please evaluate our scenario and give feed back!!

[Anonymous]

Hi all!

here is our scenario: We desperately want to buy a home. We started working on paying off debts and repairing our credit scores last summer, this is where we are at now:

Debts (installment)

Vehicle: 465/mo  (11,000 left to pay off)

Motorcylce 131/mo (3,500 left to pay off)

Debts (revolving)

Line of Credit 0 balance (6000.00 limit)

CC #1   5.00 balance (500 limit) *wanted to show using some credit)

CC #2  0 balance (3000.00 limit)

store CC 0 balance (200.00 limit)

We have $10,000 in savings as of today.

Hubby makes 59,600/year with annual bonus of 10% of salary depending on how business is doing.This year pay out on bonus was $5,000.00....last years I believe was around $3,000.00. Does bonus count towards income? He has worked there for 4 years.I am currently a FT student w/ s loans deffered for more than 12 months. also have child support court ordered of 230/mo but it is in arrears..can this count as income?

So I was trying to run number but am confused about what and if we we will be able to qualify...Credit scores for hubby was : eq 639, tran 653, ex 689 mine were eq 634, ex 611 *a trade line is not showing up on ex i think this is why my score is lower should I point this out to up my score?? these scores were at a utilization rate of 80% we just paid everything off last week, I am hoping scores will jump higher with having paid everything off?Any guesses?LOL

I ran front end and back end ratios and came up with 1450 for front end (FHA 29%) and back end 2050 (FHA 41%) resulting in no more than 1450 per month for a mortgage pmnt. Does this sound right? I was hoping to get approved for 225,000 is this unrealisitc? I guess I am at a standstill, i dont know what to do next...We could pay the motorcycle off but it would have to come out of savings, if we did that our monthly debts would be lower, and we could afford more of a house..but then we wouldn't have much saved for D payment....just not sure what to do!!!!!!!! Gosh sorry this has turned into a book!! I just dont want to mess things up when we are getting on the right track finally!!!

[Anonymous]

I really don't know enough to answer all your questions but i can tell you your score will go up considerably from paying down CCs. As much as 60 pts but generally 20-30 pts.

Not knowing your other score makes it hard to say right now. FHA is starting to require a min. mid score of 620. If your other score is below 611, then you might need to wait until those update

[Anonymous]

I think you are going to need to pay off the motorcycle to keep under DTI limitations (and you should anyways just to have one less payment/debt)  that would give you closer to 1600 to work with.  The car payment is a killer as it is large and not close to being paid off.  So, my approach would be to save up as much money as i could for now, get the bike paid off, and rebuild the DP money back up to 10K.  Then go looking.  Ideally, you could then use the 8K first time home buyers tax credit to pay off the car next year and be in great shape.  You will be tight on DTI I believe so local tax levels may be an important factor in what you can get qualified for (also any HOa fees if there are any)

As far as the support goes, unless you can document payment history it won't count (not sure it counts anyways as it is child support)  My only concern would be to make sure that with the added expense of woning a home, that at 225K things are not stretched too tight partciularly with one in school and kids involved.  That said, you know your situation better than me by far, just make sure you know what you are getting into. 

[Anonymous]

Child support does count as income, you have to show them the court order. Not sure how that works if it's not current though.

[first48]

I asked about child support counting as income and it can but you have to show proof.  I was told that having the order isn't proof anymore.  You have to show at least 3 months of deposits.

[Anonymous]

Thanks for all of the advice. I did check my other score and it is 634 this is with our utilization rate high (we just paid all revolving off but a small balance)

I wonder what we could get approved for with out selling the bike? One thought is to pay it off and sell it, and replentish our 10,000 saved that way but I am really hesitant to because everyone is tighteneing their budgets and what if it doesnt sell? I also REALLY dont want touch our savings!! It looked to me like our total monthly payment couldn't be more than like 1450 if we didnt get rid of bike? Maybe we need to think about cheaper houses? It is hard to find something in our area for a low price though..

... also, there are a couple of medical collections that are older (3+ years), I can pay them and do HIPPA letters but am worried that it will re age or something in the middle of our loan process and we wont get a loan. Would the assumption be that I should leave these alone until a LO tells me to pay them? I dont want to push our score any lower and then not qualify, do medical collections count against you for mortgages? they are like 50 bucks each.

Right now we are paying 1400 month in rent, plus an additional 1600.00 per year in city tax that will go away when we move, and we are comfortable so I feel ok about a mortgage payment total of around 1550 or less....

[Anonymous]

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@first48 wrote:
I asked about child support counting as income and it can but you have to show proof.  I was told that having the order isn't proof anymore.  You have to show at least 3 months of deposits.

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Yes, it is counted as income. I would have had to provide a court order and 3 months of deposits also. I have the court order, but he hasn't paid a dime in well over a year...so that didn't pan out so well for me.