topic Re: Preparing to Buy a House - advice please in Mortgage Loans

Preparing to Buy a House - advice please

boogiesaveslives — Thu, 20 Aug 2015 04:35:33 GMT

I just want to say thanks to the community, I've come a long way since joining a few years ago. You guys rock!

I'm getting pretty close to applying for a mortgage loan. I'd like to see what you guys think about my plan to decrease my DTI as well as shooting for the biggest score bump.

Here's my profile:

Current DTI 46% (based on 375k loan)

Student Loans 60k - mo. payment $365 but currently in deferment

Chevron 0

JCPenney 0 - just paid off balance of $581 and took a 19 point drop!!!

Amazon 0

Victoria's Secret 819 (2230 limit, 37% utilization)

Care Credit 2791 (6000 limit, 47% utilization)

Barclay Rewards 2356 (2500 limit, 94% utilization)

Walmart 0

Barclay Apple 4727 (6000 limit, 79% utilization)

Logix CC 198 (1500 limit, 13% utilization)

Home Design 0

Collections

Franklin (OC AT&T) $81 - paid. GW letter sent

Midland (OC Tmobile) $1200 - scheduled to drop off this Oct

Midland (OC HSBC) $1100 - scheduled to drop off this Oct

There's a couple games I'm playing right now.

1) Student loans - currently deferred, racing the FHA countdown. I'd like to get an approval before they change the rules in Sept.

2) Collections - I'm pretty much going to leave the Midland accts alone. They can go fly a kite.

3) Credit Cards - I'm not sure what order I should pay these down. I think the Barclay Apple and Rewards cards are hurting my scores the most, so I'm leaning towards paying those down next. Care Credit has a 26% APR, and frankly, I just hate it. LOL. I'm using my Logix for day to day expenses, but plan to pay it down to about 7-9% utilization just before the billing cycle closes. I've got about $5500 trickling in over the next month to put towards them, what order should I do it?

Side note, it's nice to see all of the cards I used to rebuild my credit all have zero balances.

Thanks in advance!

Re: Preparing to Buy a House - advice please

StartingOver10 — Thu, 20 Aug 2015 13:33:38 GMT

Does the 46% DTI you show include the future mortgage payment for the new $375k loan? I assume so.

If it doesn't then my answer would be different.

You are right, the Rewards card and the Barclays Apple utilizations are hurting your score. Best to bring each of those cards under 30% of each of their credit lines. If you do that it will eat up most of your cash that you have set aside for cc payments. But it should help your score. Have you tried for a SP CLI's at all? That might help too.

Re: Preparing to Buy a House - advice please

Anonymous — Thu, 20 Aug 2015 15:25:07 GMT

Your best bet would to be get that DTI to under 40% to be safe and really try to take a chunk out of that credit card debt. I recently paid down my utilization from 75% to 35% and my scores went up about 30 points on each report. If you have the funds available, pay off all credit cards except one and keep that balance at a utilization below 10% for the highest increase in your score. As far as the Franklin collection, if it is old enough, it probably isn't affecting your score much anymore but since it is paid most lenders will not consider it a huge problem unless it is very recent. Best of luck!

Re: Preparing to Buy a House - advice please

boogiesaveslives — Thu, 20 Aug 2015 15:53:36 GMT

Yes, the 46% includes the payment. 375k is on the high end, but better to overestimate.

I've been SP the other cards, but thought I couldn't with Barclay but after reading some boards I got a few tricks. Gonna make some chunky payments before I do though.

Re: Preparing to Buy a House - advice please

boogiesaveslives — Thu, 20 Aug 2015 15:58:32 GMT

Thanks kokenwa, that gives me hope! I'd love to see 30 pt increases. I've already made a big dent in the CC debt and will be making a few more big ones. My overall utilization is 42% now, a couple more months and I'll be golden.

Unfortunately the stupid Franklin collection hit my report last week. I think ATT screwed up and I paid it directly to ATT anyway. Tried to talk to Franklin yesterday to have it removed and they won't. Still sent the letter and I'll try ATT. So ridiculous.

Re: Preparing to Buy a House - advice please

Anonymous — Thu, 20 Aug 2015 16:17:36 GMT

@boogiesaveslives wrote:
Thanks kokenwa, that gives me hope! I'd love to see 30 pt increases. I've already made a big dent in the CC debt and will be making a few more big ones. My overall utilization is 42% now, a couple more months and I'll be golden.

Unfortunately the stupid Franklin collection hit my report last week. I think ATT screwed up and I paid it directly to ATT anyway. Tried to talk to Franklin yesterday to have it removed and they won't. Still sent the letter and I'll try ATT. So ridiculous.

Did you include your deferred student loans in the 46% DTI? If not, waiting and paying down your CC debt may push you past the 9/14 deadline (FHA rule change regarding student loan debt), causing your student loans to now be counted in your DTI. Just something to think about!

Re: Preparing to Buy a House - advice please

boogiesaveslives — Thu, 20 Aug 2015 18:12:43 GMT

Yeah, the 46% includes the student loans just in case I don't make the deadline

Re: Preparing to Buy a House - advice please

Anonymous — Thu, 20 Aug 2015 18:15:04 GMT

@boogiesaveslives wrote:
Yeah, the 46% includes the student loans just in case I don't make the deadline

Good call!

Re: Preparing to Buy a House - advice please

boogiesaveslives — Thu, 20 Aug 2015 18:35:38 GMT

Thanks! In terms of the 9/14 deadline, do I need to apply by 9/14 or before? What's the latest I should apply to get an approval in time?

Re: Preparing to Buy a House - advice please

Anonymous — Thu, 20 Aug 2015 18:59:28 GMT

@boogiesaveslives wrote:
Thanks! In terms of the 9/14 deadline, do I need to apply by 9/14 or before? What's the latest I should apply to get an approval in time?

You need an FHA case number before that date. To get an FHA case number you need to be in contract. So it really depends on how long it takes to find a property and get an offer accepted, but if I were you I'd get pre-approved ASAP.

Re: Preparing to Buy a House - advice please

Anonymous — Thu, 20 Aug 2015 21:16:51 GMT

What is the deadline? Is it an artificial deadline?

Personally, I think you need to take care of some things before moving ahead. You simply need to pay down those balances. Both Barclays cards are killing your scores.

Pay the Logix off absolutely.

Victoria's Secret 819 (2230 limit, 37% utilization)

Care Credit 2791 (6000 limit, 47% utilization)

Barclay Rewards 2356 (2500 limit, 94% utilization)

Walmart 0

Barclay Apple 4727 (6000 limit, 79% utilization)

Logix CC 198 (1500 limit, 13% utilization)

If you could push your time table by 1-3 months and pay down most of those balances before applying, your scores would go up. And you don't want to go in buying a home with such high balances.

Re: Preparing to Buy a House - advice please

boogiesaveslives — Fri, 21 Aug 2015 00:48:29 GMT

@Anonymous wrote:
@boogiesaveslives wrote:
Thanks! In terms of the 9/14 deadline, do I need to apply by 9/14 or before? What's the latest I should apply to get an approval in time?
You need an FHA case number before that date. To get an FHA case number you need to be in contract. So it really depends on how long it takes to find a property and get an offer accepted, but if I were you I'd get pre-approved ASAP.

Got it! I know I'm pushing it, but preparing for missing the deadline.

Re: Preparing to Buy a House - advice please

boogiesaveslives — Fri, 21 Aug 2015 00:57:58 GMT

@Anonymous wrote:
What is the deadline? Is it an artificial deadline?

Personally, I think you need to take care of some things before moving ahead. You simply need to pay down those balances. Both Barclays cards are killing your scores.
Pay the Logix off absolutely.

Victoria's Secret 819 (2230 limit, 37% utilization)
Care Credit 2791 (6000 limit, 47% utilization)
Barclay Rewards 2356 (2500 limit, 94% utilization)
Walmart 0
Barclay Apple 4727 (6000 limit, 79% utilization)
Logix CC 198 (1500 limit, 13% utilization)

If you could push your time table by 1-3 months and pay down most of those balances before applying, your scores would go up. And you don't want to go in buying a home with such high balances.

I will have them all paid off in about 3 months, I'm just hoping to beat the FHA deadline (a far reach). Starting 9/14 they will include student loans that are in deferrment in the back end DTI. Which now that my DTI is down to 45%, the student loan deadline doesn't really matter any more. It's all about paying these bad boys off.

The 2 Barclays will be tackled next and hopefully I'll see a good bump. I use the Logix for my daily expenses instead of a debit card, so I'm not worried about that one.

Thanks for the advice.

Re: Preparing to Buy a House - advice please

Anonymous — Sat, 22 Aug 2015 04:44:34 GMT

I had a paid Franklin account removed quickly after I sent a GW letter. Good luck!