HELP I NEED ADVICE

[Anonymous]

I HAVE BEEN READING THESE FORUMS FOR A FEW DAYS AND ALL OF YOU GUYS SEEM SO SAVY.  CAN SOME ONE BREAK THIS WHOLE PROCESS INTO STEPS?  I AM LOOKING TO BUY A HOUSE IN A FEW MONTHS CURRENT SCORE IS 597 WANTING TERRIBLY TO RAISE MY SCORE.  BEEN CURRENT ON ALL BILLS SINCE APRIL OF 2007.  HAVE A CHARGE OFF FROM 2005 FROM A VAN I HAD REPOSSED (HAD TOUGH TIMES HUSBAND LOST JOB OF 100,000+ YEAR AND I WAN IN NURSING SCHOOL).  IN THE PAST AROUND SAME TIME SOME SMALL HOSPITAL COLLECTIONS.  SINCE THEN THOUGH I HAVE A MORTGAGE AND A CAR PAY  AN AS STATED BEFORE ALL CURRENT FOR OVER 1 YEAR.  I ALSO HAVE SMALL CREDIT CARDS LIMIT OF 400.00 AND BALANCE AROUND 320.00 ON BOTH AND 1 LARGER CARD LIMIT OF 5000.00 BALANCE 4300.00.  i AM OPEN FOR ANY HELP.  I AM TRYING TO SELL THE HOUSE I HAVE AND DON'T WANT TO END UP NOT BEING ABLE TO FINANCE A HOME WHEN/ IF IT SELLS.  PLEASE HELP.

THANKS!!!!

[ShanetheMortgageMan]

The first step you would want to take is getting pre-approved for the new home purchase.  Items that go into determining if you could get pre-approved are: credit, credit scores, employment, income & monthly minimum required debt payments (together it calculates your debt to income ratio), sales price, anticipated down payment, and assets/reserves (such as savings, checking, 401k, IRA, etc.).

First we go over the credit.  A 597 credit score isn't great but can definitely still qualify.  Since your credit has been on time for at least 12 months then FHA financing could very likely be an option.  FHA financing would not require the charge-offs or collections to be paid, but lenders sometimes have their own "overlay" guidelines that could require them.. so when you seek out your lender that would be one of the questions you'd want to ask upfront before credit is pulled.  I also think that your credit card utilization is bringing your scores down quite a bit, pay off/down your credit cards and you should see a nice score improvement.

You didn't lay out your income but I assume you make some, so what is your employment situation and how much is your income?

What do you anticipate will be the minimum monthly payments on your credit cards (and any other debt, like a car loan, student loan, etc.) when you apply?  Are you going to pay off the credit cards with the sale proceeds from your current home?

What sales price range are you looking to buy in?  How much are you anticipating getting as the net sale proceeds from your current home?  How much of a down payment are you planning on putting down?

Outside of the sales proceeds, do you have other assets/reserves?  This could be key in getting you a streamlined approval.  The more assets/reserves you have after you bring in the down payment & any closing costs you are responsible for, the stronger your overall file is to underwriting.

After you get pre-approved then your next step is to get your home sold and keep an eye out for what other potential home you'd like to buy.  You can make an offer contingent upon you selling your home, usually called "first right of refusal" where the seller can still accept other offers, but then if they do, you would be given the chance to remove the contingency that you would need to sell your home first - or you can just back out of the purchase contract.  Or if you already accepted an offer on your home that makes you a more attractive buyer because then the seller of the home you are looking to buy wouldn't have to wait around for you to accept an offer on your home.

[Anonymous]

SO FAR THIS YEAR I HAVE GROSSED CLOSE TO $40,000.  BUT THAT INCLUDES OVERTIME WHICH IS MY USUAL. MY BASE PAY IS ABOUT  $43000.00I HAVE ALREADY GOTEN PREAPROVED ACTUALLY BUT I AM CONCERNED THAT MY HOUSE WONT SELL IN TIME UNTIL APPROVAL EXPIRES AND I WOULD LOVE TO GO BACK TO MY MORTGAGE BROKER WITH A HIGHER SCORE.  SO I WAS WONDERING WHAT STEPS I COULD TAKE TO IMPROVE MY SCORE.  IT ALL SEEMS A LITTLE OVERWHELMING.  SHOULD I GO WITH MYFICO.COM OR SCORE WATCH OR BOTH?  AND IS MYFICO EXPLAINED IN DETAIL OF THE NEEDED STEPS TO HELP TOWARD MY IMPROVEMENT?.  MY LITTLE CREDIT CARDS COULD BE PAID OFF PRETTY QUICK, WOULD THIS HELP EVEN IF THE CREDIT LIMITS ARE LOW (BOTH TOTAL TOGETHER BALANCE  $700.00).  MY LARGER ON WILL BE PAID OFF WITH THE PROCEEDS FROM THE HOUSE.  i HOPE TO NET AROUND $30,000.00 FROM SELLING MY HOUSE.  MY HUSBAND (WHOSE CREDIT SCORE IS LOWER THAT MINE SO I  DONT THINK I CAN USE HIM ON THE LOAN)CURRENLTY HAS OUR LAND OWNER FINANCED AND WE ARE LOOKING INTO GETTING A MANUFATURED HOME COSTING ABOUT AROUND 95,000.00 INCLUDING LAND IMPROVEMENTS.  i WAS LOOKING TO REFINACE THE LAND BALANCE OF 28000.00 IN THE HOME LOAN.  FOR A TOTAL OF ROUGHLY 130000.00 THEN WE WILL PUT DOWN AT LEAST 20000.00.  WOOULD IT HELP TO HAVE THE COUPLE OF LATE PAYMENTS FROM LAST YEAR GONE IF POSSIBLE I WAS THINKING OF WRITING A GOODWILL ADJUSTMENT LETTER?  IS IT WORTH THE $50.00 + TO MONITOR MY CREDIT REPORT MONTHLY?  OR SHOULD I JUST KEEP PAYING MY BILLS AND LET TIME HEAL MY WOUNDS?  I AM VERY PROACTIVE AND WILLING TO DO WHAT I CAN TO BRING UP MY SCORES AND MY HUSBANDS, JUST DONT WANT TO SPEND $100.00 A MONTH AND IT NOT DO ANY GOOD.

[ShanetheMortgageMan]

For tips on credit improvement I'd strongly recommend the general credit section of this website.  We know a little about credit improvement here, but there are tons of experts in the general credit section that will know exactly what you would need to do to boost your scores.  I do know that paying down your credit cards will have a big positive impact on your scores though, and if you can goodwill those other lates off that should help too.

The scores you get here at myFICO.com should be accurate to what the loan officer pulls... however the credit format of TrueCredit is a little bit easier to read since it's "merged" all together.  One of those websites has a feature that will notify you when something has been updated, like a late payment being removed, etc... it might be worthwhile to invest in that rather than pull your scores each month for $50.