My husband and I currently own a home in NC. The estimated market value is $550,000. The total outstanding balance on the first and second mortgage is $220,000 so we have lots of equity. Both mortgages are not in my name but I am, of course, on the deed to the house. We are wanting to sell the house and move to our dream destination of Charleston, SC. We both have the type of jobs where we can live anywhere as long as an airport is nearby. The house in NC needs some cosmetic updates to get listing ready but will probably sell quickly once that is completed. That's all the good news.....here's the complicated part.
We have found a new construction home in SC that we want to purchase. Purchase price around $450,000 and completion in about 6 months. So maybe by Christmas. Perfect. But this is the last home available at this price point and location, so we would have to have offer accepted, pay down payment, and get pre-approved or qualified for the new mortgage.
My husband is self employed. He took out a lot of debt to build his business so his scores are low and income hard to document due to tax write-offs. So the new mortgage would have to be in my name alone. My income is $120,000 and good employment history....5 years in current position and 15+ in the same field.
I have been adviced to take a HELOC on the first property, use the money to get the home in NC updated and on the market, pay off some remaining debt, and have the funds for down payment on new home. This would be approximately $130,000. My remaining debt at this point would only be a car payment and school loan totaling $1100 monthly....and the HELOC payment.
Now the bad news. My FICO scores are/were 568/601/609. I also carried a lot of debt on CC but have since paid down the balance on all to <10%. I just did this recently and the payments haven't posted yet to my credit report....so I am hoping this ups my scores to above the needed minimums. The score simulators are confusing. Myfico says my scores will boost to the 688 range but my Equifax simulator only puts me at 629.
I also discovered two 30 lates on two of the credit cards. One of these was in February of this year and I have had no luck getting it removed. It's probably real.....I was very sick in February with flu.
My student loans show a period last year, early 2013, of 120 days late. This was where they were renegotiating my payment terms based on income and sent me paperwork to fill out, which I did, but they sent the wrong paperwork. Then they sent me another form but told me to check the incorrect box on application. Long story short it was their errors that delayed the new payment terms and in the interim it was unpaid. They told me that when I began the new payment schedule in September of 2013 that they would go back and update the lates but apparently they did not.
There are also 3 medical collections that I was unaware of.....but 2 appear to be duplicates using different names??? One was in 2012. All for $250. Again confusing because two credit bureaus show them as paid and the third, Transunion I think, show it as not paid but charged off??? Again, I had no knowlege of any of these as I never received notices and paid the accounts directly to the medical facility. One wasn't even for me but for my adult child whom I am not legally responsible for paying medical bills. I have disputed these negative accounts but am having little luck getting them removed.
So, my question is will my credit score increase sufficiently after the credit card payments post to my credit report?
Will my HELOC still be approved with the negative collection items remaining? Is there a way to get these removed? I am told there is not and they will stay on for 7 years.
Is a HELOC even the right way to go about fixing up the old house to sell and paying down payment on the new? Wouldn't applying for two different mortgages at once be another hit on my scores? Woudn't the same institution want to do both loans? Or somehow bridge the two?
Would appreciate advice. Thanks.
