Mortgage Loans

[Dk30]

First let me tell you a bit about myself. I am 30 years old, I work full time in construction estimating. I have been at my current job just over a year now. My annual gross income is $30,000. I do not have any current debt. My credit score right now is 675 and I currently have 3 recently opened credit cards. One is secured, and two of them are cards for rebuilding credit with low limits. I have a bad financial past and had made lots of mistakes. I currently have 8 chargeoff accounts listed on my report, 2 of them are actually listed from the original creditor and the junk debt buyer, so they are essentially the same account. I paid all of these off, some settled for less than the full amount and some paid in full. These are all over 5 years since the delinquency was recorded, so all of them will fall off of my report within two years, and about half of them within the next year. I have $20,000 in my bank account and am currently looking to get a house with my fiance. I am currently living at home due to my past credit issues, so I don't have any rental or mortgage history. My fiance has a good credit score, probably over 750 and she is 25 years old and makes around the same amount of money as I do with absolutely no blemishes on her credit. We are looking at homes or condos in the $80,000 range. We would probably put a down payment of around $20,000 down. So my question is, from what I have told you, do you think it is possible for the two of us combined to get a loan, or would it be better to see if she would qualify on her own and add me to it in a few years if possible. If we have to we would rent for a while, but home prices are still low and I would love to purchase if possible. I apologize for writing such a long story here, but I have been a myfico member for a bit now and have been lurking the forums. Everyone seems very helpful, so I would greatly appreciate any answers or advice you can give me.

[Kozmo]

Yes.

Most credit unions are dying to give out money. Especially with that kind of down payment.

I would write letters to all of those charged off creditors asking to remove the delinquency on your credit and start there. Be persistent. Keep doing it until you're blue in the face. Call them too.

Worst case scenario your Gf applies and you just sit back and work on your credit.

[rckstrscott]

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Dk30 wrote:

First let me tell you a bit about myself. I am 30 years old, I work full time in construction estimating. I have been at my current job just over a year now. My annual gross income is $30,000. I do not have any current debt. My credit score right now is 675 and I currently have 3 recently opened credit cards. One is secured, and two of them are cards for rebuilding credit with low limits. I have a bad financial past and had made lots of mistakes. I currently have 8 chargeoff accounts listed on my report, 2 of them are actually listed from the original creditor and the junk debt buyer, so they are essentially the same account. I paid all of these off, some settled for less than the full amount and some paid in full. These are all over 5 years since the delinquency was recorded, so all of them will fall off of my report within two years, and about half of them within the next year. I have $20,000 in my bank account and am currently looking to get a house with my fiance. I am currently living at home due to my past credit issues, so I don't have any rental or mortgage history. My fiance has a good credit score, probably over 750 and she is 25 years old and makes around the same amount of money as I do with absolutely no blemishes on her credit. We are looking at homes or condos in the $80,000 range. We would probably put a down payment of around $20,000 down. So my question is, from what I have told you, do you think it is possible for the two of us combined to get a loan, or would it be better to see if she would qualify on her own and add me to it in a few years if possible. If we have to we would rent for a while, but home prices are still low and I would love to purchase if possible. I apologize for writing such a long story here, but I have been a myfico member for a bit now and have been lurking the forums. Everyone seems very helpful, so I would greatly appreciate any answers or advice you can give me.

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The employment issue might be a concern. One year at this job or one year in this industry? What was your previous employment like... what kind of income? Self-employed? W2?

If the debt is paid, and none are outstanding, with the age of the negatives I don't see that being a problem. Where did you get your score from? They will check all three credit scores (experian, equifax and transunion) so you need to know what is on those reports as well. Have you gone to annualcreditreport.com and pulled your free reports?

If you have no real outstanding debt, with combined income of 60k, you could likely qualify for a home alot higher if you wanted to. I was qualified for 277k with a 65k salary. I opted for a more affordable 180k home, but i don't think you have much to worry about. I think you could get a loan.

Although, I agree, you should work on your credit as much as possible prior to pulling the trigger. If you go FHA it won't matter as much, but with other types of morgages, your interest could be determined by your scores, and they will use the lowest mid score between you two.

-scott

[Dk30]

Thanks for the answers! First of all I have one year at this current job. I was working in the same sort of field for two years at my last job and I was laid off. I was without steady  employment for about two years, except for about 4-5 months I was working as a freelance recruiter from home for an insurance company and was making a commission only income. So I have about three years experience in the field but there was a gap. I did get all three scores, I believe they were 660, 665, and 675. The myfico site says 675 is my current score. Again, I really appreciate people taking the time to give advice.

[JM-AM]

You have a few different issues that can cause problems in my opinion.

1 Your work history even though same field, the long gap between employment can be an issue. Possible work around is to have Fiance be borrower and you be co-borrower. But the best case scenario would be to apply in Fiance name alone and just add your name to the deed In my opinion.

2 Your new credit in the last few months may also set you back. Lenders prefer not to see new credit in the last 12 months. This is not always a deal breaker, just depends on lender and investor guidelines. Stop applying for credit while thinking about home purchase.

3 Your credit scores do not say where you received them from? 

4 Your negative accounts can play a part in a decision no matter if they are paid and or settled. We are always at the mercy of the UW, while they have guidelines issued by the different programs, lenders also have additional guidelines, and lender investors also have a set of guidelines, then it is solely up to the UW to approve or deny based on his or her professional opinion according to these guidelines and your file. 

[MovingForward_2012]

I guess I was pretty lucky given that I leased a new vehicle last month (didn't have much of a choice), and acquired two CCs in the past 6 months. I pre qualified no questions asked with a mid fico of 703. So it could be lender based but I haven't had any problems with the new credit I acquired. A broker in July said new accounts are only considered if they are acquired 120 days from closing and he encouraged me to app for new credit before that lockout period. The new broker I am working with that will be doing the loan has no concerns with my recent accounts. Like you said, could be lender specific or more sensitive with lower credit scores..

If your girlfriend is the only qualifier, you may save some headaches and pay a lower interest rate which can allow you to get more condo or pay a cheaper mortgage payment. The employment history could pose a problem as others said...they usually like to see at least two years of steady employment.

[Dk30]

Would having a co-signer with high income and good credit help if necessary? I would like to do it without if possible, but a family member has talked with me about the possibility of being a co-signer if we can't get approved on our own.

[MovingForward_2012]

I'll let someone else answer your question as I am not sure. I am not a mortgage guru...learning as I go along. I don't know if the cosigner process works the same as a auto loan or not.

[JM-AM]

The term co-signor is not valid any longer in the mortgage industry.

Any applicant would be considered a co-borrower.

In my opinion I would go speak with a LO or a Broker ( my choice would be broker since have many more options ), Explain your concerns and situation and let them guide you on what they feel is in your best interest according to programs available, and lenders they do business with. They should be able to spend the time to explain your options and what they feel would be the best options for your situation, whether it would be for you and fiance to apply together, your fiance apply alone, or even possibly have another or a different co-buyer.

Having a co-buyer that will not be occupying the property limits the type of program and or loan available to you. Just wanted you to be aware of that. 

[StartingOver10]

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MovingForward_2012 wrote:
I'll let someone else answer your question as I am not sure. I am not a mortgage guru...learning as I go along. I don't know if the cosigner process works the same as a auto loan or not.

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No. the loan process for a vehicle and a home are two totally different procedures...not at all the same.

Remember, in a mortgage, once you have the pre-approval that is essentially step one, then you find the house and THEN you go through the entire manual underwriting process.