How Soon Should I Apply for a Loan??

[Anonymous]

The past 3 years have been a rollercoaster! To make a long story somewhat short I decided I wanted to buy a home back in 2009 when I was 28. My goal was to own a home by the time I was 30. I became obsessed with the home buying process. I cleaned up my credit by getting numerous account that did not belong to me removed. I settled on some my old collections and paid off what I could afford. I opened up a secured credit card, got approved for a Orchard Bank credit card and opened up a Wal-Mart card. I have paid ALL of my bills on time for the past 3 years. My scores started in the 400's in 2009, but by September 2011 my mid score was at 626. The day before I was scheduled to go look at homes with a realtor I pulled up my credit report in my scores were in the low 500's. I had a 30 day late payment from August! Well back in 2008 I made the stupidest mistake of my adult life. I co-signed on a car for my cousin. She had never been late on her  payment before. The thing that pissed my off is that she never called me to ask for help with the payments but more importantly the car company never contacted me! They had my address and phone number on file. I would think if they were trying to collect their money they would make an attempt to contact everyone on the account. But I accept full responsibility for putting myself in that position. NEVER AGAIN! Well my cousin has 4 payments left on the car. She hasn't missed any payments since 9/2011(thanks to me making a couple payments for her) and now my scores are back in the 600s! My plan is to buy a home in June when school ends for my boys.

How soon should I apply for a loan? 

Since she still has 4 payments left, will that count towards my debt? Will the banks want  to see cancelled checks?

[cdtotten]

I'd wait until the car was paid off completely just in case something else goes wrong. With only 4 payments remaining, it most likely wouldn't be included in your DTI calc though. Good luck.

[K_J]

Having the car paid off before you apply is a good idea, though with 4 payments it may not count towards your DTI. On another note keep a close watch on the 4 remaining payments to make sure it’s paid on time and doesn’t mess things up for you again.  

[FrugalRican]

Wait til the car is paid off. The last thing you need is another late payment to pop up because she decided she wanted to have a little fiesta instead of making the last payment.

[pizzadude]

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@FrugalRican wrote:

Wait til the car is paid off. The last thing you need is another late payment to pop up because she decided she wanted to have a little fiesta instead of making the last payment.

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+1.  I agree that you should probabaly wait until the loan is PIF.  And it wouldn't hurt to be proactive and check with the creditor each month to make sure that she has sent in a timely payment as well.  

Another alternative.....assuming that you have some extra cash, and that you can't wait....is to offer to pay the loan off now and to have your cousin make her last few payments directly to you.    Not sure if you want to go this route, but it might be an option....

[Anonymous]

Thanks for the advice. Turns out it will be best for me to wait until her car is paid off...I just got a text from her today saying she only has half of this months' car payment. Ugghh...I feel like I'm in some type of prison or something. Biggest mistake ever!!!! If I wasn't a victim of identy theft and recieved my income tax return as scheduled, I would really consider paying off the loan and have her sign an agreement to make lower montly payments to me. These past few months have been disappointing but hey everything happens for a reason. Maybe my "dream house" will not be on the market until this summer. Gotta try to think positive 

[FrugalRican]

See what I mean.

There's another thread from a forum user who got screwed by an ex-girlfriend of his for a 72 month car loan that she extended to 75 months and then decided to be late on the 75th payment. Those can come back to haunt you. You're much better off waiting and monitoring the situation.

[pizzadude]

Ouch.   Well hang in there ~ only 4 more payments.   And most definately check with the creditor before the due date just in case.......you don't want any more surprizes.