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10-13-2012 06:04 PM - edited 10-13-2012 06:09 PM
Okay - my husband and I are ready to start the adventure of home-buying (for the 1st time). He is a stay at home parent to our 6-month old daughter (no child care costs). I am an attorney (for a child welfare agency). Husband has historically spotty credit history, no income, and only $2K in a truck loan. We have no idea what his credit is going to look like, but plan on tackling that in the next week or so.
Ideally, we want me (only) to be on the loan, and both of us to be on the deed. I know that the truck may be used in calculating my DTI (since I'm 100% of the household income). We live in Alabama in a very low cost of living area. The houses we really like are listed in the 130s-150s. We were thinking about a FHA loan and there are areas near us that qualify for a USDA loans as well. We own a 2b/1b (700sq ft) mobile home which we will be renting for $460 a month to a friend (after paying lot rent we will net $350 a month). We own the mobile home outright (through an inheritance), but don't own any land. We hope to buy a "real" house in about 6 months.
Should we work on paying off the truck (husband's debt) first?
Should we pay off the credit card with the highest use ratio first?
Should we pay off the lowest balance first?
Should we pay off the highest interest rate first?
Here are my facts:
EQ Fico (10/13/12) - 689
TU Fico (10/13/12) - 692
Credit Utilization: 61% (yeah, I know its bad) ($15,700/$25,500 - mostly from school) $9K @ 11%, $1,700 @ 13%, & $5K @ 19.9%
one 30 day late in 1/2008 & one in 9/2006 (family member had a credit card in my name; I closed it when I found out about it. I didn't prosecute, so the lates stayed on my CR).
Car Loan: $5K (Husband & Me) @ 4.5%
Car Loan: $2K (Husband) @ 7.9%
Student Loan: $47K (paid down from $60K) @ 3.5%
Total Debt Payments per Month (minimums only): $1,325
Gross Income Per Month: $4,300 (expect 10% raise by end of year)
Steady Employment for 5 Years in Field
Down Payment: $10K (savings + gift from my parents)
Emergency Savings: $1K (getting 0.95% interest)
10-13-2012 07:37 PM
Lot of questions... I'll try to answer what I can...
1- Will your husband be on the loan as well? Since he does not have an income, it will be better to leave only you on the loan, so his debt won't be counted in the application process.
2- What is the "minimum payment" on all of your Credit Cards + Car Loans? (Your name only)
3- Are the credit scores you posted FICO? (where did you get them from)
10-14-2012 05:01 AM - edited 10-14-2012 05:04 AM
1. I don't want my husband on the loan. The plan is to not include him.
2. Credit Card Minimum payments are: $200, $25, and $100 (respectively), Car Loan is $277
3. The scores are from FICO. (When buying my car, I got a crash course on Fico v. Fako)
10-14-2012 05:50 AM
10-14-2012 06:15 AM
Update to Add:
Ran Husband's Scores
TU - 748 (from FICO)
EQ - 774 (from Equifax site)
He is reporting two car loans: $277 (Ours) & $235 (His only)
And 2 Credit Cards (which are his mother's) which he is an AU on (they have balances - so I don't know if that helps/hurts him - since he doesn't have his own card.)
No COLLECTIONS!!!! (WHOO HOO!)
No Student Loans
So, he may be on the loan after all!
10-14-2012 06:19 AM
Congrats and good luck on your journey! I would tackle the loan alone in your case. His car payment would push your debt to income ratio above 50% by my calculations (guesses on taxes/insurance). I used 130,000 and 3.5% down payment assuming FHA. Your scores will qualify for FHA. And employment and reserves look good (although reserves not necessary for FHA, they helped me in automated underwriting). Your down payment is only 3.5% required for FHA. I would put the remainder of the $100 in the emergency account. Have you checked USDA income limits in your area? In my area your income would be very close to not qualifying.
Re: USDA - We would be under for the MOD.INC-GUAR.LOAN limit of $74K
Not the Low Income.
I prefer to do an FHA loan, so USDA is an "if not FHA then..." plan.
We have a very low overhead where we are now and hope to pay off several thousand in debt between now and applying - so this is my way of feeling out the best place to start.