Newbie needs advice

[ampy]

Hello all-
   I'm new to these boards but I've been trying to do some reading here and there on what all I would need to do to obtain a mortgage. My husband and I currently live in an apartment and our lease will be up in March 2013 so we're trying to obtain one during the summer most likely. I currently owe $5300 on my car but he's planning on paying that off by January so that we can free up the $350 that we currently pay each month for that. I've read that for a down payment you can have as little as 3% if you're getting a FHA loan but that more is always good. We're trying to keep our house price range between $100k-$130k. I do have alot of debt to income ratio so I'll be working on getting that down as that's what I think is holding my score back as well. I pulled them the other day and my Equifax is showing 572 and Transunion is showing 620. The Equifax is showing a collection from Dish Network for $90 which is not accurate so I will be calling them on Monday to dispute it with them and see if they can take it off. When we moved in December it was a hassle to cancel with them and they were trying to charge us $200+. I had to call them 4 or 5 times just to get them to cancel my service and then for them to drop the fee. The collection that's showing up says it's from June or July so I'm not happy about that. After they agreed to cancel and for no fee I never received a letter or phone call saying otherwise. If I can get that taken off then I think that will help my scores rise a little bit. I do have a couple of late payments which I am going to try to GW and see if they will get taken off. I can share my credit report if that will help anyone give me advice. My question is for the down payment. Should we focus on using the extra cash we have to pay off the debt so our DTI will lower or should we try to pay off the car first? Our other option would be to keep that in savings and what a while longer to try and obtain a mortgage after doing all that but then we would have to pay rent on a month by month lease and that would be more expensive which is something we don't want to do. I'm also looking at possibly pulling out a loan from my 401k to use that to pay stuff off. It wouldn't be very much because I've only just started putting money in there 4 years ago but I could get at least 3 or 4 thousand from there. Of course I've already started looking at houses and the one I am in love with is $110,000. It probably won't still be for sale in March or the summer but who knows. That one has a lease option that you can do but is $1300 a month and that's $400 more than we pay now for our apartment so my husband really doesn't want to do that plus the fact that we are still in our lease. If we broke our lease we would have to pay a fee and could pay that to them in installments but with having a higher monthly payment already he doesn't want to do that. The real estate agent who has it listed says that it can be leased with an option to buy. She gave me the name of a lender she works with in case we were interested but with no money really saved we're not in a position to start that process. I was thinking that maybe that meant they were friends and so he would really try to help us out so that she could get the sale and that he could get a new account. Someone I know suggested that we just try to apply for a mortgage and see what they say but I think that would count against us if we were denied so soon to when we really want to do it in a few months. Does anyone know if that's true or if I'm wrong and if that's actually a good idea? I don't think there are alot of people who you can just go meet with and say hey, can you pull my score and see what I need to do to get a mortgage and then I'll get financed through you. They want to meet with the people who already have the money and scores. I have a steady job history. I've been at the same job since 2005 and make about $34k a year. My husband had the same job for 4 years but was laid off in January and got a new job in February and has been there since then. He started an additional job in July of this year and has been there since then as well. Both jobs combined he makes somewhere a little over $60k. We're worried that because he hasn't been at his jobs that long that might count against him but maybe because he's been steadily employed it will be ok. Does anyone know about that? Sorry this is so long but I wanted to give what info I could. This will be our first home purchase so we really have no clue what we're doing. Any comments at all would be appreciated. Thank you!!

[Anonymous]

Hi I think you have a good plan of attack.

I am no expert so take this with a grain of salt so to speak but they do have DTI calculators out there that will tell you how much house you can affored. I personally would think getting your debt down would help however getting a loan with a small down will also cost you more.

If I was in your situation I would be interested in getting the loan then anything else and would focus on what would help you more the lower DTI or the saved down payment. Also keep in mind the taxes and insureance cost which will be a part or your overall costs.

Good luck to you and your husband.

[beb86]

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@ampy wrote:

Hello all-
   I'm new to these boards but I've been trying to do some reading here and there on what all I would need to do to obtain a mortgage. My husband and I currently live in an apartment and our lease will be up in March 2013 so we're trying to obtain one during the summer most likely. I currently owe $5300 on my car but he's planning on paying that off by January so that we can free up the $350 that we currently pay each month for that. I've read that for a down payment you can have as little as 3% if you're getting a FHA loan but that more is always good. We're trying to keep our house price range between $100k-$130k. I do have alot of debt to income ratio so I'll be working on getting that down as that's what I think is holding my score back as well. I pulled them the other day and my Equifax is showing 572 and Transunion is showing 620. The Equifax is showing a collection from Dish Network for $90 which is not accurate so I will be calling them on Monday to dispute it with them and see if they can take it off. When we moved in December it was a hassle to cancel with them and they were trying to charge us $200+. I had to call them 4 or 5 times just to get them to cancel my service and then for them to drop the fee. The collection that's showing up says it's from June or July so I'm not happy about that. After they agreed to cancel and for no fee I never received a letter or phone call saying otherwise. If I can get that taken off then I think that will help my scores rise a little bit. I do have a couple of late payments which I am going to try to GW and see if they will get taken off. I can share my credit report if that will help anyone give me advice. My question is for the down payment. Should we focus on using the extra cash we have to pay off the debt so our DTI will lower or should we try to pay off the car first? Our other option would be to keep that in savings and what a while longer to try and obtain a mortgage after doing all that but then we would have to pay rent on a month by month lease and that would be more expensive which is something we don't want to do. I'm also looking at possibly pulling out a loan from my 401k to use that to pay stuff off. It wouldn't be very much because I've only just started putting money in there 4 years ago but I could get at least 3 or 4 thousand from there. Of course I've already started looking at houses and the one I am in love with is $110,000. It probably won't still be for sale in March or the summer but who knows. That one has a lease option that you can do but is $1300 a month and that's $400 more than we pay now for our apartment so my husband really doesn't want to do that plus the fact that we are still in our lease. If we broke our lease we would have to pay a fee and could pay that to them in installments but with having a higher monthly payment already he doesn't want to do that. The real estate agent who has it listed says that it can be leased with an option to buy. She gave me the name of a lender she works with in case we were interested but with no money really saved we're not in a position to start that process. I was thinking that maybe that meant they were friends and so he would really try to help us out so that she could get the sale and that he could get a new account. Someone I know suggested that we just try to apply for a mortgage and see what they say but I think that would count against us if we were denied so soon to when we really want to do it in a few months. Does anyone know if that's true or if I'm wrong and if that's actually a good idea? I don't think there are alot of people who you can just go meet with and say hey, can you pull my score and see what I need to do to get a mortgage and then I'll get financed through you. They want to meet with the people who already have the money and scores. I have a steady job history. I've been at the same job since 2005 and make about $34k a year. My husband had the same job for 4 years but was laid off in January and got a new job in February and has been there since then. He started an additional job in July of this year and has been there since then as well. Both jobs combined he makes somewhere a little over $60k. We're worried that because he hasn't been at his jobs that long that might count against him but maybe because he's been steadily employed it will be ok. Does anyone know about that? Sorry this is so long but I wanted to give what info I could. This will be our first home purchase so we really have no clue what we're doing. Any comments at all would be appreciated. Thank you!!

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You may get more responses if you could break these down into paragraphs. It makes it so much easier to read...Thanks