@Anonymous wrote:
Good afternoon folks and thank you for taking a moment to read this thread.
I'm getting ready to purchase a home next year probably in Dec-Mar time frame and to be honest I haven't a clue on what I am doing. My credit scores should be fine I'm 650-700 depending on which report is pulled. These are Fico 8 scores and I haven't pulled my mortgage scores. I do have 4 negative items on my credit reports. 3 judgements all paid from 5-6 years ago (2 fall off the end of the year and the last in Mar '17). I also have some late payments from my exwifes car which is also no paid off. Those also will fall off at the end of the year so hopefully I will get a bump there. I have several trade lines open so aaoa is around 2 1/2 years. In the area I'm looking in I can get a place that will work just fine for me for less than $125k. I'm currently renting and my rent payment is $800.00 a month and the only other bills I have are my cell, car payment, and utilities. My CC util reports less than 10% each month on 1 card. The others report 0. I have 0 lates/derog in the last 4 years+.
Now onto my questions and these have probably been answered before and I'm just terrible at using the search feature to find the answers I would like so I thank everyone in advance for bearing with me on what is probably being rehashed.
1. I want to get preapproved so there aren't as many surprises when I actually look for a house. Is this a fairly easy process and how long before I go house hunting do I do this?
Getting pre-approved means the lender will evaluate your credit, income, assets, and debt. If those are all in order, and you are good about getting all necessary paperwork quickly to your LO, it doesn't take long. If you have work to do regarding your financial situation, it will take as long as the repairing does.
2. I see there there are down payment programs and such in my area that it appears that I qualify for. I'm assuming I just call them up to get information and a application or is there something else I should be looking at?
Your lender should be knowledgeable in this area. Certain programs have income limits and other restrictions, so it's best to work with a lender first to see which programs may be a good fit for you.
3. The area I'm looking in appears to all qualify as Rural development. Is going the USDA route the most advisable? I won't have a ton of cash to put down maybe 5% or so depending on what I save between now and then.
Again, your LO will be your ally here. If you qualify for USDA, there is a good chance it may be your best option as far as pricing is concerned.
4. I see with closing costs lots of fees and such are any of those able to be rolled up in my house payment?
They cannot usually be rolled into the loan, but you can take lender credits (higher interest rate for credits towards closing costs/prepaid items). This is usually a good route if you plan on living in the home for only a few years or less.
5. With the mortgage calculators I've looked at particularly Zillow it estimates taxes, home insurance, mortgage insurance, etcetera. Do I have to have home owners insurance wrapped into my loan or can I continue on with State Farm whom I have my renters insurance through?
You will most likely have an impound account. Your mortgage servicer will collect monthly installments of your homeowner's insurance and pay the annual premium to the insurance company when it comes due. You can choose any insurance company you want.
6. With this being the first time I ever buy a home/apply for a mortgage are there any major gotchas that I should avoid over the next 5-8 months before purchasing?
Don't apply for any new credit, save as much as you can in the bank, avoid large cash deposits within two months of applying, no late payments, and keep credit card utilization low.
Again thank you in advance for any help and guidance it is very much appreciated.
