When to start FHA process

[Anonymous]

Our bankruptcy will be discharged 2 years in May 2011. Our average scores are mine 650, my husband 585. On the job five years, stable. we make 7400 per month with a car laon in good standing, and each have 2 credit cards, all good standing. no lates. we have never owned a home. bankruptcy due to mediacl bills circa 2003, with a few others mixed in from that time period too. my question is when do we start the fha process? i know we have to wait for 2 years to be approved but do you wait until exact date, or do you stat the process before that so that in may you can select a house and be ready to go? if so, when do you start process? can you be pre approved months before? we want to know what we can be approved for so we can start to look for homes in that price range. oh also we have just under 10 thousand for a down payment. thanks so much....

tonya

[Anonymous]

Just out of curiosity, why is hubby's score still under 600 if BK is from long ago and all acounts now are paid as agreed.  HAs there been more lates post BK?  Because otherwise you would normally see his score up above the 600's by now. 

As far as timing, I would not press it right now.  You still got 8 months until the 2 year mark (and some banks are requiring 3).  The 2 year mark is not some sacred marker that makes approval a sure thing either (hence the questions about credit).  It is just the minimum most banks will even consider.   So,  you need to get both of your midscores above 660 to be safe (620 is the minimum but most banks are moving up to 640/660 as minimums).  You need to keep all of your credit in perfect standing (even 1 late with a past BK can make and UW say no, especially if it is within the last couple years...) And once the 2 year mark is over and credit is up to the comfortable levels, then start talking to banks.  You do not want to start looking into it early because:

A:  it is a waste of time

B: Hubby's score is still too low

C:  You will just rack up inquiries that will lower your FICO score (they will have to initiate additional inquiries every couple months to update the approval)  

D:  You will drive yourself crazy.

E:  Any preapproval given to you right now would be bogus because you are 8 months away from the 2 year mark and too many things change in the period.  That is why pre-approvals are only good usually for 90 days or so.

Personally, I would contact whatever banks you are considering going through and find out there BK waiting period.   Then maybe about 1 month prior to the deadline (no more), contact an LO there and see if they can get you a preliminary pre-qualification without pulling credit (this will not be binding in any way, just them doing a snapshot guess of what you can afford based on the income and debts you tell them).  Then you can at least start browsing a bit for homes.  Then as it gets pretty close to the end of the waiting period, contact the same LO and see if they can go ahead and get you the full pre-approval.  With a past BK, try to get him to get a full approval through the UW because any file with a past BK or foreclosure on it is trickier than a standard file so you want as thorough of a pre-approval as you can get to limit the chance of getting denied after you have put time and money into a new home.

[Anonymous]

Not sure why his score is low still. The car is in his name. He makes less money than me, not sure. Thinking of giving usda a shot. I know it says three years from bk but there are other factors that effect your chances. I think we have a shot. We may make too much money though. After taxes we should be okay. Anyway, spoke to the director in my area of Califonria and he referred me to someone even more local to me. Gong to call today in a bit, so we will see. Could happen!!

[Anonymous]

Understand that you have zero chance with your husbands score still being under 620.  So right now all calling is going to do is get another inquiry and drop both of your fico scores.  yes there are circumstances where they will allow you to get under the minimum guidelines for a BK, but that is generally for death int he immediate family (i.e wage earner), divorce, forced relocation, major documentable illness...)

USDA does have shorter BK restrictions I believe, but most USDA is going to require 620 - 640 fico.

Not trying to pick on you, but why do something to lower your score right now when you know the chances are almost zilch.  No lender is going to be able to do a loan with 585 FICO.  That is 3x more likely when you are only 18 months post dishcarge.  Unless your husband had some bad account that fall off soon or has some revolving debt you can pay down, it will take awhile for his score to get up to 620 (and as said before it may very well require 640-660).  Why go throught he time and effort only to actually hurt your future chances by taking a credit ding for the inquiry right now.

In any case, good lcuk with it all.

[Anonymous]

very good points to consider. we have 4000 saved right now but if we wait til may for 2 year anniversay we will hopefully have double that, maybe a tad more, and his score should go up by then. His 2 cards have higher limits then mine and he used it a bit too much lately. He has to pay it down. I have low limites 500, and 300, and have basically my whole amount available. So, I guess we can wait a few more months. We waited this long. Properties are not going up here in southern california, in fact most are still going down. Thanks. Have a good night.

[Anonymous]

what part of SO Cal.  I live in Temecula.

[Anonymous]

rialto right now, but we will most buy in beaumont/yucaipa/redlands area. we used to live in redlands and liked it there. so, we will see......