Will I hurt our chances to get a new home?

[divine6771]

My husband and I reconciled 2 years ago after 4 years of separation and are now ready to buy a house. We originally wanted to buy the home together, but I'm not sure if I will do more hurt than good. 

Husband:

Income- 80,000 as electrician (W2), c

urrent job for one year, before that laid off for few months but over 5 years as electrician

2 trade lines - NFCU Rewards $1,000 limit - currently $54 (joint account); Barcalys Wyndham cc $2,000 limit $0 (au on my account) 

Scores- Ex 620; EQ 656; TU 687 I have since paid all collections and disputed accounts and am waiting until all investigations are complete. TU has already 

deleted all negative accounts, hoping for simlar outcomes with Ex & Eq. No charge-offs, judgements or late payments and hopefully after the disputes no more collections.

No monthly debts other than cell phone and car insurance and union dues are $200 a quarter.

Single family home in PG County MD under $250,000 

Assets - 2k in 401(k); $1,000 in savings and soon to be tax refund of 2-3k.

Me:

Income: $51,560 5yrs at current job; W2 salary

Trade lines: 5 cc's - Walmart 1,000 - $50 bal., Khols 500- $0 bal. NFCU siggy 15,000 - $2,000 bal (0 by the end of the month) and 2 from above barclay & NFCU; Car note - $208 monthly payment; Student Loans 40k in deferment; I graduate in May, and will be attending graduate school in the fall.

Score- TU MyFICO - 709, not sure of the other 2 but they all have the same info so shouldnt be too far off;  2 charge-offs from HSBU due to fall off in August (no luck with multiple GW letters) and one 120 day late on a consolidated student loan from 2009.

Debts- Mortgage- $106k payment is $992 a mo and does not report on my credit but no lates in over a year, $155 condo fee.   Car note $208, min cc payments are $100 a mo. Student loans in deferment for now.

Assets- 11k in 401(k), 3k in savings 

Our mortgage has a spotty payment 

history from my time as a single mom and it's currently underwater so we will be renting instead of selling.

Right now I'm waiting for the results of the disputes to see where his scores land and we are focusing on saving. I can let him app alone if it means we have a better chance. I can also add him as a joint user on another card or two. Any advice is greatly appreciated.

I also want to say that this site has been such a blessing to me. When I started lurking in 2011my score was 533 and all could get was a $500 secured card.  When I started on my husbands credit last August he didn't have a score in Fico, credit sesame or credit karma! Now all of his scores are over 600.

[ShanetheMortgageMan]

Nice improvement on your guys' scores. If you can add him as a joint account holder to yours then he should see a bit of a score improvement since it appears he only has 2 open accounts (one being an AU).  I'd wait until all of the disputes have concluded (and the dispute comments have been removed from your credit report) before having your credit checked, otherwise you'll face a lot more scrutiny in getting approved.  Also wait until the NFCU credit card reports as a $0 balance, as you should get a little score boost from that.

With all of your combined income & debt payments (cc's, union dues, mortgage, HOA fee, student loans, car loan) your debt ratio should be fine to purchase a $250k home using FHA financing & a 3.5% down payment.  Since your home is underwater, you won't be able to rent it out and also use that rental income to qualify, but you should be OK to qualify without that rental income anyway.

Not sure if you were planning on using funds from the 401(k) to help out with your down payment, but if you are then that should be fine as long as there is a paper trail of the funds coming from the 401(k) into your checking/savings account.  60% of the remaining funds in your 401(k) can be used as "reserves" to help you qualify as well.

[divine6771]

Thank you so much for your quick response. I've been driving myself crazy thinking about all the different scenarios.  Now I have something to work on and keep myself sane for the next few days.  I definitly want to use my 401k which is why I was so bummed when I thought I couldn't be on the mortgage app. I finally feel like I'm onthe right track. Thanks again.

[ShanetheMortgageMan]

You are welcome, let us know how things turn out.