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07-17-2009 08:00 PM
Hi everyone, I was wondering if anyone knew if I would qualify for a home loan with my credit scores. They are:
I am tired of renting, and really want to purchase a home. My income is 75000/year. If you have any info please let me know. Thanks
So many more variables that just scores. For instance are you trying to obtain a FHA or conventional loan? Generally speaking FHA loans get you in the house with less money out-of-pocket, and maybe with lower credit scores. However, there are some really nice conventional loan programs out there too. Lots of people take advantage of 80/15's (first mortage 80%, second loan 15% with 5% down) or 80/20's (yeup, that is a 100% loan). Also if you have really messed up credit but have more money to put down up front there are some conventional loan programs out there to help you get a house.
But for the sake of argument, I will assume you want a FHA loan. Here are a few quick and dirty things to know:
1. They are looking for an AVERAGE score of 620 based on all THREE bureaus. Currently the 2 you listed is an average 607. Your Experian may or may not get you there.
2. Maximum house payment per month is limited to 29% of your gross pay. In no case, can your monthly house payment exceed this amount. $75k/12mos*.29 = $1813/mo
3. Maximum debt to income ratio is 41%. This means all bills you pay (that show on your credit report) PLUS your house can equal 41% of your gross pay. So the more you owe, the less your house payment can be. $75k/12mos*.41 = $2563/mo
4. FHA loans require you pay taxes and insurance with your loan payment. Easy to figure out. Just divide yearly costs by 12 mos and take those onto your monthly mortgage.
5. FHA loans also require mortgage insurance until you have a loan value of only 80%. This fee is 1/2 percent (.005) of your total loan amount and then spread over 12 mos for a monthly payment value. For instance a $150k home would cost you $62.50/mo for mortgage insurance.
6. I believe they require a solid 12 mos of no missed payments, lates, etc.
7. You can have judgments, but they must be PAID OFF.
More info here:
07-18-2009 03:22 PM
07-18-2009 04:32 PM
To the OP -
I don't know if anyone has said this yet, but have you considered calling and asking for your "closed, paid on time" CC to be reopened? That positive TL could help your score quite a bit.
07-18-2009 04:48 PM
And I'm not going to pretend to know your business, but that 8k tax credit probably isn't going anywhere. There will be some incentive to replace it you can be sure.
Outside of that, are you sure a mortgage is the next step for you? I have spent the last few years repairing my credit. I have very few issues on my credit report that have yet to be dealt with, I make decent money, but I can't imagine adding a mortgage payment to the mix. Not until I have a 20% down payment, more time at my job(s), and a flawless CR anyway.
That's how things used to be.
"For decades mortgage dealers insisted that home buyers be able to produce a down payment of 10 percent or more, show a steady income and good credit rating, and possess a real first and last name. Then, at the dawn of the new millennium, they suddenly threw all that **bleep** out the window and started writing mortgages on the backs of napkins to cocktail waitresses and ex-cons carrying five bucks and a Snickers bar."
Again, I'm sure you have your reasons, but an 8k tax credit isn't going to make a mortgage payment more affordable if you can't afford it now. By taking the time to improve your credit file, you can save tens of thousands of dollars or more on a 30 year mortgage.
07-18-2009 05:03 PM
If your paying high rent or even mediocre amount of rent and managing things even half way decently, saving up an outrageous amount of money for 20% or even 10% down can be next to impossible to do, unless you want to be a first time home buyer at retirement age. We are looking at a 65K house and hoping we can get it or something like it soon. I am at a 551FICO and hope to get some good info from the mortgage lady Tuesday on the bare minimum I need to do to get into a home before Dec 1st.....with this yahoo and his cronies in office I wouldnt bet on anything lasting like the 8K tax credit thing. By spring I imagine bare scores will be in the 660-680 range and you'll probably have to give uncle Sam 8K in order to be able to buy a home....and I hope you dont need anything health wise or you'll really be in trouble...but thats for another forum. Where we live in Michigan there are unvbelieveable deals out there. Real nice homes and older fixed
(I mean real nice) up historical homes for less than 50% of value. So with a baby on the way and rent here going up this month because I am not signing a 12 month lease and then having another collection on my credit when we do leave and I cant afford all those thousands of dollars all at once for breaking a lease and our lease is up, so the month to month dealio is 850$ ....thats absurd in this area, outrageouslyu rediculous....there taking advantage of the market right now and all the people that CANT get a mortgage because of knee jerk reactions to others errors. So a MSHDA 0% down loan on a 65K home when I make 55K a year ....is an excellent decision and choice in my opinion.
So I think it all depends on your circumstances on whether you buy and when you buy and whether or not you have anything to put down or not.