Should I wait for BK to drop from report?

[Anonymous]

I want to buy a home in the next year and have been working on my credit to achieve that. I had a BK in 2002, which should come off my credit report in March of next year. Also, I need to get an idea of what I might qualify for under FHA. i can get a 2000 sq ft home for under 70k in some instances but the commute would be 1 hour. If i can afford a little more I could be closer to work, Here'r my stats:

1. Credit scores (pulled here) - EQ603 / TU650. Should go up with credit card pay down this month.
2. Tradelines: New car loan (2 months) - $12k. high interest loan - $317/mth. should never be late and will up to $400 to knock of interest in the end.
3. 5 small Credit cards ($500 and under limits) - all paid with no lates. All are under 1 year old, but a couple are close to a year now. Total minimum payments per month now around $90 but will show 8% utilization each month or less.
4. Income - 31200 from job. will be there 2 years in April. Also, receive child support (court ordered) at $550/mth and it is very consistent over the last year.
5. Chap 7. Bankruptcy in March 2002, discharged June 2002.
6. Collection - 83 with Brightouse, but has 0 balance.
7. Collection - 287 for Directv (will be settled this month for 143).
8. Collection - 451 for Total Card (need to contact for settlement. from 2006.
9. Bad Acct with LVNV - 632, but have settle offer for 248 which I will do in the next couple weeks.
10. Wil have downpayment of 3.5%. Need to save for closing costs, but have access to some capital from a friend to assist.

That's pretty much it. Would it be better to wait for the BK to drop off my report before trying FHA?

Also, the FHA site says I would qualify for about 90k. Is that correct?

[mauve]

There's so much you can do with your credit scores in the next year.  Also, it sounds like you need some time to save up for closing costs and such.  You can also look into state programs for down payment / closing assistance. 

For those revolving balances - are you at 8% on each card?  Ideally you want all but one to be at $0 balance and the remaining card to be at less than 9%.  That's when you'll maximize your score, all else being the same.

[ShanetheMortgageMan]

Without the child support, the debt ratio is fine for the $70k sales price, a bit high for a $100k sales price.  If the child support is going to continue for the next 3 years, and has been paid on time for the past 3 months, then you should be able to use it and then a $120k sales price should be reasonable.  This is assuming taxes of $1,500/year & insurance of $900/year on a $120k sales price.

Collections after a BK aren't great to have, but your most recent one appears to be from 5 years ago so the underwriter shouldn't make that big of a deal about it - worst case may require them to be paid.  Once you have the BK off your report then the underwriter won't know it happened, and then the collections would be reviewed as individual cases and not repeating a potential BK pattern, so very unlikely an underwriter would require them to be paid.

[Anonymous]

Thanks mauve. You are correct. I am looking into the Florida Assist and HAMI programs. I thought all those programs had gone away, but I guess not. I can try to get the collections removed etc. That should only help my case. I've had a lot removed and paid over the last year, so a little more time won't hurt. The CCs are above 8% during the month, but I pay them down before they report. Its just easier to pay my bills and then make the credit card payment. Most bills are on auto payment so I don't miss as well. I have that pretty much down to a science at this point. I will consider dropping all but one to zero balance especially in the months before applying. What else do you suggest credit -wise?

[Anonymous]

Thanks Shane. The child support payments have been spot on since last year, and most likely will continue for the next 4.5 years as long as the ex-wife is healthy. I really want to reduce my monthly housing obligation. I pay 860/mth in rent for a 3/2, but I can pay about $500 PITI if the house is around the 65k - 70k mark. There's a ton of homes built after 2000 in that range in Kissimmee, FL which is an hour away. If I choose a home closer to where I am now, I would need to be in the 100k - 110k range. I will keep that in mind - thanks! I'm most likely going to just wait for the BK to drop because I would like smoother sailing and I'll have more capital to work with.