Not sure were to begin!

[Anonymous]

I am so lost....  I recently went to my credit union to see if I qualified for a loan for a mortgage.  My credit score is 640.  I was hoping to get it up to about 680-700 before I applied for a loan.  I just recently opened 2 CC accounts to help build my score.  I also have 5 out of the 7 inquires on my CR to drop off by Feb 09.  Do you think that will raise my score enough to get a low interest rate?  I have 4 baddies on my report, 1 will drop off in Feb 09, and all the others are atlest 2+ years old.  Will the baddies hurt me and will I have to pay them before I can be approved?  Im not sure who to contact first to start the approval.  I will attend my first homebuyers class (to get down payment assistant) in a couple of weeks.  I am planning on having my home built hopefully by March 09, is that possible?  Thanks for all the help.

[ShanetheMortgageMan]

You might want to begin at Help the FICO Forums help you (with your mortgage qualification questions) but for the most part you've provided a bunch of that info already.  Info that would still be helpful are income, assets, sales price, down payment, employment, etc., but read that post first and you'll get an idea of what basic info is needed.

What happened with the CU and your mortgage application there?  If you were not approved, what was the reason?

Did you not have very many accounts open, and that is why you just opened up two new credit cards?

What "baddies" are these?  Charge-offs, collections, judgments, BK's, etc.?  Owing, not owing?

[Anonymous]

I make 30K a year.  No real debt.  Min payment on CC is $20.  Didnt have any other CC.  I do have student loans but I am still in school.  I have been on my job for almost 4 year.  Program gives 10K down payment assistance.  I was told that I could get a 150K loan.  Want to build a new home.  I did not apply through my CU.  Baddies are BK, but has been more than 2 years.  Have 3 CC that are charge offs.  Should I pay them?  It totals about 3K

[ShanetheMortgageMan]

Yeah $150k might be your max, could be less as your debt to income ratio is a bit high for that much - who told you that you would qualify for a $150k loan?

The down payment assistance program might require you to through certain approved lenders.  I know there are programs here locally that you must use a lender on their list or you cannot use the down payment assistance.  So you need to find out if there are approved lenders you are required to use, and if there are, you'll know which lenders you need to communicate with to find out their loan program guidelines.  It doesn't matter if you have 1,000,000 loan officers telling you that you don't need to pay off the cc's that have turned into charge-offs in order to get approved for a loan - if none of them are loan officers of the mortgage lenders you need to use to get the $10k down payment assistance, their opinions won't mean anything. 

Now if you don't want to use the $10k down payment assistance then you will be free to use any lender you want, and if you elect to go with FHA financing you shouldn't be required to pay the charge-offs off.  Your debt to income ratio is a little high like I mentioned though, and could be tough getting an approval on a $150k loan amount.

Has it been more than 2 years since the BK discharge?  Did the charge-offs occur after or before the BK?  Do you have any reserves/assets?