Ok guys - I'm hoping you can help calm my nerves a little.
My mom is deeding us 3 acres to build a house on. We are in the process of surveying and dividing off the land now. We have found a builder and the builder is ready when we are. We currently live an hour away and are needing to get into a home before our son will start school in a year. That was our whole plan was to either buy or build in the county we are from so he can go to school there.
I've researched countless times on whether to apply for an FHA construction loan or conventional. I'm sitting right now with scores of 645, 650, 635. My husband's is in the high 500s but he has very little credit history on his. We both have one collection that has been paid and we are waiting to fall off in the next 30 days so it should boost both of us a little more. We have 3 late payments on his truck that we have tried for a year with no luck to get taken off. The first 2 were 2 years ago and the last one was Sept 2018. So that makes me nervous on not getting approved.
We have up to 10,000 for a down payment, which we won't need all of for an FHA but are willing to put more down if it means a smaller interest rate. We both make more than enough money to have zero problems with the DTI ratio.
I'm just nervous as I've never had a mortgage and don't want to get screwed.
My mom is wanting us to try a local bank, which is a very small non-chain bank. I don't want more than one hard pull and I feel like we could get more for our situation at somewhere like Quicken loans or the like?
I'd love advice on using a local bank vs. an online lender and if you think we will be able to get approved with our scores the way they are now?
The hardest part of your situation is your most recent late payment occurred less than a year ago. Almost all lenders want this to be at least 12 months old. However, it's not impossible to get approved but might be difficult. If you have no other debt issues and income is good, a lender will wonder why you had a late payment just 9 months ago.
I would not worry about more than 1 hard pull. Rate shopping is allowed into Fico scoring and is encouraged. In fact in your situation a mortgage broker might be the best way to go. Given your credit scores I don't think you would qualify for a conventional loan, FHA might be your only option.