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Tired of Renting but Have Low Fico Scores

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Tired of Renting but Have Low Fico Scores

I am tired of renting however my fico score are low.  I was hoping to be approved for a FHA loan July of 2011 however with banks increasing FHA loan minimums to 640 for 3.5% downpayments I am becoming discouraged.

 

In March of 2011 I will be completely debt free so I can begin saving my down payment for my home which bring me to my question.  Will lenders do a loan if a borrower has low scores, mid to upper 500's, if they have a 20% downpayment?

 

Thanks for any in sight you can give.

Starting Scores (7/26/2010): EQ 517; TU 508; EX 527 (lender)
Scores Along the Way (11/4/2010): EQ 542; TU 547; (11/8/2010) EX Plus 641
Scores Along the Way: (4/15/2011): EQ 516; TU 622; EX 585 (lender)
Scores Along the Way: (8/25/2011): EQ 617; TU 627; EX 625 (lender)
Scores Along the Way: (11/28/2011): EQ 617; TU 645; EX 667 (lender)
Current Scores: (8/9/2013): EQ 634; TU 662; EX 694 (lender)
Closed on a Home: 12/30/2011 Goal Scores (8/25/2014): 700 club
Message 1 of 14
13 REPLIES 13
Senior Contributor

Re: Tired of Renting but Have Low Fico Scores

Not likely.  You will need 640

Message 2 of 14
Valued Member

Re: Tired of Renting but Have Low Fico Scores

I'm still a newbie so don't take my advice for granted, but it looks like you're already on your way with credit repair, you just have to keep it up until you have an allowable score for FHA and not have any badies like late payments for at least a year, preferably for two years. Obviously there are a lot of factors, down payment being one of them, but yeah, personally I wouldn't even consider trying until I was at least at 650+, regardless of any other factors. Maybe an unconventional lender will bite at a lower score, but at what cost, a much higher interest rate? Isn't it worth the satisfaction of doing it the right way and having the hard work pay off?

 

On a related note, mostly out of curiousity, have you been removing badies from your reports or just practicing good credit principals?

 


Starting Score (10/27/10): 604
Current Score 9/27/11): 729
Goal Score (11/27/11): 722


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Message 3 of 14
Valued Contributor

Re: Tired of Renting but Have Low Fico Scores


@plewis80 wrote:

I am tired of renting however my fico score are low.  I was hoping to be approved for a FHA loan July of 2011 however with banks increasing FHA loan minimums to 640 for 3.5% downpayments I am becoming discouraged.

 

In March of 2011 I will be completely debt free so I can begin saving my down payment for my home which bring me to my question.  Will lenders do a loan if a borrower has low scores, mid to upper 500's, if they have a 20% downpayment?

 

Thanks for any in sight you can give.


I do not raelly answer in this forum much but....you really need to consider alot of things before you start making home buying decisions.

 A common miss conception for the last 20 years is that you can own far cheaper then renting.


And well unless you are currently renting a house and paying all the utilities yourself, I just do not see it.

Especialy if you are coming in with scores so low.


A house is NOT a year commitment but needs to be considered a long term commitment.

 

I currently rent a 2 bedroom APT for $530. I pay $160 a month for utilities/cable (I only pay electiric and  cable) and my city taxes are around $65.00 a year.

 

My fridge broke over the summer,  they had a new one in in 3 days I did not pay for it.
last year a leak in the bathroom caused the ceiling beneath me to fall, I paid for no repairs.

Water heater broke when I first moved in, fixed without any cost to me.

 

If my employer decides to close up shop I can move within my lease ending to closer to where i end up working at a new job.

 

A general rule of thumb for a home owner is whatever your house payment is, you will have to put two additional payments aside each year in amortised upkeep and repair costs. You will pay real estate taxes, you will pay all utilities, garbage sewer, water, heat, electric, gas, insurance, homeowners insurance.

 

If something breaks you will be the one fixing it.

 

So if your rent is real high, I would recommend moving somehwere cheaper to get your score up, save some cash, and really take a look on if you can afford homeownership.

 

 

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Message 4 of 14
Frequent Contributor

Re: Tired of Renting but Have Low Fico Scores


@OCcouple wrote:

I'm still a newbie so don't take my advice for granted, but it looks like you're already on your way with credit repair, you just have to keep it up until you have an allowable score for FHA and not have any badies like late payments for at least a year, preferably for two years. Obviously there are a lot of factors, down payment being one of them, but yeah, personally I wouldn't even consider trying until I was at least at 650+, regardless of any other factors. Maybe an unconventional lender will bite at a lower score, but at what cost, a much higher interest rate? Isn't it worth the satisfaction of doing it the right way and having the hard work pay off?

 

On a related note, mostly out of curiousity, have you been removing badies from your reports or just practicing good credit principals?

 


My scores are low due to defaulting on student loans back in 2003.  These loans eventually ended up in a judgment of $48k which I was able to settle with Citigroup for $28k which I paid off in 11 months.  These loan accounts have been removed from both my Transunion and Experian however two of the eight are still showing up on my Experian.  I have not had anything (baddies deleted) however somethings have rolled off due to the 7 year rule.  I am disputing two duplicate medical bills on my Experian report however so far 2 online attempts have been been useful so I sent in letters on the 8th of this month hopeful to finally have them removed.

 

All in all I have been paying my bills on time and reducing my debt load without opening up new accounts.

Starting Scores (7/26/2010): EQ 517; TU 508; EX 527 (lender)
Scores Along the Way (11/4/2010): EQ 542; TU 547; (11/8/2010) EX Plus 641
Scores Along the Way: (4/15/2011): EQ 516; TU 622; EX 585 (lender)
Scores Along the Way: (8/25/2011): EQ 617; TU 627; EX 625 (lender)
Scores Along the Way: (11/28/2011): EQ 617; TU 645; EX 667 (lender)
Current Scores: (8/9/2013): EQ 634; TU 662; EX 694 (lender)
Closed on a Home: 12/30/2011 Goal Scores (8/25/2014): 700 club
Message 5 of 14
Frequent Contributor

Re: Tired of Renting but Have Low Fico Scores


@usmc58555 wrote:

@plewis80 wrote:

I am tired of renting however my fico score are low.  I was hoping to be approved for a FHA loan July of 2011 however with banks increasing FHA loan minimums to 640 for 3.5% downpayments I am becoming discouraged.

 

In March of 2011 I will be completely debt free so I can begin saving my down payment for my home which bring me to my question.  Will lenders do a loan if a borrower has low scores, mid to upper 500's, if they have a 20% downpayment?

 

Thanks for any in sight you can give.


I do not raelly answer in this forum much but....you really need to consider alot of things before you start making home buying decisions.

 A common miss conception for the last 20 years is that you can own far cheaper then renting.


And well unless you are currently renting a house and paying all the utilities yourself, I just do not see it.

Especialy if you are coming in with scores so low.


A house is NOT a year commitment but needs to be considered a long term commitment.

 

I currently rent a 2 bedroom APT for $530. I pay $160 a month for utilities/cable (I only pay electiric and  cable) and my city taxes are around $65.00 a year.

 

My fridge broke over the summer,  they had a new one in in 3 days I did not pay for it.
last year a leak in the bathroom caused the ceiling beneath me to fall, I paid for no repairs.

Water heater broke when I first moved in, fixed without any cost to me.

 

If my employer decides to close up shop I can move within my lease ending to closer to where i end up working at a new job.

 

A general rule of thumb for a home owner is whatever your house payment is, you will have to put two additional payments aside each year in amortised upkeep and repair costs. You will pay real estate taxes, you will pay all utilities, garbage sewer, water, heat, electric, gas, insurance, homeowners insurance.

 

If something breaks you will be the one fixing it.

 

So if your rent is real high, I would recommend moving somehwere cheaper to get your score up, save some cash, and really take a look on if you can afford homeownership.

 

 


Thank you for being concerned.   I have however thought about my choice to purchase a home extensively.

 

I have been renting a house since July of 2008 and pay all of my own utilities and is responsible for half of all repair costs.  Additionally, in my case owning a home will be less expensive than renting.  I have researched homes in my neighborhood and due to the current market my mortgage would be about 60% of what I am currently paying so even after adding in utilities I will be paying less for mortgage than what my current rent is without utilities.

 

I am also aware that home owners should set aside approximately 1% of their home value toward repairs each year.  As, I mentioned I have thought about this decision and have been working extremely hard for home ownership by paying off old debt, saving an 8 month emergency fund and will begin downpayment saving in March. 

 

I have low fico scores due to an unforseen default of my student loans due to not working however I have learned so much from this experience that I save almost all of my pennies and have developed discipline in paying my bills.  As mentioned in a previous post I just paid off $28k in student loans and will use these payments previously reserved for this toward savings so I know I can afford a home it is just a matter of when I will be getting pre-approved and closing not a matter of if.

Starting Scores (7/26/2010): EQ 517; TU 508; EX 527 (lender)
Scores Along the Way (11/4/2010): EQ 542; TU 547; (11/8/2010) EX Plus 641
Scores Along the Way: (4/15/2011): EQ 516; TU 622; EX 585 (lender)
Scores Along the Way: (8/25/2011): EQ 617; TU 627; EX 625 (lender)
Scores Along the Way: (11/28/2011): EQ 617; TU 645; EX 667 (lender)
Current Scores: (8/9/2013): EQ 634; TU 662; EX 694 (lender)
Closed on a Home: 12/30/2011 Goal Scores (8/25/2014): 700 club
Message 6 of 14
Senior Contributor

Re: Tired of Renting but Have Low Fico Scores

A couple comments.   It is generally illegal to charge a tenant for repairs.  I could be wrong, but I believe that is true in any state.  Repairs are the sole responsibility of the owner.  Unless it is an unusualy situation (like renting from a family member at a reduced rate), then there is no way any repairs should be paid by you.  IF they are, it should be dedictible from the rent.

 

Second, there is no percentage amount that is truly accurate as a furnace in a 70K house does not costs 1/5th the furnace of a 350K house.  If you are trying to determine reserves or maintenace costs, pic the 2 most expensive "systems" in the home.  Can you fi them both if they both went out in the middle of the winter/summer where it would be necessary to fix immediately.  This is on top of the little stuff (figure a couple hundered a month for just keeping little things taken care of like bad faucets, leaky sinks, yard maintenance, etc.  You need to plan to spend say 200 per month while at the smae time still being able to afford to replace the big things as needed.  Often times cheaper homes (in a given area, not udged by different markets) may have much higher maintenance costs...Hence the term money pit.  

Message 7 of 14
Frequent Contributor

Re: Tired of Renting but Have Low Fico Scores


@mickie08 wrote:

A couple comments.   It is generally illegal to charge a tenant for repairs.  I could be wrong, but I believe that is true in any state.  Repairs are the sole responsibility of the owner.  Unless it is an unusualy situation (like renting from a family member at a reduced rate), then there is no way any repairs should be paid by you.  IF they are, it should be dedictible from the rent.

 

Second, there is no percentage amount that is truly accurate as a furnace in a 70K house does not costs 1/5th the furnace of a 350K house.  If you are trying to determine reserves or maintenace costs, pic the 2 most expensive "systems" in the home.  Can you fi them both if they both went out in the middle of the winter/summer where it would be necessary to fix immediately.  This is on top of the little stuff (figure a couple hundered a month for just keeping little things taken care of like bad faucets, leaky sinks, yard maintenance, etc.  You need to plan to spend say 200 per month while at the smae time still being able to afford to replace the big things as needed.  Often times cheaper homes (in a given area, not udged by different markets) may have much higher maintenance costs...Hence the term money pit.  


In my state, MD, specifically Prince George's county, there is no rule out lawing tenants from paying for parts or entire repairs as long as it is included in the lease.  Yes, I checked into it before signing the lease because I did also think it appeared strange myself.

 

Thanks for the tip on having monies for the largest repairs on hand.  I have never heard/read about it in in this manner but what you say make sense especially if I don't want to have it financed on a credit card.

 

I learn so much from visiting these boards.  

Starting Scores (7/26/2010): EQ 517; TU 508; EX 527 (lender)
Scores Along the Way (11/4/2010): EQ 542; TU 547; (11/8/2010) EX Plus 641
Scores Along the Way: (4/15/2011): EQ 516; TU 622; EX 585 (lender)
Scores Along the Way: (8/25/2011): EQ 617; TU 627; EX 625 (lender)
Scores Along the Way: (11/28/2011): EQ 617; TU 645; EX 667 (lender)
Current Scores: (8/9/2013): EQ 634; TU 662; EX 694 (lender)
Closed on a Home: 12/30/2011 Goal Scores (8/25/2014): 700 club
Message 8 of 14
Senior Contributor

Re: Tired of Renting but Have Low Fico Scores

I would recheck my local laws.  A landlord can not charge you for maintenance or repairs, only damages you cause.  It is in no way your responsibility to replace a furnace that goes out, a pipe the busts, etc and the liability on your end is huge.  The profit from to the landlord from the tenant is suppossed to cover these things and then in turn, they can write the m off as business expenses where a tenant can not.  A tenant is only responsible for damages they cause and usage type maintenance (replacing filters, batteries, light bulbs, etc).  I have never once heard of a situation (outside of what I mentioned above when you are renting for under market value from someone you know, etc) where this would be permittable by law, and most tenant laws has some sort of State protection (not local).  SO even if the local law technically allows for it, the state law may protect from it. 

 

I do want to clarify that this is a residential lease I assume.  This type of thing does happen in commerical leases. 

 

I of course could be wrong.  Something just does not add up. 

Message 9 of 14
Frequent Contributor

Re: Tired of Renting but Have Low Fico Scores


@mickie08 wrote:

I would recheck my local laws.  A landlord can not charge you for maintenance or repairs, only damages you cause.  It is in no way your responsibility to replace a furnace that goes out, a pipe the busts, etc and the liability on your end is huge.  The profit from to the landlord from the tenant is suppossed to cover these things and then in turn, they can write the m off as business expenses where a tenant can not.  A tenant is only responsible for damages they cause and usage type maintenance (replacing filters, batteries, light bulbs, etc).  I have never once heard of a situation (outside of what I mentioned above when you are renting for under market value from someone you know, etc) where this would be permittable by law, and most tenant laws has some sort of State protection (not local).  SO even if the local law technically allows for it, the state law may protect from it. 

 

I do want to clarify that this is a residential lease I assume.  This type of thing does happen in commerical leases. 

 

I of course could be wrong.  Something just does not add up. 


mickie08 - You are correct, I do not pay for damages not created by me such as a furnace blowing out but I do pay for repairs such a plumming issues in the bathroom, kitchen etc.  I misunderstood what the poster meant by repairs.

 

Honestly, I am not worried about paying for repairs/upkeep of a home because I am aware it comes with purchasing a home.

 

My original reason for posting was to ask the likelihood of being approved for a loan (not just FHA) with a lower score if I had a 20% downpayment. 

Starting Scores (7/26/2010): EQ 517; TU 508; EX 527 (lender)
Scores Along the Way (11/4/2010): EQ 542; TU 547; (11/8/2010) EX Plus 641
Scores Along the Way: (4/15/2011): EQ 516; TU 622; EX 585 (lender)
Scores Along the Way: (8/25/2011): EQ 617; TU 627; EX 625 (lender)
Scores Along the Way: (11/28/2011): EQ 617; TU 645; EX 667 (lender)
Current Scores: (8/9/2013): EQ 634; TU 662; EX 694 (lender)
Closed on a Home: 12/30/2011 Goal Scores (8/25/2014): 700 club
Message 10 of 14
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