Mortgage Loans

[StudentRN]

Hi Everyone,

I found this board in December and have been working on improving my credit score since then. I started at 516 for both TU and EQ in the end of December, these were  scores from myfico and not FAKO scores. I have removed some collection accounts from 2007-2009 and updated a few lates. My score was up to 573 last week and when I pulled it yesterday my TU was 651 and my EQ was 653!! It appears some additional TLs on some student loans have begun reporting on both my TU and EQ.

I have been working on my credit for the main purpose of getting a mortgage for the first time. My credit issues all stemmed from 6-7 years ago. I have been going to school full time for the past 3 years while being a single mother. I just graduated with my nursing degree and would really like to get a mtg for 50k-100k instead of paying rent. My question now that my credit score is higher is if now is the time to obtain a preapproval and start looking for houses? My current lease will be up May 1st.

Here is some background info: 

Income: I have been employed for 8 and a half years at the same company. The past 2 years I have been working part time two jobs as I have attended attended nursing school full time. I graduated in December with my BSN. I have just begun working about 20-25 hours per week ($15 an hour) at the office again. I have also been an employee of a hospital for over 2 years. I will resume my position there on Monday, making $17 per hour (24 hours per week) and then increase to an RN position on March 20th making $24 per hour (36 hours per week).

Debt: 2 credit cards that total $754 dollars of combined $800 limit. About $55,000 student loans, currently in a income based repayment and grace period so no payments are needed at this time. I also have two old (2007 and 2009) collection accounts. One is a medical collection that I am going to do a pay for delete that they have agreed to. Few old charge offs from 06-08 that have been paid or settled years ago. I currently have no late payments since the old charge offs.

I will be receiving my tax return shortly and intend on using that for my down payment. I know once I pay off my credit cards in the next 2 weeks my score should increase a little bit because my util is currently very high on those. So my main question is now that my score is high enough is it a good time to get the ball rolling for an FHA?

Thanks in advance!

[MovingForward_2012]

I would normally tell folks that are getting an increase in salary to wait to apply after they have accumulated at least a couple of paystubs reflecting the higher income so that it is counted. But your current salary I believe is sufficient for a $50K-$85K home. After you become an RN, you can afford max about $180K. So if you are really interested in homes above $85K, you need to wait until you are making the salary associated with the RN position.

Your credit card utilization accounts for 30%-40% of your score, so getting your utilization down will help a lot not a little. So the first order of business would be to get your utilization down below 10%. Right now, lenders consider your cards maxed out.

The latest you would need to apply by is April 1st; however, it can sometimes take more than 30 days to close so applying right after you start receiving your pay as a RN is best. You don't want to apply too early and risk not qualifying down the road as the earlier you apply, the more subsequent credit pulls you have to survive as lenders typically will pull your credit 1-2 more times after the initial pull if closing is more than 30 days out. So I would not apply at this moment. At this moment, I would pay down your credit cards so that the lower balance is reflected on next month's statements and credit reports, and also work on PFDs for those old medical collections.