First Time Home Buyer Scenario

[Anonymous]

Ok Guys, I have been reading the post's for months now trying to relate other people's scenarios. I decided it was time to get direct answer's from you smart folks. Be easy on me.. 

Alrighty, my husband and I are wanting to buy a house sometime this year and we would love some feed back to determine if we should go for it.

Here is our scenario,

Michelle:

Active open accts:

Dress barn- date opened 9/2010-Limit $750-high balance $137-curr bal-$92-no late payments

Kay Jewelers- date opened 04/2005-limit $2,700-high balance $1,718-curr bal-$84.00-no late payments

Capital One- date opened 2/2010-limit 750.00-high balance $150-curr bal-$129.35-no late payments

Victorias Secret- date opened-3/2010-limit $350.00-high balance $80.00-curr bal-$60.00-no late payments

Honda Finance-loan began 5/2008-30 days late March and April of 09-no late payments since, monthly payment-$537.00

Ok, in 08' I had about 6 acct's that I consolidated with Incharge:

Maurices-Limit 700-still showing open-late payments Feb,March,April, May June of 09'-still reporting monthly and no late payments since 09'

Care Credit-Limit $5,000-showing open-late payments Feb, March, April, May of 09'-still reporting each month, no late payments since 09'

JCP- Limit $1200-showing open-never any late payments

Lane Bryant- Limit $410.00-showing open-late payments in Feb, March, April, May 09'-still reporting each month-no late payments since 09'

Zales-Limit $500.00-showing closed due to inactivity-late payment Aug 09', no late payments since, still reporting

Capital One-Limit $500.00-showing closed-late payments in Jan,Feb, March, April, May 09'-no late payments since

INCHARGE BALANCE $1967.00, $197.00 PER MONTH, WILL BE PAYING OFF INCHARGE WITHIN THE NEXT 2 MONTHS TO INCREASE DEBT/INCOME RATIO

Also have to car loans in the past dating back to 01'

01'-04' Credit Union Loan- $14,380-no late payments

04'-08' Space Coast Credit-$18106-no late payments

Income-18,000 per yr

Credit Scores-exp-673 equ-648 trans union-651

My Credit Info was last updated 2/2011, due to have another report in May

Husband's History:

He had no credit history, not even enough to generate a credit score close to a year ago. He had a few negative collections that were a few hundered dollars a piece that I have paid off. From there the building began, I added him to my dress barn (see above) and it is showing on his credit report with the on-time payments, his mom added him to her Walmart Credit card that also showed up on his credit dating back to 09' with no payments showing that the acct was opened 10/98. On 1/2011 he applied for a secured credit card with Cap. 1 with a $200 limit, no late payments reported and high balance is $59.00 with curr bal being $30.00 (he just charges gas)

With that being said, his credit scores were in the low 500's when we began rebuilding and are currently as follows:  exp-679 equ-680 trans-695, last update was 3/6/2011

His income is 31,742.00

Monthly Debt $662.00

Monthly Income $4,000

Ok I hope I gave enough info.

We are interested in a home around $120,000-$130,000.

We have $4000 cash saved

Does our situation look promising? Any First time Home Buyer Programs or down payment assistance?

Any comment's are appreciated and welcomed. I will continue to post our journey on the forum.

Thank you so much in advance!

[Anonymous]

I'd go to the rebuilding boards and work on your items - send goodwill letters for the lates you have on your accounts.  I'd also work on your revolving balances - for ideal scoring, you want all but 1 card showing a $0 balance and to have that one remaining card to report a balance of less than 9%.

I'm interested in where you're getting your scores.  Given that you're showing 3 scores, I suspect that they are not FICOs.  Experian stopped selling FICOs to consumers in 2009.  Anywhere that will give you all three scores is going to be giving you FAKOs or it's a lender when you're applying for a loan.  Starting in July, I believe, you can get scores when you're denied credit IF they're the basis on which you were denied credit.

First time homebuyer assistance programs exist - I think the best place to look for them is on your state's website.  There are federally and locally funded programs, but usually the state is where you need to start.  Expect to go through a homebuyer education class and probably to agree to a lien on the property for some period of time. 

[ShanetheMortgageMan]

Your debt to income ratio looks good.

Make sure you have the down payment (3.5% for FHA) either from your own funds or a gift from family, and your closing costs (probably be around $4-5k) if the seller isn't going to pay them, and at least another $2.5k on top of that (for reserves, which wouldn't be needed to qualify but I don't recommend not having emergengy funds right after you buy a home).  

Like mauve said your scores are probably not your actual credit scores since you have all 3 (unless you got them from a mortgage lender).

Your credit is probably just fine, your husbands, if he is an actual account holder on those cards and not just an authorized user, would probably be OK too but if he's only an authorized user there aren't a ton of lenders permitting that.  Does he have non-traditional credit?  Such as rental history, utilities, cell phone?  He'd need 3 of those for at least 12 months and then the trade line history would be fine.  Needs to be in his name (it's OK to be in your name too).

Down payment assistance is local to where you are buying, either your city/town, county, or state.  Very few, if any, national down payment assistance programs exist.  There used to be this thing called "seller paid down payment assitance", where more or less some legal money laundering is done, but that is no longer prohibited (so I guess now it'd be illegal money laundering if it was done in conjunction with a mortgage).  If you are buying in a rural area then there is the USDA loan program which is 100% financing/no down payment requirement.  VA also is 100% financing but you need to be an eligible Veteran.

[Michellewantsahome1]

Thx to both of you for your input, we got our credit scores from bank of america's privacy source. It's a credit protection/identity theft program and I do realize that these credit scores may be off from what the lender's see. What  I was wondering about though, alot of people say you cant piggy back any longer so I am confused as to why it shows up on his credit report's, we never even gave the creditor's his ss# when adding him to our acct's.? If the lender's see it listed, will it tell them that he's just an authorized user?

[ShanetheMortgageMan]

Welcome.  Yes authorized user accounts are coded that way on the credit report, says "Auth User" right next to the trade line for the underwriter to see.

[Michellewantsahome1]

oh ok, good to know. We didn't wanna sign another lease with the apt we were living in so we could take the steps to buy a house so we moved in with the inlaws to save money. We have been here for 6 months and pay them a small rent. Will this hurt us when buying a house? We do have the 2 yrs prior to moving in with them of perfect rental history.

thx for all your help Shane!

[ShanetheMortgageMan]

No that won't hurt you when buying a home - do you pay them by check?  Just make copies of the cancelled checks that you paid rent with, you can call your bank to get copies (or online banking may have them for a few months, maybe more).  The prior rental history verification will help as well, and both can be used for a non-traditional trade line.

You are welcome.