My husband and I would like to buy a home, but.....?

Question

our credit is not the greatest. Two years ago my husband started fighting a medical condition that didn't allow him to work and he finnaly got accepted for Social Security Disablitiy in April 2007. But for the last two years we have relied on my income alone which wasn't much. So need less to say we fell behind. We are still working on getting all the way caught up. We had a friend look at our credit reports he said that there is a lot of good things on it but there are also things we need to work on. Which we have been for the last three months. But we have $6,000 dollars in medical bill still and are are behind a month on a couple payments. Will it be possible for us to get a home loan with these types of problems

I should also explain the we have $3000 in savings and we already rent which is $700 a month.

Answer 1

There are a lot of good answers, especially Go, I's answer. She really put it all in a nutshell on how running emotions can get oneself into trouble in this fast changing environment of real estate and mortgage financing. DJB on the other hand is not fully correct on checking your credit. Yes, if you are applying for credit and doing it often, the "hard" inquiries will affect your score. On mortgages and autos, there is a de-dupe logic formula for that where in a fourteen day period all the inquiries will count as one, since most people like to shop around for the best deal. There is not de-dupe logic on credit cards. Now, if you do credit monitoring, for example with True Credit (affiliated with Transunion), you can update your credit every 24 hours and these inquiries are considered "soft." Soft inquiries will not affect your score.

I put a link below in the "sources" area for your perusal. It will help give you a better understanding on how credit reports work and it also explains the de-dupe logic on hard inquiries for mortgages and autos.

Answer 2

It may be possible to get a loan, but it will be hard in this market. My advice would be to get caught up on your bills, and save up some money first, because you will need several thousand dollars at closing to buy a house, even with a loan. The better your credit is, and the more you can pay down, the better rates you'll be able to get, which will save you money in the long run. You don't want to get in even further over your head.

When you do decide to buy, talk to some local banks and credit unions first, because they might give you better rates, and are usually easier to deal with than large mortgage companies or mortgage brokers. You should get pre-qualified for the financing first anyway, because it will let you know exactly how much house you can afford, and will make it faster and easier to buy when you find the right home.

Answer 3

Humans often take the path of least resistance because they do not want to wait for things. When it comes to purchasing a home, that is the biggest mistake that people make.
When it comes to obtaining a mortgage, lenders will want to see no open collections and no open charge-offs. Take care of the things on your credit report and clean that up.
With your open accounts, get current and stay current. The lenders will also consider you debt-to-income ratio and whether or not you are paying as agreed on your open accounts. The lenders will also want to see a year's worth of on-time payments with your open accounts.
If you don't have those simple things going for you, you might not qualify for a good, reputable loan at this time.
Whatever you do, do your research. Don't buy into a bad loan just because you don't want to wait for the time it takes to get your credit right. Foreclosure is at an all-time high in this country for that very reason. Balloon, interest-only and adjustable rate mortgages are not for everyone and they are not for ANYone who has problematic credit (even though those are the folks who are often talked into them).
My advice would be to wait until everything is under control before you start home shopping.
Good luck!

Answer 4

Twelve to twenty-four months ago this wouldn't have been a problem for you, but mortgage companies have been tightening up their underwriting standards, which means people with marginal credit quality have a harder time borrowing money today than in the past.

You should look at your credit report to see what your creditors have been reporting about you. You can get a free copy of your credit report at www.annualcreditreport.com. You will be able to see all delinquent payments your creditors have reported. Any late payments or money they wrote off because of failure to pay will count against you. If you want to know your actual credit score you will have to pay about $10 per credit scoring agency (Equifax, Transunion, etc).

If it looks relatively clean you might want to show your report to a mortgage broker and get their opinion. The mortgage market is changing weekly, with mortgage companies going out of business. More companies are expected to go out of business. If they don't have favorable information, wait a few months after all the negative news on sub-prime mortgages dies down and check back again. Mortgage companies, even large ones like Countrywide, are very skittish these days so they are being extra cautious. After the fear subsides they may be more rational and willing to consider more loans.

Bottom line: check your credit report and see what it looks like. If there aren't too many negatives, talk to a mortgage broker to get the latest info, as it is changing week to week. If they want you to apply, try it. If you get turned down, watch the news headlines on sub-prime mortgages and when they stop writing about it, check back again.

Good luck with everything.

Answer 5

No. Being a month behind on a couple payments will kill any hope of qualifying for a mortgage. Besides, if you are in such financial straights, how do you think you can afford to buy a house?

First, catch up on those late payments. Then work on paying off all your current debt. You can then look at your credit report and deal with any old negatives.

You will need at least 2 years of consistent, on time payment history before you talk to a mortgage broker.

Answer 6

Probably not, in the current market. A lot of people were given loans over the past few years that they couldn't keep up with, and now are ending up losing their homes, so requirememts have been tightened down a lot for getting a mortgage. That's actually a good thing for the people applying - you don't want to buy a home then lose it a few years down the road.

Keep working on getting your financial situation straightened out, and get something put back for savings.

Good luck.

Answer 7

I'm afraid you may need to rent for awhile longer. Mainly because the mortgage industry shake up and caused most lenders to tighten their qualification requirements and a lot of folks no longer qualify.

Work for another year on improving your credit and paying off debt. What you could do is in the Spring (April) of next year, check with a lender again, so see how your credit report is coming along. DO NOT check you credit regularly, it impacts your rating. Check it maybe once - twice a year max.

Good Luck! Hugs from Minnesota!

Answer 8

go to freecreditreport.com this is free doesn't cost a thing but need to cancel within 30 days or they start charging your credit card and see for yourself what your credit score is, and what needs to be fixed