First, thanks in advance to all that might respond to this. These forums have been so helpful in getting my life straightened out and I'm happy to say that my credit is recovering nicely and I'm feeling ready to take the next step. Below is my situation:
Single family home; new purchase. Property has second (rental) home on the 2.5 acres in Washington state. 2nd home is occupied by adult daughter/son-in-law for $600/mo.
Wages are K-1. I've been an employee of my company for 6 years - in 2013 given ownership shares and now receive all wages via K-1 guaranteed comp. $105K annual plus bonuses averaging $10K.
3 person household - husband stays at home (no income) but does occassional 1099 consulting - will not have him on loan.
Mid score is 637 (myfico).
Foreclosure 4/2010 due to death of previous husband. Also due to death, many late pays - everything is now older than 2 years. Current on everything since that time.
No collections.
Home value (per Zillow) is $491,000. Currently occupying home, agreed upon purchase price from owner was $485,000 with $15,000 paid as down payment on the purchase contract plus additional $21,000 paid to date for a net purchase price of $449,000 which I think makes LTV 91%. Hoping to use this $36K as credit toward the down with little to nothing additional for DP.
Currently 11 tradelines open - 1 car lease, 9 revolving CC's and 1 Amex NPSL. Credit util is approx 35%, plan to pay down to 10% and wait for score bump. AAoA 5 years.
Pro's: good property value, 2 years current on everything, good income, soon to be low util., rental home bringing add'l income, easy to explain the FC and lates due to extenuating circumstances and show that everything has been good now that I'm recovering.
Con's: FC (though almost 4 years old), late pays (though not in last 2 years), K1 income (non-standard income source, requires explanation of why, it's a recent change), less than 700 score which is my ideal but I know not a deal breaker. Plus the extra home on property is just one more thing to explain away.
I think based on the loan amount I'm looking for that I'll need to go FHA or conventional. Might have to be jumbo, which just throws one mroe snag into the process.
What I'm looking for is a reality check on this. I know the things that I need to do (pay down CC's, wait for score bump) but not sure what else I'm missing. I'm trying to figure out what program to look for, what I can realistically expect for rates, and whether there's anything that I'm missing. Also trying to establish timing - apply now while rates are low? Wait for some amount of time (6 months? 1 year? why?). The good news is that the owner is a friend - she's fine with us taking the time to be in an ideal situation for a loan and can even carry part of the loan if we want (I'd like to keep it simple with one mortgage and have her out of the picture).
Any help would be so great - I'm scratching my head on how to keep moving forward with my life in a deliberate way. Thanks.
Starting Score: 592