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Hi everyone. I've been lurking the forums for a while, but now need advice. I want to purchase a home by the summer/fall. I'm interested in applying for a mortgage in only my name due to spouse's credit score (low 600s). Although we will qualify for a bigger house if we use his income (total household income is about 110K), I am comfortable with a smaller house and therefore smaller mortgage. We don't live in a community property state. I would like to purchase something max $200K and would love for my monthly housing costs (including utilities, taxes, pmi, etc) to not go over 2500. Not sure how possible that is.
Should I try to pre-qualify now or try some pay for delete letters and/or GW (as I've seen on here), get my score a little higher, and save more?
My details:
Middle FICO Score: 673
Income: 72K gross. Net around $4300/month
Savings: About $15K right now. I save about $2000-$2500/month
Debts:
Car: $396/month (spouse helps w/this, but they won't see it that way if I apply on my own)
CCs: Total min payments are about $50/month. I can aggressively pay these down from my savings.
a. $570/$2500
b. $726/$3000
Student loans are in deferrment due to being in school and are being reported as in good standing.
Good items on credit history:
All payments on my accounts have been on time for the past 24 months and my utilization is decent.
Credit age
Negs on credit history:
I let someone obtain a mortgage in my name years ago (yes, I know stupid...I was young) and they have some 90+ lates. The last activity on these accounts is from Dec. 2010 after the accounts were paid when the property was sold.
I have two old Chase accounts from years ago that have some lates.
I have 4 collections (1 medical) from 2011-2012 when I was struggling financially. They do not have high balances.
Thanks in advanced!
Check how long the pre-qual would be good for. Navy Federal told me theirs is only good for 30 days, so you'd want to be in that time window.
Unless property taxes are outrageous, then your monthly payment on a $200k home should be well under $2,500/mo. With 5% down at a 4.5% interest rate, the principal & interest portion alone is just $962.70/mo. Figure another $125/mo for PMI, and then annual homeowners insurance & property taxes divided by 12 and you have your monthly payment. You'd have to estimate what utilities go for in your area, will depend a lot on how the home is heated, insulated, etc.
Your income should be fine to qualify for the amount you are looking for.
Credit scores would be good to get to a 680 level, as you'd get a good break on conventional financing interest rates. Deferred student loan payments are included with conventional financing, but with FHA financing wouldn't be if they aren't beginning for at least 12 months after you close on the loan. Credit history should be fine, the mortgage lates are old enough not to matter much, worst case may have to pay the collections but if they are small balances then that is probably unlikely.
To be fair,
Pre-qual's are just about worthless. What you want is the pre-approval.
The difference is that the pre-approval will scrutinize your financials much much more. Basically, it carries more weight than a pre-qual does.
Thanks so much for the responses. I think I will begin the pre-approval process some time in March or April.
Just an update: I purchased my home yesterday! At the time of pre-approval, my scores were higher around 700. I paid off some more of my credit card. 1 to 0% and the other to 9% utilization. Thanks for all of the informative reading and replies to my post.
@Anonymous wrote:Just an update: I purchased my home yesterday! At the time of pre-approval, my scores were higher around 700. I paid off some more of my credit card. 1 to 0% and the other to 9% utilization. Thanks for all of the informative reading and replies to my post.
Congratulations on your new home!
congrats