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How much do I need to have saved up for closing costs for a NFCU Mortgage?

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Established Member

How much do I need to have saved up for closing costs for a NFCU Mortgage?

Hi all...New member here! Trying to rebuild my credit in time to finally buy a house this year. I'll try to be as detailed as possible to give you an idea of what I'm working with. My Fico 8/Mortgage Scores as of 3/20/19:
Eq: 634/634
Tu: 658/648
Ex: 649/631
Current FICO 8 as of today (mortgage scores will update on 4/20/19):
Eq: 684/?
Tu: 694/?
Ex: 677/?
Credit balance/limit as of today:
Lowe's- $0/$1,000
Credit One- $0/$1,000
Credit One- $175/$1,150
Capital One- $479/$1,500
Target- $1,483/$2,000
Kohl's- $2,533/$3,000
BoA- $2,200/$2,300
Chase- $4,590/$7,000
Fingerhut- $1,887/$3,900
From reading the forums I know that the obvious answer is cutting down on my credit utilization. However I am torn between paying down more of my credit cards and saving towards the closing costs. Just to give you a little background information I was a small business owner for several years. I ended up closing my business and working fulltime for a company 2 years ago, so my 401K savings not that great. But, yet it was still going to help a lot with paying down my credit cards and helping with closing. So I took out a loan from my 401K... Not soon afterwards I got hit with a notice from the city that I had delinquent business taxes. So all of that money had to go towards paying those back taxes for fear it would end up as a judgment on my credit report. So as of right I have $5,000 in my savings. I have planned out my funds for depositing into my savings thru July... by then I will have $10,000 saved up. Im torn between savings funds and paying down credit cards. I don't know what to do. I really would like to have a good interest rate.
Message 1 of 22
21 REPLIES 21
Established Member

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

I also wanted to add that I'm interested in applying for the 30 Yr HomeBuyers Choice no downpayment loan...and looking to purchase a home in the low 200s...
Message 2 of 22
Frequent Contributor

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

I belive you'd be better off paying down the credit card balances first. The reason for this is those balances are really going to limit the amount you can get approved for. I didn't add them all up but it appears to be in the neighborhood of 10k in Credit card debt. Getting this lower will give your credit scores quite the boost (especially mortgage scores) and that will help the interest rate in which you can get. So I would tackle the cards that have the highest interest rates first and get those paid down so your overall utilization is at least below 30%. You didn't list your income so it's hard to say if you could get approved for the 200k you're looking for. Also, do you have other debts such as Auto loan or Student loan?

Message 3 of 22
Established Member

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Thanks for your feedback! My income is 100K...I have two car loans, the balances are $11,707 and $9,074 and no student loans, no delinquent accts or public records... bills have been paid 100% on time.
Message 4 of 22
Frequent Contributor

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

I would suggest you look online for a 'Mortgage affordability Calculator'. There are lots of them around. They would help you determine what you might be able to afford in terms of monthly payments and house price. Basically the lender would take all the payments listed on your credit report (for credit cards and auto loans) and add those up. That will then be your debt obligations. I don't know much about the Homebuyers Choice program, so I'm not sure if they have specific DTI (Debt to Income) ratios that are required. It's great you have no bad information on your credit report. It seems the high credit card balances is the only thing holding your scores down.

Message 5 of 22
Established Member

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Ok...will do. I'll definitely try to pay in full the BoA card and the Fingerhut credit over the next two months. And I'll chip away at the Kohls,Target, Cap One and Chase balances. I was hoping to apply for a mortgage in late July.
Message 6 of 22
Frequent Contributor

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

A house is typically the biggest expense one will have in their entire life. And, even small movements in interest become expensive over the course of a 30 year term. Therefore, in my opinion, you should absolutely, positively with NO EXCEPTIONS, pay down your cards before trying to get a mortgage. 

 

Below is a quick table on your current balances and utilization. Your scores are getting crushed by some of those balances. There are scoring penalties when aither aggregate or individual card utilization surpass 28.9%. And these penalties increase when you surpass 48.9%, 68.9% and 88.9%. (Anything over 88.9% is considered Maxed and gets an even bigger penalty).

 

Ideally you want your aggregate utilization to be below 8.9% and no individual card above 28.9%. If you truly do not have any late payments, charge-offs,. or collections, I can easily see your score well above 760 if you do, which will get you the best rates. 

 

AccountBalanceLimitUtil
Lowes$0.00$1,000.000.0%
CreditOne$0.00$1,000.000.0%
CreditOne$175.00$1,150.0015.2%
Capital One$479.00$1,500.0031.9%
Target$1,483.00$2,000.0074.2%
Kohls$2,533.00$3,000.0084.4%
BoA$2,200.00$2,300.0095.7%
Chase$4,590.00$7,000.0065.6%
Fingerhut$1,887.00$3,900.0048.4%
 $13,347.00$22,850.0058.4%

Message 7 of 22
Established Member

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

Wow thank you so much for this information. I will definitely pay them down first. I'll update the forum with my scores in a couple of months. Thanks again!
Message 8 of 22
Frequent Contributor

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

But Wait There's More!!!

 

  1. Mortgage scores are particularly sensitive to # of accounts with balances. So, keep this in mind. Also, search these forums and read up on AZEO 
  2. Another way to get your utilization down is to request credit limit increases. Search the forums to see what credit card lenders you have that do not HP for a CLI. You definitely do not want an HP but should be actively seeking any and all SP credity limit increases you can

Message 9 of 22
Established Member

Re: How much do I need to have saved up for closing costs for a NFCU Mortgage?

I'm literally floored by these numbers... it definitely paints a different picture when I see it like this. Thank you!
Message 10 of 22
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