question for the mortgage gurus

[Anonymous]

Hello,

I am looking to buy my first home.  I live in the Cleveland Ohio area.  My salary is 42,000.  I am looking to buy in June 2009 (paying off cc debt).  I plan to have between 15,000-20,000 saved for a down payment. 

I also work a part time job - it was my full time job prior to the job I'm in now. I left there in January 2008, since then I have been working once a mnth and within the next few months they will promote me to a part time manager (will bring in approx 500/mnth)

Once all my cc debt is paid off (right now about 8,000 total) my only monthly debt payment will be 380 for student loans.

I hope to purchase a townhouse @ 130-140,000.  Since this is so far away I'm just really wanting to get an idea of what I'm looking at.

What are my chances of being approved??

Thanks in advance!!

[ShanetheMortgageMan]

Hi michelle.  Your debt to income ratio looks fine to purchase the home you want, even without using your other part-time income, with the down payment you plan on having saved up.  At the most, on a $140k sales price, you'd have to bring in 8% down (3% down + 5% more for being in a declining market) for conventional financing... however if you opt to go with FHA then you can get away with just putting 3% down.

The only big remaining question is how is your credit?  What are your scores?

[Anonymous]

Shane,

Thanks for replying.  I've been reading this forums for a couple weeks now and you are so kind to lend your wealth of knowledge.

As if today all of my scores are in the mid 600's.  Overall my credit is OK.  My main problem is is that I have the majority of my credit cards "maxed out."  I have two 30 day lates from 2004 and one 60 day late in 2004.  I do have a car payment but that will be payed off next month (yay!).  Other than that I only have my student loan payment.

I'm currently living at home with my parents so all of my cards will be paid off by the time I'm ready to apply for a mortgage so I'm going to assume that my scores will raise.

If I'm reading you original reply right I really would only need 3-8% down even.  My question now is, I plan to have between 15,000 saved by the time I'm ready.  I know that the more down the better, but I will also need reserves and some funds for furniture.  Do you think I would still get approved with less than the whole 15,000 down?

Thanks for your guidance, I'm really trying to plan this right and I'm just not ready to really sit down with a lender.

Michelle

[ShanetheMortgageMan]

You are welcome.  Your credit should be fine, appears all of the negatives are well behind in your past... so those are a non-issue.  I have total confidence that you would get approved with 3% down on FHA, so you could keep the rest as reserves/closing costs and help you with furniture/moving as well.