First time homeowner / sketchy financial situation - need advice!

[Anonymous]

Here's my situation:

My girlfriend slash future wife and I are about to start shopping for our first home.  We're both 26, live in MD, work full-time, and make a modest combined income of approximately $100,000/yr...

Basically, I've got a clean (currently) credit report, a score of 660 (steadily inreasing though - it was a 524 one year ago), and make $35k, with good job security.  The only negative items on my report now are two accounts (student loans and one cc) red flagged for past lates, but all of my accounts are caught up and in good standing now.  I do have a lot too.  I am co-signed on about $10,000 of revolving debt, and have about $500 of my own.  I owe $14,000 on my student loans, and $7000 on my car (unsecured loan),  I live with my parents and because of that I have quite a bit of available cash, most of which goes towards debt, and into savings.  I'm making payments on ALL of my credit cards 2x per month, and pay much more than the minimum amount due.  I know this is dumb, but I'm trying to eliminate as much as possible before filling out an application.  I haven't been late or missed a payment in almost a year.  You're laughing sarcastically, I know.

My GF makes around $65k (total) between two jobs - oncology nurse and midwife's assistant.  She too has excellent job security, but the trade-off is her terrible credit score.  It's really bad, and to be honest I don't even know what it is.  She has several large debts in collections totalling near $7500.  The plus side, is that she also cleaned up her act with me, and has paid off most of those collections.  She also lives with her parents (we moved back in with our folks to get ourselves cleaned up, about a year ago) so ALL of her income goes towards clearing her debt, and once that is finished she will be making the downpayment, which will hopefully be around $7000 if we get approved for an FHA loan on a $230,000 house.  I'm approximating.  But we will not be filling out any applications until all collections and delinquencies are taken care off.  I know her score is horrible, but I don't want there to be anything outstanding when we apply, so we can show that we've changed our ways and are continuing to improve. 

So to recap, we're counting on my credit score and her income. 

Does anyone know what we should expect? 

How much will her credit score be a factor?

Will having a clean credit report with no lates or missed payments for a year help?

I know we won't get a top notch rate, but will we be approved for an FHA, to come in with approx. 3-4% down?

Should we get married before or after - does it make a difference?

Any help would be greatly appreciated.  Thanks!

Message Edited by nixon08 on 12-04-2008 01:03 PM

[first48]

IMHO one of the things you can do is have your girlfriend to pull her scores from my fico to see exactly what her scores are.  Then I suggest you guys go through the reports and start posting her baddies on the rebuilding board to get some help.  This may improve her score drastically.  Sometimes when you have collections on your report you are able to do a PFD and once it is deleted it can increase your score.  You also may need to go to the annual credit report site to get all 3 reports as well since you are able to get those for free once a year.  Since you are both living with parents then you have more time to do these things.  As far as everything else I would wait for someone else to chime in.

[Anonymous]

Does anyone know what we should expect? 

Not without her credit info

How much will her credit score be a factor?

It will be a big factor as they will use the lowest midscore between you both.  Also, since she has the higher income, your high score is less of a compensating factor.

Will having a clean credit report with no lates or missed payments for a year help?

Yes, particularly with borderline credit.  No lates for 12 months is pretty much a necessity without good reasoning

I know we won't get a top notch rate, but will we be approved for an FHA, to come in with approx. 3-4% down?

If you get an approval, 3.5% down will be enough.  Having strong reserves will help ease the approval process as well.

Should we get married before or after - does it make a difference?

It should make little difference as far as approval goes (taxes may be a different story...)  But either way, never base marriage timetable on a financial decision.  That siad, if you are ready to get a house together and want to get married, then yes it probably makes sense to do one before the other just so you don;t have to go through the hassle of messing with deeds and confusing taxes, etc.