As I'm jut beginning my journey toward homeownership, I thought I'd start to educate myself a bit, so I attended a free seminar put on by my credit union yesterday. Here are some things I thought the board might be interested in: (keep in mind this info is from one specific lender only)
--They were talking approval in the 620-680 range
--Their best rate is given to those above 720 (no tier above that)
--The use the Triments (sp?) system, where they use the middle score
--There were a lot of credit questions, obviously -- some of these people needed a separate credit seminar. In the packet was a print out from myfico.com and I raised my hand and talked up the myfico forums as great sources of info! (I was feeling pretty smug that I'd already gone through and learned this stuff, too.)
--For every $10,000 down, the monthly payment will drop $10
--They look at your credit and payment history for last 24 months. They want 3 open and active credit trade lines
--For conventional loans, they want a 45% to 50% DTI ratio (total debt divided by gross income -- can anyone give me an example of an equation like this?)
--They do consider 401(k) monies as reserves, and said that having that money looks good on the app
--They did talk about the problem with cash gifts (aka "mattress money") and said that if you receive such a gift, you have to deposit it for 2 months to be considered (but stated that other lenders might want up to 10 months!)
--They also want you to have at least 3% (3.5 for FHA loans) downpayment, closing costs, and 2-3 months monthly payments saved up
--Closing costs run 3 to 4% of the loan amount
--They don't do the FHA 203(k) loans there (darn!)
--They will finance duplexes with 3% down
--Pre-approval letter is good for 3 months
--Their closing process takes about 30 days (so they say)
Again, this was from one specific credit union/lender, but it was useful for me to go through this. The biggest surprise for me was it's apparent I could get approved and buy a house right now! After years and years of being convinced I could never buy a house, I'm feeling somewhat discombobulated. I was thinking that all home purchases required a minimum of 20% down, which is a pretty high bar considering today's home prices. Happy, of course, and glad that I've worked so hard the past couple of years to get my credit in shape, but . . . I'm not ready. I'm picky! Anyway, hope this helps.
