Our Journey to Home Ownership

[andemalia]

Hello All,

Just sharing and documenting the process. It might be helpful for someone else.

Here is a brief summary of the situation:

My credit score as of today EXP 651 TU 644 EQ 654 

Last delinquency is paid apartment collection from December 2012

Multiple charge-offs, paid collection lates from mostly from 2010 and earlier.

5 credit cards with 0 balance except one card that $542/$1000 (I pay about $150 every month)

1 car loan at just under $7000 with Cap1

Multiple student loans at about $25k all is deferrment as I am in school

Currently make $54k. I have been at my job for 3months, was at my previous job for over 2 years with a lower but gradually increasing income. No gaps in employment.

Single income-earning home. I'm married with a baby boy so household size is 3.

Currently renting at over $1500/month.

Looking for a home in Frederick, Montgomery or PG counties in the greater DC area (SFH are in the $400s and up so looking for a townhome).

No assets, little savings.

We just contacted a lender today with whom we have kin of exploring options. We're doing prequals just for the sake of finding out numbers and potential obstacles. We will work on pre-approval as soon as we have the results from pre-qual (we know it doesn't mean much but for us it's a start).

Potential obstacles:

- very little cash

- 2 disputes comments on credit which will certainly need to be removed

- did not get our ducks in a row as far as our bank statements. We can kind of anticipate what will need to be explained

We should have feedback on Monday.

[Movin_on_up]

Best of luck!   I'm starting the process myself.  ( http://ficoforums.myfico.com/t5/Mortgage-Loans/Ready-to-take-the-leap-Advice-needed/td-p/3534577 )

Look forward to reading more!

[Score_Raiser_T]

Good luck. Keep us posted 

[andemalia]

Movin_on_up and Score_Raiser_T

Will try to update as much as I can. We are trying not to get our hopes high but at the same time trying to think positive!! We need a house, rent is a budget killer!! We will very likely be using some of the state and county programs around. We have been rebuilding our credit for about a year, we wanted to wait until Spring of next year for score over 700s, but the market has been bouncing back up, a home within a reasonable commuting distance (minimum 40-45 mins with no traffic one way) will soon be out of reach if we don't act soon, instead of telling ourselves it can't/won't happen for us...

[andemalia]

Update from last week...

We send all documentations in to the lender: W2 and tax returns for 2 years and paystubs for a month; he also checked our credit (654). He says sofar we are pre-qualified for $225k. I actually didn't expect as much, that amount is 4 times our annual income so I don't know...  But given that we live in an area where homes are very expensive I ca maybe understand why. Still in that price range, there exactly 3 homes for sale, that need work, one of them with a steep HOA fee;  the other one is a 2-level towhnome that would need some updating but kind of liveable; the third one well... ahem... no thanks. But we have to stick to this area because we can qualify to up to $20k in downpayment assistance from the City.

We are looking at what they call MPDU, basically lower priced units, often new construction, you have enter a lottery to be eligible to put an offer on these properties and there is a limited amount of those around. But they are a steal because brand new townhomes priced in the $400-$525k can get bought through the MPDU program for as little as the $150-to $300s range.

All the above reasons are why we decided to start this process early, inventory is very very limited with lots of people looking for homes to buy and many buyers of the homes prices in that range get bought by investors who turn them around for profit. 

We could go further, for a longer commute (like 1h30) or in a crappier county with really bad school system but we have a toddler, so that's importnat. Luckily we have plenty of time to patiently look, pray and hope something comes on the market that we like. Our lease is up in June next year... We just can't keep paying over $1500 in rent for another year after the lease is up...

Now I asked the lender why couldn't we move to pre-approval. He just answered that we did not have to worry and that all we needed to do was literally to find a home we like a go from there. I don't know whether that's due to the fact that we are getting the entire downpayment from the city program and basically he would have no "true" assets to verify other than stuff like reserves. He seemed to hint to that. We would only need to pay $450 for appraisal.

I'm still about to gently ask him why we are pre-qualified instead to working on being pre-approved...

Also, we found a good realtor that we are working with... we will see how things go.

[Movin_on_up]

Thanks for the update.   Sound like you two have a good plan in place!

[andemalia]

Thanks for reading Moving On Up!!

[andemalia]

I just wanted to update the thread with the credit scores pulled by the lender.

Experian: 649   Equifax: 654   Transunion:= 666

Middle score 654

Funny enough, this is exactly what my scorewatch is saying on here. And they did use the 04 version.

[andemalia]

Our area is sooo expensive, we have had not luck finding anything in our price range. Many of the options we found needed a lot of work, which would not work with FHA, none were move-in ready. 

However, our lender was able to increase our budget to $250k which gives us more options, not a lot but more. We would have had a lot of options if we had decided to look about 30-40 minutes away in the opposite direction as my job. But I already drive about 30 mins with no traffic (which never happens), most times it takes me a minimum of 1 hour to 1h15 to get home. Moving further away would not be a good decision. My job is in Northern Virginia and our budget wouldn't go far over there either. 

We are meeting with our realtor for the first time tonight and with another (who urged us to meet with him and compare them according to our needs even though we had told him with were already working with someone) on Monday. I guess we will decide who we ultimately want to go with after we meet him on Monday. There a few homes we are really interested in that are in our new price range although at the very top of our budget.

I will you posted on everything!

[Movin_on_up]

Good luck on the with the expanded search.  I know stretching the budget can be a challenge at times.  I'm trying not to get myself over my head.