying a old medical bill (well fighting it first since i had insurance) He makes $43,500 yr. Self employed but doesn't deduct anything because he boss does. He has been at this job for over 5 years now.

We are going with a FHA loan and have 3.5% to put down which is a gift from family. Closing costs, we are hoping to add them to the loan.  you cannot add costs to the loan. BUT.... seller can pay them up to 6% or purchase price

His credit score is 656, 645 and need to check on the last one. He has 3 things on his report..

1.bank of america 2013- 3 late payments- paid in full/closed (credit card)

2. capital one secured card $200- opened april 2014

3. victoria secret- through shopping cart trick $750, opened May 2014 i believe.

All toghether he has 3 inq.

We are going with our sisters broker and are able to provide last year of cell phone bills, last year of car insurance, last year of motorcycle insurance, last year rent rec. (money orders)

We dont have a savings account but are going to try our best to have at least 2 months mortgage payments before applying. 

I am the type that likes to be 100% ready and because this is a big step i am a little nervous i guess. Just wondering if anyone out there who works in the field, thinks we have a shot at getting approved.  Also if there is anything else we can do to improve our chances. 

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looks like the broker is using alternate credit to build the file.

yes, you have a good chance

[stefnian0426]

Thank you for the reply. I had just checked his experian report with shows a 690 credit score and has not added the victoria secret credit card yet.

He also has 50% used on his cap one card which i just paid off and added a $200 credit line increase. His cap one card has been on his report for the past 4 months.  So hopefuly when it reports end of this month/early next it will bump up a little bit.

We have a letter from our car insurance which stays we have been a customer since 2012- until recent and all has been paid. 

Also working on letter from verizon which also states 2012-recent. He also has motorcycle insurance for past year- it is small bill for the year paid in full but requested that as well. Rent rec. past year but a few i found from 2012 (same landlord).

That is really all we have since everything else has always been in my name.

Is alternate credit just as good as regular credit on your report?

Also thank you for the closing cost info. A while ago a women from bank of am. said I could add it in so i just assumed we could.

Do you think there is anything else we can do to help get approved? 

[ShanetheMortgageMan]

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@stefnian0426 wrote:

Is alternate credit just as good as regular credit on your report?

Also thank you for the closing cost info. A while ago a women from bank of am. said I could add it in so i just assumed we could.

Do you think there is anything else we can do to help get approved? 

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No it's not as good as traditional credit.  Usually non-traditional credit is used when there isn't much credit history at all, but it cannot be used to offset negative credit history... like "I've had bad credit in the past, but I've made all of my utility payments on time since then", that won't work.  Only re-established traditional credit can be used to offset past negative credit history.  Generally you need 12 months of clean credit, and if your husband only has 3 items on his credit report (two credit cards opened within the past few months, and a credit card opened in 2013 that has 3 late payments (when were those late payments?) and has since been closed) then it may be tough to get approved at this point.

[stefnian0426]

We just got his experian report

Current score- 690

-Capital one secured card- opened 4/14 with $200- Just added another $200 for total limit of $400- paid on time/never late.  ($200 increase not show on report yet)

-Bank of america- opened 9/12- 3 lates from march-may- paid in full/closed in 2013. 

- store card for $750 opened 4/14. $750 amount. (this has not shown on his report yet)

He has never had any collections/ other lates/ judgements.

He is not recovering from bad credit- he just never had any.

We have the rent rec., last year of cell phone payments, last year of motorycle insur, last year of car insur.

He has 2 inq. on his report which are from this year.

[ShanetheMortgageMan]

The late payments are the bad credit I was referring to.  They are over 12 months ago now, which is good, but he doesn't have 12 months of re-established credit yet, as he just started re-establishing it in April of this year.  By April of next year he should be good to go though.

I'd really look into writing a goodwill letter to see if BofA will remove some/all of those lates.