Will I get pre-approval? If not, what do I need to do?

[zoopydoo]

Hi,

I've been lurking here for awhile trying to soak up as much information as I can about my score and what opportunities I have with it. 

Right now, my primary goal is finding a place for my son and I to live and while I didn't think buying a home was a possibility, a "low income" unit right near my sons school recently became available for purchase.

To put it in perspective, the median sales price where i live is 740k, and the average listing price is 1.4 million. 

The 2 bedroom condo I just learned of is 160k.

So, while I thought I was destined to rent for awhile until I boosted my score I feel like I have to give this a shot. 

Looking at Shane's post here I figure it would be easiest if I just ran through these points as he stated them.

1. For the past 2 years I held about 5400 in revolving credit debt. I paid everything off in full the 3rd week of July 2013 and I currently have a zero balance on the account. 

2/3/5. I'd been a freelancer for years and didn't make a lot of money. I grossed about 15k in 2010 and about the same in 2011. In 2012 I grossed about 48k. 

This year I should gross near 55k. 

while I still do make freelance income, For the past 1.5 years I've been employed by a company and bill about 150-160 hours a month. I'm not techincally "full time" and sallaried, but I do earn benefits and get paid an hourly wage.  (I wouldn't call this freelance work, though since they call me an employee) 

4. as for current debts, i've worked hard and I'm happy to say I have very little.  I paid off all revolving debt and the only outstanding debt that remains are two months worth of car payments totalling $750.

6. As for assets, I have about 45k. 

8/9/10 I'm looking to secure pre-approval for a townhome that is 6 years old and is being sold for around 160k. It's my first home purchase and it would be a primary residence. 

I can put down at least  5% and maybe up to 8% of the sale price as a down payment . 

Now for the part I'm worried about: my credit score is just 620 according to scorewatch. This doesn't seem to take into account the fact I recently paid off all of my credit card debt (around July 20th 2013), but frankly I don't know when that information will effect my score and I need to secure pre-approval in the next 1.5 weeks. 

So, all that said, I guess what I'm asking is if I'm in a good position to get pre-approved for about 142k over 30 years , and if not, what can I do to better my situation. 

Any insight would be greatly appreciated, thank you

edit: a somewhat big point i forgot to add is that the selling agency is requiring pre-approval for a non FHA loan. that is a big part of my concern. 

[StartingOver10]

Welcome Zoopydoo!

So now all your revolving debt is zero?

It sounds like the zero balances haven't hit yet. When is your reporting dates on the cards? You might see a very nice bump now since it is right at a month since you paid them off.

The rest of your file sounds good. You have enough for a conventional loan. When you make application, make sure you mention you have paid off all of your debt. You still have the credit lines/cc's right? Good, keep them open.

Sounds like you have a great opportunity and that you are in the right position to take advantage of it. You might want to pm shane too...

[zoopydoo]

Thanks very much for the welcome!

Yes, currently all revolving debts are zero. The statement closing date on the account is the 18th of each month (i think).

I still have credit lines open, yes. 

Another question I have is about my car payments. Since I have 2 months, and about $800 of payments left, would it help me if I paid everything off before going in for pre-approval?

Thanks again,

[StartingOver10]

No, you only have two payments left.

You might even get a little boost on your score if you had left a small amount on one card. That is the traditional way to boost your score: all cards at zero except one reporting less than 10% of the credit line. However, the mortgage scoring algorium, from what I understand, likes zero balances on revolving. We are past your reporting date now since today is the 19th so you will see the result soon.

You didn't post the real estate taxes, insurance cost or HOA/condo fee, if any for the property. This info is important too, for your ratios. I assume that you will be fine. But you are in California, right? I assume the taxes are higher in that area just because of the median prices you posted.

[zoopydoo]

Thanks again, StartingOver10

The condo fee is about 250/mo, and frankly I'm unsure about tax rates.  I live in MA, and in an area with pretty high property taxes. 

[Genkeim]

You might try looking at your counties website. I'm in Indiana and I'm able to look up the tax records for any property in counties surrounding me. It was good information when we were looking at properties. Do a good search for GIS or Tax Records and your county and state. See what you come up with. Oh also on some of the reality sites they give the tax information also. trulia and zillow come to mind.

[StartingOver10]

^^Good info. However, let me caution you about using any other site than the county's actual tax assessor's website. The info that populates third party sites (Trulia and Zillow, for example) comes from various sources but does NOT come directly from the county's tax site. The propensity for errors is huge. I've seen tax info that is several years old on those sites, and others. Use the current data, your county's website and you are much less likely to run into an error.