topic Re: How much do I need to have saved up for closing costs for a NFCU Mortgage? in Mortgage Loans

How much do I need to have saved up for closing costs for a NFCU Mortgage?

Anonymous — Thu, 11 Apr 2019 13:10:16 GMT

Hi all...New member here! Trying to rebuild my credit in time to finally buy a house this year. I'll try to be as detailed as possible to give you an idea of what I'm working with. My Fico 8/Mortgage Scores as of 3/20/19:
Eq: 634/634
Tu: 658/648
Ex: 649/631
Current FICO 8 as of today (mortgage scores will update on 4/20/19):
Eq: 684/?
Tu: 694/?
Ex: 677/?
Credit balance/limit as of today:
Lowe's- $0/$1,000
Credit One- $0/$1,000
Credit One- $175/$1,150
Capital One- $479/$1,500
Target- $1,483/$2,000
Kohl's- $2,533/$3,000
BoA- $2,200/$2,300
Chase- $4,590/$7,000
Fingerhut- $1,887/$3,900
From reading the forums I know that the obvious answer is cutting down on my credit utilization. However I am torn between paying down more of my credit cards and saving towards the closing costs. Just to give you a little background information I was a small business owner for several years. I ended up closing my business and working fulltime for a company 2 years ago, so my 401K savings not that great. But, yet it was still going to help a lot with paying down my credit cards and helping with closing. So I took out a loan from my 401K... Not soon afterwards I got hit with a notice from the city that I had delinquent business taxes. So all of that money had to go towards paying those back taxes for fear it would end up as a judgment on my credit report. So as of right I have $5,000 in my savings. I have planned out my funds for depositing into my savings thru July... by then I will have $10,000 saved up. Im torn between savings funds and paying down credit cards. I don't know what to do. I really would like to have a good interest rate.

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Anonymous — Thu, 11 Apr 2019 14:33:57 GMT

I also wanted to add that I'm interested in applying for the 30 Yr HomeBuyers Choice no downpayment loan...and looking to purchase a home in the low 200s...

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

pgtackle2003 — Thu, 11 Apr 2019 14:43:45 GMT

I belive you'd be better off paying down the credit card balances first. The reason for this is those balances are really going to limit the amount you can get approved for. I didn't add them all up but it appears to be in the neighborhood of 10k in Credit card debt. Getting this lower will give your credit scores quite the boost (especially mortgage scores) and that will help the interest rate in which you can get. So I would tackle the cards that have the highest interest rates first and get those paid down so your overall utilization is at least below 30%. You didn't list your income so it's hard to say if you could get approved for the 200k you're looking for. Also, do you have other debts such as Auto loan or Student loan?

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Anonymous — Thu, 11 Apr 2019 14:52:50 GMT

Thanks for your feedback! My income is 100K...I have two car loans, the balances are $11,707 and $9,074 and no student loans, no delinquent accts or public records... bills have been paid 100% on time.

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

pgtackle2003 — Thu, 11 Apr 2019 15:02:43 GMT

I would suggest you look online for a 'Mortgage affordability Calculator'. There are lots of them around. They would help you determine what you might be able to afford in terms of monthly payments and house price. Basically the lender would take all the payments listed on your credit report (for credit cards and auto loans) and add those up. That will then be your debt obligations. I don't know much about the Homebuyers Choice program, so I'm not sure if they have specific DTI (Debt to Income) ratios that are required. It's great you have no bad information on your credit report. It seems the high credit card balances is the only thing holding your scores down.

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Anonymous — Thu, 11 Apr 2019 15:20:34 GMT

Ok...will do. I'll definitely try to pay in full the BoA card and the Fingerhut credit over the next two months. And I'll chip away at the Kohls,Target, Cap One and Chase balances. I was hoping to apply for a mortgage in late July.

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Caardvark — Thu, 11 Apr 2019 18:10:30 GMT

A house is typically the biggest expense one will have in their entire life. And, even small movements in interest become expensive over the course of a 30 year term. Therefore, in my opinion, you should absolutely, positively with NO EXCEPTIONS, pay down your cards before trying to get a mortgage.

Below is a quick table on your current balances and utilization. Your scores are getting crushed by some of those balances. There are scoring penalties when aither aggregate or individual card utilization surpass 28.9%. And these penalties increase when you surpass 48.9%, 68.9% and 88.9%. (Anything over 88.9% is considered Maxed and gets an even bigger penalty).

Ideally you want your aggregate utilization to be below 8.9% and no individual card above 28.9%. If you truly do not have any late payments, charge-offs,. or collections, I can easily see your score well above 760 if you do, which will get you the best rates.

Account	Balance	Limit	Util
Lowes	$0.00	$1,000.00	0.0%
CreditOne	$0.00	$1,000.00	0.0%
CreditOne	$175.00	$1,150.00	15.2%
Capital One	$479.00	$1,500.00	31.9%
Target	$1,483.00	$2,000.00	74.2%
Kohls	$2,533.00	$3,000.00	84.4%
BoA	$2,200.00	$2,300.00	95.7%
Chase	$4,590.00	$7,000.00	65.6%
Fingerhut	$1,887.00	$3,900.00	48.4%
	$13,347.00	$22,850.00	58.4%

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Anonymous — Thu, 11 Apr 2019 18:16:46 GMT

Wow thank you so much for this information. I will definitely pay them down first. I'll update the forum with my scores in a couple of months. Thanks again!

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Caardvark — Thu, 11 Apr 2019 18:19:00 GMT

But Wait There's More!!!

Mortgage scores are particularly sensitive to # of accounts with balances. So, keep this in mind. Also, search these forums and read up on AZEO
Another way to get your utilization down is to request credit limit increases. Search the forums to see what credit card lenders you have that do not HP for a CLI. You definitely do not want an HP but should be actively seeking any and all SP credity limit increases you can

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Anonymous — Thu, 11 Apr 2019 18:25:33 GMT

I'm literally floored by these numbers... it definitely paints a different picture when I see it like this. Thank you!

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Anonymous — Thu, 11 Apr 2019 18:30:16 GMT

Ok... great idea... I'll definitely have to do research on who doesn't do a hard pull.... I'm in kind of nervous to ask for an increase.

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Caardvark — Thu, 11 Apr 2019 22:32:01 GMT

I'd still recommend paying down your balances a bit before you ask for increases. Otherwise, you're likely to get either denied or small ones.

Step 1 should be to pay all cards to below 68.9% of their credit limit

Step 2 - pay all cards to below 48.9%
Step 3 - pay all cards to below 28.9%

Step 4 - pay all cards to below 8.9%

Step 5 - pay all cards to zero except one (AZEO)

That said, if you don't have any negatives on your report (charge-offs, collections or late payments) I think you stand a pretty good chance of being above 760 after Step 3. That would get you the best rates and take some pressure of paying the remaining balances immediately. Of course, with the APR you are paying, it is still wises to pay them off asap

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Anonymous — Fri, 12 Apr 2019 02:30:29 GMT

Yes...I agree...I rather pay them down...so I will not be requesting any credit increases. I started rebuilding my credit two years ago... the negative things that were on there a few years ago fell off a cpl years ago...so no collections, late payments etc is on my credit report.

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

CreditInspired — Sun, 14 Apr 2019 11:11:16 GMT

@Caardvark wrote:
A house is typically the biggest expense one will have in their entire life. And, even small movements in interest become expensive over the course of a 30 year term. Therefore, in my opinion, you should absolutely, positively with NO EXCEPTIONS, pay down your cards before trying to get a mortgage.

Below is a quick table on your current balances and utilization. Your scores are getting crushed by some of those balances. There are scoring penalties when aither aggregate or individual card utilization surpass 28.9%. And these penalties increase when you surpass 48.9%, 68.9% and 88.9%. (Anything over 88.9% is considered Maxed and gets an even bigger penalty).

Ideally you want your aggregate utilization to be below 8.9% and no individual card above 28.9%. If you truly do not have any late payments, charge-offs,. or collections, I can easily see your score well above 760 if you do, which will get you the best rates.

Account Balance Limit Util
Lowes $0.00 $1,000.00 0.0%
CreditOne $0.00 $1,000.00 0.0%
CreditOne $175.00 $1,150.00 15.2%
Capital One $479.00 $1,500.00 31.9%
Target $1,483.00 $2,000.00 74.2%
Kohls $2,533.00 $3,000.00 84.4%
BoA $2,200.00 $2,300.00 95.7%
Chase $4,590.00 $7,000.00 65.6%
Fingerhut $1,887.00 $3,900.00 48.4%
$13,347.00 $22,850.00 58.4%

Ahh @Caardvark. Kudos to you for breaking it down in an easy to understand and readable format for OP.

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

CreditInspired — Sun, 14 Apr 2019 11:10:09 GMT

@Caardvark wrote:
But Wait There's More!!!

Mortgage scores are particularly sensitive to # of accounts with balances. So, keep this in mind. Also, search these forums and read up on AZEO
Another way to get your utilization down is to request credit limit increases. Search the forums to see what credit card lenders you have that do not HP for a CLI. You definitely do not want an HP but should be actively seeking any and all SP credity limit increases you can

OP, in reference to #1 above, since CreditOne and Cap1 are only $175 & $479, I suggest paying those off first.

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Anonymous — Sun, 14 Apr 2019 21:50:40 GMT

That's exactly what I plan on doing... I'll post an update once it's reported and scores are updated

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Anonymous — Wed, 01 May 2019 17:44:28 GMT

Updated mortgage scores as of 4/20/19:

EQ - 650
TU - 679
EX - 681

So I've bit the utilization bug and I like it! We're currently in the process of paying down more CC balances, but I'm very excited with the results so far. I know that we won't have all cards with the exception of one with zero balances by the time we apply. But getting these high utilizations down significantly is definitely working in our favor. We hope to go for our approval at the end of July. I'll post the updated mortgage scores again on May 20th when myfico generates a new report. Our goal is 720... let's see if we can do it.

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

800who — Sun, 05 May 2019 15:11:51 GMT

Don't even think about mortgage until those are paid down, will pay off in the short term, will pay off tremendously in the long term.

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Anonymous — Sun, 05 May 2019 23:12:24 GMT

Thank you for the reminder...I definitely won't even think about it.

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

800who — Mon, 06 May 2019 21:31:07 GMT

sarcasm?