Shane can you please evaluate my situation

[JJARDINE]

Hello Shane here is my situation i am 28 live in bay area looking to buy first home i am looking in the central valley(tracy,ca) area.I am an in a apprenticeship program  currently making 32.00 hr i get 5% raises every 6 months until i turnout journeyman in 2 years the current journeyman rate is 43.00 an hour it will probably be 47.00 an hour when i become journeyman do to current contract.my credit score are TU 705,EQ 700,EXP 750  I owe 4,000 cc 11,000 on car  and 5000 to put down .My question are as follows i plan to buy mid to late 2008 as i believe home in the tracy area continue to fall i hope ?do you agree?i own two autos should i sell my auto that i owe 11,000 on ?would that look better as far as home loan ?what type of loan should i try to obtain in my situation?i am torn between  looking at older homes on bigger lots or trying to take advantage of all the new home builders that continue to drop there prices and unload there homes in this market.one last question i have one late of 30 days(macys thought i had mailed it)that is the only blemish is there any way of getting this off my credit report ,sorry for long post any help will be greatly appreciated.

[ShanetheMortgageMan]

I do think Tracy's values will fall a little further, it's not quite Stockton but not exactly Pleasanton either.  In upcoming months I think that 100% financing will be hard to find in declining areas, and I would put Tracy in that category... most lenders will do "max financing less 5%", so since 100% financing is still available in non-declining areas, 95% is probably what you should anticipate in Tracy.  The $5k you have can be combined with certain down payment assistance programs on an FHA mortgage. 

What is the house price range you are looking at?  What are the minimum payments on the CC & car loan?

Why do you have 2 cars?  Are both needed? 

In California land is generally worth more than the home, but you would have to look at what is going to suit your lifestyle the best.  I recommend buying a home that would accommodate your situation, rather than finding a home that would be less likely to depreciate in value.  The benefit with new homes it that builders are usually giving some good incentives on them, but in my opinion the quality of construction today isn't as good as the quality from decades ago.

Have you made on time payments to Macy's since the 30-day late?  Did you make the payment as soon as you noticed it was late?  Have you looked into writing a goodwill letter asking them to remove it?

[JJARDINE]

Thank you for your help the minimums on cc are 100 car payment is 300 i do not need both cars so i can get rid of car payment .The home range is in the 350k range and i have not had any lates either before or after the one 30 day late i have note inquired about a goodwill letter i did not know you could do that.Any other advice you could lend me would be great thank you!

[ShanetheMortgageMan]

Sorry for the delay, had a pinched nerve earlier this week and I was on Flexiril, so was in no shape to give out mortgage advice.

If you get rid of the car payment, yoru debt ratio will be around ~50% which is on the high side but can still qualify... so you might be able to qualify for a conforming (conventional) loan program through Fannie or Freddie... however like I was saying before, you likely will be needing to come with a 5% down payment due to the area Tracy is in (declining area).  FHA might also approve you as well, it's been known to qualify with debt ratios up to 55% or so.  With your excellent credit (sans the Macy's late), you'd have a pretty good shot at FHA in my opinion.  FHA just requires a 3% down payment, but you can get assistance with that through a down payment assistance company such as Nehemiah (http://www.getdownpayment.com).  I'd definitely try for the goodwill letter first though.