Buying a Home with questionable credit

[Anonymous]

Hi everyone, I'm new to the forum but have been reading all I can and soaking up lots of information. I thought I'd post my situation to see what specific advice I could get.

I'm looking to get a home loan for a condo (as my primary residence) of around 80-100k in the next 6-18 months with 20% down, in San Diego.

My gross income is 27500, I work full time with no debt or monthly payments (no loans).

I currently have 17k cash and assets of 3k (used car). I live at home so bank about 1400 after expenses (I live a frugil lifestyle).

I was dumb and waited to get a credit card 'till fairly recently. Oldest account is 1.4 years old, average is 1.2 years. I have a Capital One MC and Kohls card. I was 60 days late on my Kohls card when I first opened it, so that killed me. That happened 0.9 years ago.

I have 7 hard inquiries on my credit.

My credit score is around 650.

I was planning on getting another credit card (my aunt/realtor keeps insiting I need another to get a loan), and then an installment loan from my credit union just to have one. One of those low interest year long ones for maybe $500-1k (strictly to build credit).

So any advice? Do you think I can get a home loan for under 4%? Do my plans of getting another card+ installment loan kill my chances? I could technically stay at home another year to save and rebuild if that's my best bet.

I appreciate any feedback .

[tooleman694]

Yeah your credit is very very thin, id get another card and hang out a bit. Then you should be able to do it.

[nmjacobs]

I would suggest getting recommendations for a lending officer in your area.  We did this last week to see how close we were. It turned out my husband's middle score (636) is good enough to get one of the loans (needed 620) and we just needed to pay off three small collections. He said they just need to show $0 balance. It did not cost anything to meet with him and we got a copy of the credit report with everything on it.  We are choosing to fix everything now before we fall in love with a house. You never know how long it will take to be updated.  We are hoping that his score will go up to 640 after everything is paid and then we can qualify for even more loans.

[Anonymous]

Okay thanks tooleman. I had been applying for them but kept getting denied. I tried Costco's credit card twice- once a year ago and then again about a month ago. Got denied both times. My main hesitation was to decrease my average credit length and get another hard inquiry but I guess if I wait 6-12 months it will be better in the long run. I've just been getting antsy about getting a house asap.

[Anonymous]

Thanks for the suggestion Jacobs. I actually emailed the lender my Dad went through recently to get a second home. I haven't heard back from him but am interested in seeing what he has to say.

[tooleman694]

Take out a 1000 dollar secured card at your bank.

[MovingForward_2012]

Is that 650 score from the myfico site? Did have a broker pull your credit yet to see what your other scores are? If so, could you post all 3 scores?

Once your 60 day late is 12 months old, you can qualify for a mortgage if your mid fico is 640. Some lenders have a requirement of 620 and in a few cases a 580. But most lenders want to see a 640 and some want a 660, 680, or 700 depending on the type of loan/program.

A general rule of thumb is you can qualify for 4 times your gross income. So you are looking at a max home price of $110,000.

[Anonymous]

Okay toolman thanks for the suggestion, I'll talk to my bank as soon as I can.

Moving Forward, my score according to experian is 646 (I subscribed to them). I got all three scores recently but can't seem to find them right now. They are all around there though. I thought it was 1 year for that 60 day late card- thanks for confirming for me! That's great to hear. It will probably be a conventional loan.

[tooleman694]

That experian score is fake and could be way way off.

You need a lender to pull your Ficos.

[Anonymous]

When I got a declined letter from my credit union for their visa card they said my credit score was in the 670 range. I'm not sure who they pulled that from though. (Can't believe they declined me with having 16k in their bank and having a 670 but oh well).

On a side note, are you essentially saying it's worthless to have a membership with experian? It's $8 a month.