NOW OR LATER?

[jamevfan]

I need your advice here, my most recent scores are below and if you look at my acct you will see that we have tried to purchase a home in the past (2009) but got screwed when they loan broker said he had a loan secured and after 4 months of buliding our home he lied and avoided us at closing and had run our scores so much it went from the 620's to the low 500....So here we are again. lol

We looked at some model homes this weekend and ended up liking a home in a new subdivision about 2yrs old (Taylor Morrison builder) and they are offering a decent price on a home with 100% closing costs and 10,000 in upgrades if we buy within this month, they currently only have 6 of this particular model that they have left to  build and I really love the layout and sqft.

My husband and I did a prequal this weekend just to see where we are and was told that my husband had low scores and he would need to work on those before he could be on the loan but if I did it myself I would be fine with my income, debt to income ratio and that in Texas my husbands debt would still have to be added even though he would not be on the loan, even with his 3 outstanding bills considered I would meet the debt to income guidlines being at 50% when the limit is 57%.......

It will take approx. 4-5 months to build and in that time we would be working on his profile as well as mine to see if we can get some improvement but even with the option of refinancing a yrs or so later if I were to do it on my own.......

we would be 1st time home buyers and have been wanting to own for so long. myhusband only has 3-4 old collections from 2-3yrs ago when he lost his job that he has on his report, his scores are in the 550-600 range.....I was thinking about the new accts i also have within the last 6 months but apparently my file looks ok and that wasnt mentioned

WHAT YOU YOU DO?

[DallasLoanGuy]

a good strategy for removing collections is to negotiate a 'pay for delete'

[jamevfan]

Thanks Dallas Guy but will contacting a company about a debt change the time that it will fall off in case they will not agree? also what is the best method for asking and documenting a pay for delete so i dont get tricked into paying and them not deleting?

[Anonymous]

You want pre-approval not pre-qualification. 50% DTI is higher than most programs I am aware of so make sure that you get as close as you can for to full approval for that specific program, if it is a generic look at FHA be aware that lenders may have overlays that make that number lower. Prequal is the weakest of all the steps to take to obtaining a mortgage.

[ArmyWifeMBA]

Here is some information on overlays.  

http://themortgageexperts.blogspot.com/2011/01/underwriting-overlays.html

http://www.thetruthaboutmortgage.com/what-is-a-lender-overlay/

I had to check it out because I wasn't sure what they were.  

Paying down your debt first (to lower your DTI) and then conquer your husband's debt is probably the best approach (I would do that).  Just in case they don't delete file from CR, you didn't waste the money on doing so.  By lowing your DTI, you will have a better chance at getting a loan.  

My DTI is high too (as I am not sure the lenders will count all my income); hence, I plan to pay down my debt some more to get a lower monthly payment.

[Anonymous]

Talking to a collection agency won't change the date that it falls off your reports but it could cause them to update the collections and if that's something they haven't done in a while it certainly could hurt his credit scores more.You should check out the rebuilding section of this forum.You will get great advice.I was able to get all my collections removed and raised all my scores about 150 points in 6 months and was able to buy a house with no problems.

[jamevfan]

we are clueless because we are currently working on his report and he has been able to make some progress, however the one collection acct (9,000 balance with snap on tools) to a charge off status and zero'd the acct out on transunion so there isnt really anything we can do with that one as far as paying or making arrangements which is the most recent (2012).... how will that one hurt us? the other 3 bills are medical and with fairly small balances.

Thanks everyone for all of your help!!

[Anonymous]

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@jamevfan wrote:

we are clueless because we are currently working on his report and he has been able to make some progress, however the one collection acct (9,000 balance with snap on tools) to a charge off status and zero'd the acct out on transunion so there isnt really anything we can do with that one as far as paying or making arrangements which is the most recent (2012).... how will that one hurt us? the other 3 bills are medical and with fairly small balances.

Thanks everyone for all of your help!!

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The fact that his medical are listed as collections is what is hurting his score.  For a big boost he will need to get pay for delete (PFD), not just pay them off. The good news is that medical accounts are the easiest types to resolve with a  PFD.  Like someone else mention, head on over to the rebuilding forum and do a search for PFD.  I agree that you should leave the charged off account alone.  I wouldn't wake the beast especially if the statute of limitations for which they can sue is still in effect.

To answer your original question what would you do?  Pass.  

I think 50% is too high like the others stated because you may have problems with underwriting,  I would pay off (or down) your credit cards and work on getting PFD's on hubby's account then add him.  Adding his income will resolve the DTI problems.

PFD's can be accomplished rather quickly if you all have the money to pay and the company accepts the offer.  Just remember it must be done in writing so you dont get screwed.  Good luck and keep us posted.

[Anonymous]

Forgot to add that you all (especially hubby) need to OPT out of credit offers before doing any credit repair.  I cannot stress this enough because as soon as other creditors get wind that you are looking to fix your credit, they come out like vultures. Lol.  I had one super duper old creditor that was no longer on my report send me a bill.  I was like really?? 

  The rebuilding forum will have info on opting out.