Hopeful First Steps for a mortgage - Plan ahead!!!

[Anne1208]

Hey everyone! I just wanted to say that my husband and I went to a mortgage lender at our credit union on Friday and it was a great meeting.  I had printed out mine and my husband's three-bureau full credit reports and had a list of questions.

We want to buy in 12-24 months, so we wanted her to run a hypothetical to see what we'd qualify for based on our incomes, how much closing/prepaids are likely to be, and what do we need to improve on our credit.

It was the absolute best thing we could have done.  She confirmed that the amount we'd want to buy for is well within our means, and gave us a details sheet of what that would cost us upfront for closing costs/prepaids if he hypothetically bought this month. 

The third thing was the most valuable - I have 4 credit cards im paying off through a Debt Management Plan ($11k left) and $170k in student loans I pay on income based repayment. My husband has no debt, but only one secured credit card and a few 6 year old medical collections. Basically, hes hovering in the mid 600s and me in the low 700s and we felt utterly helpless as to what to do to be in a sound position in 12 months.  she gave us very good advice on what we're lacking and how we can deal with it, and because this is the very person who would be processing our mortgage loan, it made me feel like it was the most sound advice we could get regarding our credit. 

We were able to get my cards into a secured loan based on our paid off car, using my higher score at 3%, and then open a joint unsecured credit card - so we went out of there with my having saved $700 over the remaining life of my credit card balances, plus a new solid mixture of credit types for both of us, all of which will have the inquiries gone in 12 months when we return...she is confident that my husband's scores will be up to the 700s in 12 months and we will be in a great position to buy. 

My point being, the best thing we did when we felt like our situations were kind of a mess was to sign up for the myfico 3-bureau stuff and study it all inside and out, then to see a mortgage specialist long before we are ready to buy, at a time we were well informed about our situations. My husband didnt know what his credit was on Jan 1, and the lowest score was 540. just taking the time to understand things and giving yourself KNOWLEDGE, a PLAN and TIME is huge.

If anyone is thinking of buying a house in the next couple years, take this time to go ask about your situation! It's not nearly as discouraging to hear what still needs to be done when you still have time and don't have the money saved yet anyway - it sounds more like an opportunity than a hurdle when you start early and have time on your side.

[Anonymous]

Just wanted to thank you for your advice. 

[Anonymous]

Sounds like a great plan! I'm amazed at the ppl that think their situation is not good enough to qualify but they are too afraid to see an expert to tell them what they can do TO qualify (afraid of rejection???). Ex, my brother has really bad teeth. He knows he needs to have them pulled and will need implants. I asked him if he'd been to dentist and he said "no I know what they are going to tell me". I said "well how are you going to know what it's going to cost. How much insurance will cover, and what you can do to minimize the financial impact while you save?" Smh he's too afraid to go because he's embarrassed.

[Anne1208]

Hey guys! I just wanted to update you on where my husband and I are at since our July 3rd meeting.  My husband's regular scores have gone from 600ish to 645-660 (his mortgage scores were a good 50 points higher than his regular so hopefully when we check those they will have gone up too).  Last January my husband's lowest score was 540.  He had no credit histoy except for a few collections and was so hopeless.  Now, he loves looking at his myfico account each month.  Every month we pay for the instalment loan we opened in July, save money for the house, and use the two credit cards we have a little bit and then pay them down to a few dollars, and every time its giving him (and me) a jump.  It is amazing how something that felt hopeless for my husband in January is now so much better.  The time crawls when you check your scores every day (seriously July feels like a year ago, NOT three months!) but it's really made a huge difference. We will probably ready score and savings wise to get the house we want in the late winter/early spring with 5% down, a decent interest rate and with PMI paid upfront (our credit union gives 50% off upfront PMI which is AMAZING!!). 

In january my husband's lowest score was 540 and we had about a thousand dollars in the bank, first savings we ever had. Two years ago, we had no savings and I had $20k in credit card debt.  If you're feeling hopeless just come up with a game plan, take things one step at a time and be patient. It stinks but it WILL work for you!