Rent or Buy?

Question

I am going to be getting engaged next spring and at that time my boyfriend and I would like to begin looking for a home. We would like to purchase a townhome but also will be looking at homes. We both together make great money and aside from a car that we purchased together and my student loan we have no debt. The problem is that we both have less than perfect credit. We are in our mid 30's and are trying to clean up our credit. My score is in the low 600's and not sure where his score is. I am wondering if in a years time that we could bring our credit score up and qualify for a decent interest rate or if it would be wise to rent for a year and then buy? My credit score is due to late payments and he has some bills from a divorce six years ago that were just not paid. Any suggestions?

Answer 1

First, DO NOT go get an inquiry/denial just to get a free credit report-- You're allowed to do this once a a year WITHOUT THE DENIAL to check yoru report--- go to www.freeannualreport.com.

You need to BOTH Be above 580 in order to be on the loan-- and this is your middle score, not your high/low score.

I, personally, probably wouldn't buy if my scores were under 620...you're getting into bad interest rates and prepayment penalties.

That said...there's a lot you can do in a year! PUll both reports and pay off all collections/bad debt. (FYI, mortgage co's DO NOT aalways require these to be paid-- i had one mortgage guy tell me not to bother a while back. I paid them anyway, but you know what i mean.)

Dispute any old, paid collections... companies have a habit of not responding if they already have their money, and you can get lots of bad stuff taken off. You should alsp dispute any late pays. Sometimes they also disappear with a dispute-- even legitimate ones.

Then, get all your CC balances under 35%...If you dont have ANY ccc's, you should get a small one (like $250) somehwere like Orchard Bank, to help you build that score up faster.

Pay EVERYTHING on time.

If you can each get to 650, which you should be able to do assuming his score isn't much lower than yours, you can geta reasonable mortgage.

Answer 2

Definitely clean up those credit scores before buying a house. You would probably get a home loan with your current scores but the interest rate would be quite high. It may not be such a bad idea to rent for a while anyway. Unfortunately it's not unheard of for a new marriage to break apart within the first year.

Answer 3

Buy a house. Don't waist your time or money renting. My advice to you for FREE credit reports on both of you is to go to a high end department store such as Macy's or JC Penny's and apply for credit. Both of you... Then when you get a letter of denial, and you will, send a copy of that letter for both of you to all three credit bureaus asking for a copy of your file. You have a right to one free credit report per year. This is the fastest and cheapest way to see what is in both of your files. A mortgage company will tell you that you must clean up any collections that are outstanding, (his stuff is probably sent to collections) before they will approve your home loan. This happened to me and my husband in our 30's also and it took about 6 months for me to get it all cleaned up but we got a good interest rate. Since you don't have a lot of debt right now, this should be fairly easy for you. And it is so worth it! When your a homeowner, your in the driver seat!!! good luck

Answer 4

Work real hard to clean up your credit and then go to buy. If the score is still bad, the lender will let you know.

Answer 5

If your score is in the low 600's thats soso but you can bring your score up in 6 months.

Answer 6

I would clean up my credit first. It will make a huge difference in the interest rate that you can get.

Answer 7

If you can buy than you will have established credit

Answer 8

Enough calculators to answer every question.