Sign in to follow this  
sabvick

Mortgage qualification question (newbie)

Recommended Posts

I'm very anxious to purchase a home. My scores are as follows 510 Transunion, 548 Equifax and 610 Experian. I have 1 unpaid judgment, a BK discharged in 2001 and 3 CO all of which are in dispute. Is there any way I would qualify for a mortgage with these rates? I know rate may be higher but I'd be willing to do that until baddies come off.

Share this post


Link to post
Share on other sites

The midscore being 548 will likely land you in subprime land, which means pretty stiff rates, and likely an ARM with a pre-pay penalty.

It seems 620 is the magic mortgage number.

Let's see what Sir Charles has to say about this... I assume you rent now and don't own?

Share this post


Link to post
Share on other sites

That's correct I'm renting now. I read on another post that having 4 positive tradelines would be useful which I do have. My rent being one, Orchard Bank, First Premier and Reward 660.

Share this post


Link to post
Share on other sites

Right now rent does not usually show as a positive TL, though the LO will need proof of rent paid before closing. If you can stand to you might wait a year or so for your credit to improve, work on the TL's you have and get a better rate.

Share this post


Link to post
Share on other sites

Waiting is what I know would be best - rate wise. But living in this area, for every year that passes by I feel like my chances of purchasing a home by myself are becoming less and less a reality. Homes in the DC area are ridiculously overpriced and to make matters worse I'm competing against households with two incomes. Hence the urgency. If I ventured into subprime land would it be possible to get 100% financing at a higher rate? I'd rather be housepoor for the next year or so than risk never being able to purchase one at all.

Share this post


Link to post
Share on other sites

I know about the MD housing prices. Dad bought a house near Balto in 2001 for $235K, now it appraises for $350K.

Un- real!!! Well I know we can't go by it but Grim thinks this housing market is going to burst. The only way some people are able to afford homes are using Interest Only loans, and once interest rates start going up there goes the housing prices. Housing values are FAR exceeding the salaries of most people. Which means they are financed to the hilt. One burp and we end up with lots of houses being on the market suddenly, and in the extreme cases, high default rates.

Now to the question asked by the OP: Depending on your DTI, I have a feeling that you're going to be hit with a nasty rate, and the only way to afford it is going I/O. I hate I/O loans with a passion because you're paying interest to the banks, getting the tax writeoff, but no equity, unless you're in a zooming market, but it has to stay zooming for a few years and then you hit the exponential curve of affordability.

Remember too, there is rumblings afoot to take away the mortgage interest deduction off taxes. That happens, the housing market will sink like a rock!

Share this post


Link to post
Share on other sites

It sounds like you are going in the right direction, but it will take a while, unless you have about 20% down. Depending on your credit history, you can get 100% financing with a 570 score, but they will want to see 3 trade lines that are over 24 months old, at a minium. When you get to the 580 score range, you can get 100% much easier. Every 3 months or so of on time payments on all of your credit cards/cars etc, will result in a nice increase in your scores. I totally understand your desire to get into a home before you can not afford anything, but do be patient.

Some things that you can do between now and then. See how much of your income you can devote to making house payments. Then start saving that amount-less your rent. That will get you into the habit, and you will have some money saved up for moving in expenses, rainy day, etc. Then it won't be a shock to be devoting what can be up to 50% of your income to make you house payments.

You have a great goal, keep on working towards it and you will be a home owner one day.

Charles

Share this post


Link to post
Share on other sites

Thanks everyone for your replies. I'm going to try hard to be patient. . . seeing as 20% down is absolutely out of the question. Hopefully within a few months I'll be able to post again to advise of my new purchase. Thanks to this site, I've had a number of baddies deleted from my CR, so following this forum's advice has definitely proven to be beneficial.

Share this post


Link to post
Share on other sites

There is a lender that will give you a loan with 10% down with those credit scores. The rate is somewhere in the mid 8s probably.

Share this post


Link to post
Share on other sites

Thanks for your post. Well, since my last post, my middle score has actually gone up to 568. Would that get me any closer to 100%?

Share this post


Link to post
Share on other sites

Yes, you are very close. In general a 580 mid score (and remember that scores you get from the internet are not the same as the ones that mortgage lenders use) will get you an approval for a 100% financing loan.

Charles

Share this post


Link to post
Share on other sites

I am in the same boat as you.

I really need to buy a home but I can't afford one here in Miami, my son has 2 years left of HS and doesn't want to move.

I really hope that these home prices go down because I really like my job. I can get a better, higher paying job but I have to raise my children and I rather be home with them than have them home alone waiting on me. Plus I feel like I am making a difference with the students I teach.

So, How long do you guys think this market will take to sink. And by sink do you mean go down or just stop growing so quickly?

Share this post


Link to post
Share on other sites

Anyone consider doing a lease purchase......?

You give seller a small deposit, agree on a set price, make payments for a year or two....HAVE IT RECORDED ( I made a huge mistake by mot recording) and some companies qualify as a refi....and equity accrued is yours, if no equity accrued you can walk and loose small deposit............I have horrific credit....purchased 2 home this way....both time considered a refi, so my scores didn't have to be wonderful and equity made up for down payment......Just a thought.......Anyone else, feel free to comment....

I know a few people are going to tear this up, however it worked for me 2x....I have a Chapter 7, and a CH 13...if that gives you an indication of how horrible my credit is....lol

Share this post


Link to post
Share on other sites

That is a great idea,

Solvable problems

The major problem that I have seen is that you have to trust that the owner is going to make the payments. If the owner will send you the monthly statement, or let them come to the home, then that solves the problem. One seller did not want to do this because she did not want them to know how much she owed. That did not make sense to me, because who cares what something cost a while back, or how much was owed. It does not change what it is currently worth.

The other problem is that you have to make sure that the value set as the "purchase price" is current value. You can get an appraisal that takes care of this.

Super idea. A motivated seller that probably already bought their next home and did not sell their home as fast as the realtor said that they would is a great candidate for an offer like this.

Charles

Share this post


Link to post
Share on other sites

Lisa71, I live in St. Petersburg and am now seeing home prices slowly going down. Our problem here is that they are going Condo crazy, building and converting everything in site. I'm hoping the market will get oversaturated with sales so it can become a buyers market again.

Share this post


Link to post
Share on other sites

I don't know what to do, this has me so stressed knowing tha tI can't afford anything.

Hoping to get lucky with a HUD home or teacher next door.

Share this post


Link to post
Share on other sites

Lease-Purchases are VERY hard to successfully complete.

All too often the Landlord just takes the money and finds a loophole reason not to go to settlement.

Also, conservative experts predict that the housing market will recede by 5-15% in the next year. (Especially in overbought markets like DC, California and Florida.)

IMHO: Wait, save your money and buy at the lower end of the market

Good luck,

Share this post


Link to post
Share on other sites

My second lease option closes tomorrow.....paid 329k for it appraisal 505k...Due to my credit situation, I have to pay a higher rate, but with 2BK's....I don't think 8.25% is so bad....

Share this post


Link to post
Share on other sites

Wow!!! That's fantastic. What area do you leave in? I haven't seen too many lease options around here (DC area), or maybe I'm not looking in the right places.

Share this post


Link to post
Share on other sites

1st one I did was in PA, This one is in Florida.....

They were homes that were vacant, people tried to sell and couldn't so they put them up for rent......we offered to buy on lease option, 3 year contract, each home refinanced 1 year later.....

We have been very fortunate so far......if you see a home sitting vacant for a long period of time, for sale....you can always call and make that offer.....person who owns the home is most likely still paying a mortgage on it and will be relieved to not carry that load, especially if they purchased another home.............

We have considered buying some rehab properties that way, then flipping them after we rehap......any questions, let me know.....we made a lot of mistakes with the one we just refi'd.....hate to see anyone in the same boat we were in.....

Good luck:)

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.
Sign in to follow this