Will I pre qualify?

[movingup7]

This is a great forum!  I would like to purchase a home in July/August when my apartment lease is up.  I currently pay $840.00 month for rent.   My credit scores are 655, 620 and 587.  I'm working on cleaning up my experian report that scores me at 587. 

 Here is my monthy expense run down:

 Monthly salary $3640 (plus yearly bonus of $3,000)

 car payment $298.00

 student loans $400.00

 credit cards paid off zero balance

I had a bankruptcy in 2004.  But I'm hoping it has been long enough.   I would like to qualify for a $110 to $120,000 loan.  I would go FHA w/ 3.5 down.  Should I try or wait longer?  Thanks!

[Anonymous]

Not an expert but I will tell you what I know.

Your mid scpre should be 620 or above. You are RIGHT there. Don't do anything to lower your scores and keep working to raise them.

Your income with a 43% dti allows 1565 for debt payment. I didn't use your bonus b/c I don't know how an underwriter will count that. You have 798 in debt which allows 767 for your prinicpal, interest, pmi, taxes and insurance payment.

120000 mortgage with 3.5% down with 5.5% interest and 1.75% upfront PMI gives you a mortgage of 117826 gives you a principal and interest payment of 670.00

You can see there is a difference there of 97.00 but you still have to cover PMI, taxes and insurance. I don't know what taxes and insurance run where you are.PMI probably around 75.00 a month.

There are many variables though..for instance I used s 43% dti, a LO might go a bit higher. I figured 5.5% interest, I am closing with 5% next week, that could make a difference. A bit more down would help as well.

They may count your bonus (I think it has to have happened for the last two years and then they take an average of the two years) I also used 120,000 house, moving down to 110,000 could help as well. Or a combination of any of these factors could help you get where you need to be. You are so close.

The best thing to do is to sit down with a good loan officer and let him tell you what he needs you to do.

Good luck!

[WannaHouse]

Worry more about the mid score; 620. They use that. It would really help if you could boost that by 5-10 points.

As Teacher said, talk to a loan officer. Have them go over your credit report and tell you exactly what you need to do to qualify by June/July.

Your monthly debt does seem a bit high, but a loan officer is the best one to tell you that as well.

[movingup7]

Thanks for advice!