topic Re: Prepping for a mortgage in Mortgage Loans

Prepping for a mortgage

Anonymous — Wed, 08 Jun 2011 16:28:43 GMT

First off, this website is awesome!

I currently have my house for sale. My wife and I are looking to move into the country. I am trying to do everything I can to set myself up for our next mortgage. I have no late payments in the last two years on any account. We have never filed bankruptcy. I have no collections, but one charge off from 4 years ago ($141). My debt-to-income is no issue, because I have basically no debt.

My only open accounts are a Kohls card with 8% balance (open 4 years) and my current mortgage. Last week, I paid off an auto loan because we sold the vehicle. It was a 48month term with 2 payments left (never late).

My question is... Once this auto loan reports as closed, I predict it will lower my score. If I plan to buy a home in the next 6 months, should I open another credit card account or get another installment loan? Im not sure if the new hard inquiry plus new account will help or hurt me.

Any input would be greatly appreciated!

Re: Prepping for a mortgage

Anonymous — Wed, 08 Jun 2011 16:48:57 GMT

Welcome...

You did not mention what your current scores are. You may be fine as you are.

What type of loan are you looking for on the next home? Will you have equity from the sale of your current home?

Re: Prepping for a mortgage

Anonymous — Wed, 08 Jun 2011 18:27:10 GMT

As of January, my "beacon" score as stated from a refi lender, was 640. Since then, I haven't had any significant accounts drop off that would hurt due to credit length. I haven't had any hard inquiries since. The only change I am aware of would be some mortgage lates that have aged off my report.

I would like to think my score has increased slightly since then, due to timely payments and disappearing lates.

As I mentioned, we currently sold a vehicle. It was sold for $8,000 and my payoff was only $700. This money is sitting in an account as of now, but we are currently looking for a vehicle, so most of this would be spent. Thanks to Dave Ramsey, we refuse to get into another car payment. We will purchase one out-right without taking on a payment. Contrary to Ramsey, I wouldn't mind a very small installment loan or credit card for increasing credit.

We have lived in our home for 9 years and have invested quite alot of money into it. If all goes well, we will get approximately 20k after it's all said and done. This would be the source of our down payment. My income is 35k with no debt.

As far as what type of mortgage we are looking for, I am uncertain. I guess I would like to see all my options on paper when that time comes and go from there.

Thank you so much for the reply!

Re: Prepping for a mortgage

Anonymous — Thu, 09 Jun 2011 14:15:57 GMT

You are welcome.

You should be in good shape for an FHA loan IMo. There are several add ons to the rate on Conventional loans that youwould not be subject to on most FHA loans.

I think you are right, a new cc with a small limit and paid off monthly will only help your scores. Sounds like they may be fine as is though.

You will have some options when the time comes, good job in your preperation.