Information on mortgages for a potential first time home buyer?

Question

I would like to purchase my first starter home by mid 2008, but my credit is somewhat shaky. I have two credit cards (totalling 700) and one will be paid off by the end of the summer. I have 6 late payments on this card in the past 5 years of its existence, but the most recent was in 2005. The other card is 1.5 years old with perfect payment history. I have 4 collection accounts (2 with cell phone companies from 2003 and 2 for medical bills in 2006). On a good note, I obtained a car and paid the balance (before the end of the loan) of $6,200 in 10 months with never a late payment for 2005. Federal government student loans totalling $5,250 have also been on time for the past 14 months.
With this said, how hard would it be to obtain a mortgage? I'm sure the interest rate would be high, but I am so desperate to buy a house! I have lived in an apartment for 5 years and am tired of "throwing money out of the window."

Answer 1

With that credit history, let's just say it will be a "challenge."

Currently, renting is not really throwing money out of the window. When you buy, there are quite a few fees and taxes you have to pay that will not go towards your equity. For example, property tax, and association dues on a condo. Buying makes more sense financially if house prices are going up, and currently they are not.

Answer 2

I would assume you could get a loan relatively easily, if you are putting money down, and have the income.There are alot of programs that do not use credit score as a criteria for the loan. I would suggest paying the cell phone collections, and keeping your credit card balances to less than 25% of thier maximum balance. You will have to have proof of a steady income over the last two years. Putting 20% down will easily get you the loan, and 10% should be enough. Try putting the amount you expect to pay away for the next few months to see if you can do it. If you want to find out your score or have some other questions send me a message.

Answer 3

The mortgage market (for the lenders) isn't that great right now. If you notice most of the country is headed into a buyers market. Therefore the lenders are more than a little anxious to make loans. I don't think getting the loan will be difficult, specially if you can come up with 20% down payment (none of it as a gift, i.e. your parents/relatives don't "give" you any money). If someone is going to help you, have them give it to you now, put it in a CD (so you can't spend it) and it will appear to the mortgage company as your money. The other advantage to putting down a 20% down payment is that you don't have to pay PMI.

Regarding credit - the main thing they are looking for is that you make regular payments. Missing payments and/or late payments is a bad thing.

Answer 4

Most banks look at the last 12 months history. You're off to a good start if your last late payment was in 2005.
Regarding the collection accounts, you should try to clean them up as soon as possible as the bank may require you to pay them off before closing anyway.
Depending on how low your credit scores are, it is possible for anyone to obtain a mortgage.
To give you an exact answer, one would need to know more detailed information such as your income situation, potential down payment, and exact credit scores.

Answer 5

This is a rough time to be applying for a mortgage unless you have an exceptionally good credit rating. If your credit score is shaky, you'll only be accepted by one of the "sub-prime lenders" and you WILL have a very high interest rate. Unless you have someone with A-1 credit that can be the co-buyer, and their name WILL be on the deed. Warning - stay away from lenders like Dietech, Lending Tree and all the others that advertise heavily, they'll rob you blind. Stick with an actual bank or credit union. Their rates will be much lower, but again a lot depends on your credit score. Good Luck

Answer 6

Well, I'm glad you're getting concerned now rather than in the spring of 2008. So you have some time to get things cleaned up prior to qualifying for a mortg.

You should start talking to a lender tomorrow. Call a Direct Mortg. lender or a larger bank, someone who will ultimately fund your loan "in house",, you Will get the lowest rate & costs by going this route, rather than going through The middleman (the mortg. "broker").

You need to have your credit pulled right away & keep a copy for yourself. Work with the lender & they will tell you what items need to disappear or be paid down or fixed prior to your finally qualifying in mid 2008.

this way you know NOW what needs to be done.

Tip: Do NOT make any more late payments, be frugal w/ your money for this next year. You want to be GOLDEN when the time comes for you to get loan approval!

feel free to email me if you have any more questions, I can help you further , thx to the email option that Y!A's provides its' users.

Answer 7

Even with all the information you have given, you need to have your credit score checked and I believe you can do that for free annually and I'm sure any Realtor can run a credit check and let you know where you stand. Any mortgage company could help you as well. You can go to these people for services and not necessarily use them for a loan.

Answer 8

it's gonna be V E R Y hard for you to get any kind of housing loan...try for a condo...maybe a co-signer would help...your credit sucks too much for a conventional mortage. (the collection accts and student loans are the worst.)

Answer 9

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Answer 10

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