Mortgage Standard Questions

[EaglesFan2006]

I have been rebuilding credit for a couple of years now and I think I've done well.  I was wondering if someone can fill me in on the current basics regarding a mortgage.  Is 620 still the target score?  What other things are lenders looking at related to credit?  I'd like to pursue homebuying near the end of 2012 and want to get started on anyting I can to help my situation.

[IOBA]

Some basics...

1.   Pay off debt.

2.   Use credit cards, let them report a SMALL balance, then pay off and avoid interest charges.

3.   Do NOT apply for any new credit, and this **includes** changing utility companies and changing cell phone plans.  Those buggers pull credit!

4.   Save!  Save!  Save!

5.   If you can, open a separate savings account to put regular deposits into.  Money goes in, but does not come out.  This will help with underwriting.

6.   Use mortgage calculators (use several) and get a feel for what you can afford for a mortgage.   Remember, property taxes and insurance will usually be added to any mortgage payment, unless you are putting 20% on the loan.

7.   Check out the areas you want to live in.   Find out what is available, what the average sales prices is...

8.   Figure out your happy medium.  What's going to work for you.   (For us, maximum mortgage payment would be $1200 so we know we can pay it worse case scenario unemployment income.)

9.   Figure out which loan product you want and qualify for.   FHA - 3.5% down, minimum score 620.   Conventional - 5%, 10%, 15%, or 20% down.   Do you qualify for VA, USDA?   Are you looking at a Fannie Mae home?   They offer their own financing programs (3% down).

[IOBA]

PS - do not purchase new furniture or a new car.    Make the car last until AFTER closing, even if the hood is being held down with duct tape, and the bumper is super glued on.     

I knew someone who duct taped his toilet to get to closing.   Inspector said replace it.  (The toilet, not the duct tape.)   Lucky guy had a terrific realtor who worked the deal so he could pay for the new toilet at closing.   *eye roll*   But you get the point - make  what you have last.  Give up extras.  Save!!

[YHWHUDAH]

+1

I second everything IOBA stated. I opened another bank account with my bank two months prior because my other bank account had NSF charges on it.  I switch direct deposit into that account and did not touch any of the credits for 2 months.  I used the account with NSF charges to pay expenses, because I had at least 2 months worth in there. My bank did not even ask for those other accounts, so I just showed the newer account.  It looked as if I had way more than 6 months of reserves in that account, so my loan went smoothly. So time it perfectly