topic Re: First Time Homebuyer looking to purchase this summer... Do I qualify? in Mortgage Loans

First Time Homebuyer looking to purchase this summer... Do I qualify?

Anonymous — Mon, 09 Feb 2015 09:39:47 GMT

Hi all---

Long-time lurker, first time poster. My wife and I are looking to purchase a house late this summer (target: August). Working on cleaning up credit and generally improving our chances. We'd love your thoughts. Disclaimer: Wife has poor credit, but also no real income so I will be buying the house without her on the mortgage. This is not a community property state.

Credit. Currently, 648/642/619. I currently have 8 collections: 6 are medical. Of these six, I've reached a PFD for one which should be coming off the next update, and just heard back from a different agency that owns the 5 others who has agreed to delete upon full payment (weird insurance snafu at one hospital, all low balance(<$250), so I effectively am left with two collections: an old $200 one for an electricity company that is 5+ years old, and a $63 one from AT&T from 4+ years. I've sent PFD letters to both agencies, but have yet to hear from either. I don't plan to pay either one unless they agree to PFD as I don't want them updating. One 30 day late on the credit card (from sheer laziness) dated Jan 14. Edit to add: That collection scheduled to be removed via PFD officially is removed! Down to 7.

As for positive credit, I have two capital one cards with a total of $1450 limit and I'm staying at 5-10% utilization. AAoA is 1.8 years-- the newest was in August. I also have an auto loan with $20K remaining (it has a nasty interest rate and I will refinance after I buy a house). I would love to get some more cards, but I dunno if upping my credit limit would help at the stage more than hurting my AAoA, inquiries, etc.
Income. My gross income for 2014 was $136K. 2013 was weird because I moved cross-country halfway through it for this new job. I am hourly, but full-time is a minimum of $103K. I expect to make $120-135K this year with overtime/bonuses.
Source of income. It is hourly wages plus overtime and occasional shift bonuses. No other income source.
Monthly debt payments. Auto loan: $500/mo. Credit card minimums: Let's say $100/mo. My wife has some student loans, but I'm unsure of whether or not they'd factor in. We owe the IRS ~$6K for 2013 and have set up a payment plan that hasn't started yet. There is no lien of note. It looks like I will owe them another $1K this year-- unsure of whether or not to add it to the repayment plan or pay from my reserves. What's look best for the loan?
Employment. Full-time employee: Registered Nurse, ICU, at a large hospital.
Assets/Reserves. Our reserves were depleted upon moving in 2013. 2014 was kind of a "steadying the ship" year, and only now are we meaningfully saving. I expect to have approx $25-30K in savings by the end of July. No 401K/IRA balance at the moment. It was depleted for the move and I am young enough that I will start it up again after buying the house.
Location. Central Connecticut. ~30minutes to Hartford or so.
Property. Single-family
Value. Max value $350,000. Our personal target is $300K
Occupancy. Primary residence. We currently lease.
Transaction Type. Purchase.

We currently lease for $1900/mo. Given the price of houses in the area and our relatively meager assets by this summer, I am considering 3.5% FHA vs 5% conventional. Also, keeping an eye on any decent homepath properties as the lack of PMI interests me. Hoping that by removing the medical negatives and keeping utilization low (it's been high until this month), my scores will increase to high 600's by then.

Thoughts?

Thanks!

Re: First Time Homebuyer looking to purchase this summer... Do I qualify?

StartingOver10 — Mon, 09 Feb 2015 12:19:56 GMT

Seems like you have no real debt other than your car payment so generating savings for the downpayment, and closing costs is a wise move on your part.

Hopefully you can get all the collections deleted. That will help your score tremendously. The recent 30 day late (Jan 2014) is hurting you. Have you tried to GW it?

I do think that paying the shortfall on your 2014 taxes will be helpful to you since it is only $1k and you have an outstanding 2013 IRS payment you are just starting to make. IMO it will look better than adding it to your current payment plan.

Are the scores the mortgage scores that are now available here on MyFICO? If not, I think you should take a look at the mortgage scores as they are very different from FICO 08. You can get them here: http://www.myfico.com/Products/FICO-Score-3-Report-View/

Re: First Time Homebuyer looking to purchase this summer... Do I qualify?

Anonymous — Mon, 09 Feb 2015 12:55:48 GMT

Thanks for the advice.

I am actually planning on sending a GW letter, but it's Capital One so I'm not super optimistic about it getting removed. My scores are actually credit karma + sesame for the three bureaus (I know, I know...). I ordered the 3 score monitoring here yesterday, but I didn't realize I had an old account here and therefore was unable to pull it up as my SS# is tied to my old account. I will be calling customer service later today to rectify that and will report back here with the new scores.

Re: First Time Homebuyer looking to purchase this summer... Do I qualify?

Anonymous — Mon, 09 Feb 2015 16:36:37 GMT

Is your wife goin on the loan also?

Having 4 RNs in my family I know y'all are subject to move around hospitals in the same city, and even around the country, but ya need to show some stablility for the next while. Finding employment for y'all is not hard.

Do what you can do on the collection, but I'd go to work on the IRS and pay them off before mortgage hunting. Y'all have the income to do all this, ya just need to focus.

Re: First Time Homebuyer looking to purchase this summer... Do I qualify?

Anonymous — Thu, 12 Feb 2015 01:56:46 GMT

Looks like you make a decent income. You need to pay the IRS off. I'm in the same boat.

Re: First Time Homebuyer looking to purchase this summer... Do I qualify?

StartingOver10 — Thu, 12 Feb 2015 13:54:25 GMT

@Anonymous wrote:
Looks like you make a decent income. You need to pay the IRS off. I'm in the same boat.

Actually, the lenders are okay if you are on a payment plan and actually making timely payments. Certainly it looks better to have the IRS paid off, but it is not a deal killer to be on a payment plan. You need to make several payments on the plan (Shane said 3 payments). The payment will be included in your backend ratio.