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Advice

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Anonymous
Not applicable

Advice

I am not sure if this is the right place for this question, but any advice will be highly appreciated.

 

So, I am looking to purchase a home however, I am stuck - I'm not sure what would be the best move. My credit has plummeted due to some personal circumstances. I owe over $3000 in credit card debts. I have about $4000 saved for down payment for my house. I have been paying of a card at a time and paying minimum payment on the rest. My credit is now below 600 but I'm hoping it will go up in the next month as I just paid one off and paid a large sum on the other. Will it be wise to take my down payment and pay off my credit card debt to save money in the long run on interested charges and to raise my credit score and then start putting back the money I used to pay off the credit card?  Or should I keep my down payment saved and continue to pay off the rest of my cards? I just took on a side hustle to help me. Any advice will be highly appreciated. An important factor to be noted is that my lease is about to expire and I do not want to rent again - I am looking to buy my home in a couple of months.

Message 1 of 12
11 REPLIES 11
Girlzilla88
Valued Contributor

Re: Advice

The bare minimum you would need to comfortably be at is 650 middle score for your Mortgage scores.      That is like the 'good standard' do you know what your middle mortgage score is?      

 







Message 2 of 12
EaglesFan2006
Established Contributor

Re: Advice

The first thing I would do is find a loan officer you can trust...a good loan officer will discuss these options with you and recommend the best strategy.  That being said, I believe you should keep all you can toward the down payment.  The DP and closing costs are going to be critical, and if you don't have those there's not really any wiggle room, where as with credit card debt you have some.  There are loan products that you can work with, such as FHA.  Obviously your income is going to be a huge factor when they evaluate the amount of credit card (and other) debt you have, but I would advise against draining your cash needed for purchase.  

 

 

Message 3 of 12
Mortgage-Specialist
Established Contributor

Re: Advice

FHA only requires a 580 score that would allow you to put down 3.5% down payment. So youre still okay. Most lenders require higher scores but there are a few lenders who would be helpful to you. Ive havnt experienced any issues w 580 to 600 scores. So youre chances are good with the right lender.

Buyers can even go down to a 500 score for FHA loan(definitely more difficult) But between 500 score and 579 you are required to put down 10% instear of 3.5%
Message 4 of 12
Anonymous
Not applicable

Re: Advice

Yea, I discussed this with the right people - my problem is that I want a property that does not do FHA and they require a 660 score. My middle score is below 600 and the main factor affecting my score is my credit usage that is why I was wondering if I could possibly, even if a little portion of my down payment be allocated to raising my score up a bit and I can work to put it back in time for getting the property. Another factor is such that the property isn't ready for a couple months...

Message 5 of 12
Girlzilla88
Valued Contributor

Re: Advice

You need to be sure to give time for the whole process it can take up to 3 months or so to get everything done with and finalized I would most definitely pay down the amounts try if you can to get them below 10% if possible 8.9% is ideal and you can do that with all except one reporting the 8.9 if you have multiple needing to be lowered OR you can do collectively 8.9% that will help your score to jump in big chunks in a short amount of time.      Also don't apply for anything new and don't until AFTER you are finalized with the home not when you get the approval because you can get the approval and still lose the chance of getting that home if you apply for things or max out cards buying for the home etc so don't hurt your chances once you do get the ball rolling so to speak!







Message 6 of 12
Anonymous
Not applicable

Re: Advice

@

Message 7 of 12
Girlzilla88
Valued Contributor

Re: Advice

No problem at all best of luck to you I just got my preapproval for my first home the 13th of this month so I know how hard it is and can be!     Be sure to have your 4k I believe you said you have in the Savings and DO NOT TOUCH for at least 60 days adding to it is perfectly fine but be sure you don't go below the 4k even if you add it back later you want to show 4k for at least a solid 60 days before your application.    The lender will more than likely ask for a bunch of things too so don't freak out.    They asked me for most recent 90 days bank statements, my last 2 W-2's, Proof of the DP, Drivers ID, My 401k most recent Statement, and my 2 previous years of Tax Returns.   (hope that helps too) Smiley Very Happy    I was approved for a 250k home with 10k down and a 711 middle score.  (not sure how much home you are trying to get and I'm sure different states offer different amounts etc in my state 250k is still rather expensive.







Message 8 of 12
Anonymous
Not applicable

Re: Advice

OH wow, congratulations! I'm hoping all goes well for me too...I am putting in the work right now! I'm optimistic!

Message 9 of 12
Girlzilla88
Valued Contributor

Re: Advice

Thank you and Best of Luck to you just be super dedicated for the next 3-6 months and you'll be fine Smiley Happy 







Message 10 of 12
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