LOST IN THE NUMBERS? FIRST TIME HOME BUYER HELP!!!!!

[afr4life06]

Alright Fico family, i am here for assistance as a first time home buyer. I have been preparing for this day for like 2 years now and i want to make sure i have everything close to ready.

In August, i plan on starting the home buying process and i am here to find out if i will qualify or what i need to do to make my chances a lot better than it could be. Below is my portfolio.

Downpayment: I have $6000 saved up now and plan on adding to it until i close on the house so it might be more, but right now 6k is on standby for the downpayment on the house

Income: $40,371 and i will have been at my job for 2 years in August

Credit Score(Not the mortage score but it is Fico): Experian 681   Transunion: 667    Equifax: 688  I plan on pulling the mortgage scores when i am ready to sit down with a lender. Wise or not?

I have only one collection on my transunion for $150. I been trying to get it off my name but no luck and i refuse to pay it. Now will this hurt me as far as the mortgage, or i can not worry about it since it is small?

Monthly Debt: 

Car Loan: $13,665 at 3.94%  $265 monthly

Student Loan: 40,000 which is defered till April of 2016

Amex: $6000 CL with $2000 Balance

Chase: $1000 CL with $600 Balance

Discover: $1500 CL with $500 Balance 

NASA FCU: $4000 CL with $1500 Balance

Buckle: $1850 CL with $0 Balance

Finger Hut: $1300 with $0 Balance

Walmart: $3500 CL with $900 Balance

HH Gregg: $4000 CL with $1100 Balance

Wow, writing this out really made me realize i have too many balances, like i knew it before but it just hit me. This is where i will need some advice. I plan on putting aside about $1500-$2000 to pay off some of these cards so i can be in a better position once the credit is pulled. Which should i pay? i am thinking Chase, Discover and possible pay down Walmart. I plan on not using the credit cards until after the house is purchased. 

Assets: I have about 5k in 401K for my company, but i dont plan on touching that. 

Location: Atlanta, GA

Property: I am thinking a condo or single family house. I would like to get something i can later on either rent or flip and sell later on in life. Just using the calculator on Zillow, it seems i might be able to afford the most 125K worth of house

I am thinking FHA loan will be my best bet, but i wanted to know if there is a possiblity for FHA loan to use a fix up a fixer upper.

I think i have provided everything i have read will be needed to find out if i can qualify. Please Fico Family your assistance will be greatly appreciated because i think i have done too much research and lost my self in it lol if that makes sense, and the numbers are starting to confuse me. Thank you

[sports1965]

Need taxes and monthly HOA if any,plus homeowners insurance to give you a better idea of what u can afford

[afr4life06]

Ah true, wouldn't that be determined by the home you picked? Using the Zillow calculator is how i came up with the 125K which should have the taxes and PMI in there. I just want to make sure i can at lease qualify for FHA and a decent APR. I probably wont even spend 125K on a house, first home so def going to go for what keeps me comfortable as the mortgage goes

[Anonymous]

I'd pull my mortgage FICOs now. Many, many people are shocked at the difference between their generic FICO and their mortgage FICO. You really need to know.

Also, how much is your student loan payment when it comes out of deferment? Any lates in the last year or two? Any judgements, liens? Child support, alimony? What's your minimum payment on the credit card debt? I see that you've saved 6k for downpayment, where's the money for closing costs and prepaids going to come from?

[afr4life06]

Student loan will be about 200 a month after deferment but I'm sure I can pay less than that if it came down to it. No judgement liens alimony nor child support

6K was going to be used for anything as far as down payment or using less of it to use for closing cost etc. plus I was going to be adding onto that amount while we are looking for a home so it will def rise more that 6k to handle any other cost that comes with the home.

[Anonymous]

Three things: 1)pay off cc debt starting with highest interest rate, 2)you will need more in savings for downpayment and closing costs, aim for at least 10k , 3)buy a MyFico 3B report to see we here you stand with mortgage scores. Maybe give yourself a few more months until apping for mortgage. 

[afr4life06]

Ok thank you very much for your advise. I figured paying off most credit cards would be the first priority. I so thought with FHA loans being 3% that I would be in a good position as far as what I have for down Payment But I will keep adding to that as soon as I pay some credit cards off

[StartingOver10]

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@afr4life06 wrote:
Ok thank you very much for your advise. I figured paying off most credit cards would be the first priority. I so thought with FHA loans being 3% that I would be in a good position as far as what I have for down Payment But I will keep adding to that as soon as I pay some credit cards off

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Actually for an FHA loan the min down payment is 3-1/2% and your closing costs and pre-paid expenses run in the neighborhood of another 3-1/2% to 4% of purchase price. In high cost areas with high taxes or high insurnance or both, you could be looking at more.  Estimate on the safe side of 9 to 10% of purchase price to have saved. 

If you don't have that much saved, there are some other sources for your closing costs:

• negotiate it in with your purchase contract to have the seller pick up some or all of your costs - depends on the seller and the market if this is viable. In sellers' markets they don't want to pay and usually don't have to in order to sell their home.
• the lender can pick up a small portion but in exchange you are paying a higher interest rate for the life of the loan so be careful with this option

[Lemmus]

1) ...need to think about where you intend to buy ...if in rural area around Atlanta, USDA is much more advantageous than FHA in most cases, check the USDA site for property eligibility map+ ...you might be surprised at what is considered rural

2) ...your income is low enough to qualify for most state/county down payment/closing cost assistance programs ...also the USDA Direct program ...don't overlook these programs ...most will provide several k in assistance and most are either grants or forgiven if you live there for long enough

3) ...do your homework on the student loan payments ...there are substantial changes on going that may force the lender to use 1 or 2% of your SL total debt as a monthly payment in your dtir calculations whether or not they are deferred or IBR ...the payment your SL lender requires may well not be what your mortgage lender will use depending on the program

4) fico appears to weigh cc utilization in tiers ...50/30/10 being widely claimed as breakpoints in the scoring ...thus I would pay down all debts to 50% first, then 30%, then 10%, then zero on all but one cc account ...that will result in the fastest fico 8 score rise ...the problem with that strategy is that the dtir calculations will use every cc with a balance owing at the minimum payment reported ...and that can sink your dtir despite a rising fico score ...you need to figure out which payment strategy serves you best ...in your situation, I'd not worry about cc interest charges right now ...focus on what gets you to a mortgage. 

5) the TU debt only matters if it is recent ...fico weighs paid/unpaid the same ...some lender overlays may require you to pay it but most will not

6) ...pull your fico mortgage scores now ...its $40 well spent to know where you really stand ...differences of 50 points +/- are all too common depending on whats in your individual file ...no use in waging a battle that you don't need to fight 

...as always, ymmv ...hth

[afr4life06]

Wow. Thank you all for your advice. Seems I need to do more research to make sure I am a better advantage for this Mortgage

never really thought USDA. 

With 6K available now, couldn't I keep adding to that as I am searching for a house if preapprovaled