October 26, 2010,
S.H. asks from Harvest, AL on April 12, 2010
Buying a House W/ Not-so-good Credit
My husband & I are really tired of renting & would love to be able to buy a house. My credit isn't horrible, it's just limited/new. My husband has some debts, but it's not credit cards. We're hoping to get some more money back from taxes & would be able to take care of most if not all of the debts (I don't think the debts are over $5,000). So his credit score is low.
I've got a decent job, but have only been there since July 2009. My husband is currently working part-time & also looking at going to college full-time with the military paying his tuition plus a paycheck every month. He's still in the National Guard & qualifies for a VA loan.
We were recently turned down by a local mortgage company. Are we forever doomed?? Or is there anything that can be done? Do we need to keep trying other mortgage companies?
I/we have had a pretty good rental history for the past 6 years. Wish all of that money had gone to buying our own house though :(
Thanks in advance for any suggestions!
H.P. answers from Dallas on April 13, 2010
Give Ron Stuart at RMCN Credit Services, Inc. a call at ###-###-#### or toll free # 888.4.my.repair. He is a great guy and will be honest with you if he can help. Good Luck!!!
A.M. answers from Oklahoma City on April 13, 2010
Here is one option that might help put some money away without taking any time away from your children: I have a hobby on the side that makes money. I enter car tags into a database. Then I tell others about it. That's it. No products, no services to sell. I can write them down with my 15 month old in the car. A completely legit company has created a way to store information to help find missing children and those who have stolen cars or failed to make their payments. I have already received multiple checks. I told 3 friends, then they told and so on. Yes, like multi-level or Arbonne, only no products or services. Just 10 tags a month. I'm almost to my 4th level of people. Once you reach 5 levels, it is $4,500 a month. Please feel free to call me on my cell, you can sign up from anywhere around the country. This isn't a junk response, I really am a Mom on here that loves to talk to other Moms, you can read all about my posts as I've been on here for a while. Call me, A., at ###-###-####. My Web site is amcglothlin.narcthatcar.com
M.R. answers from Rochester on April 13, 2010
We are in a similar situation--lower credit background, some debt but not too much, etc. We are still renting but last summer, after a year's subscription with a monthly credit monitoring update, our scores were barely high enough and we applied and were pre-approved for a mortgage. We were hoping to find a home with an FHA loan and were hoping for an older, rural home. It did not work out (probably more because my husband was going back to school and we did not find a home we wanted), but I went with a recommended mortgage broker and she "shopped" around for me. She also talked me through specifics like expenses unrelated to credit that might make what I was approved for impractical (one of our loans is not in our name, so we pay it but it does not show up as credit debt, groceries, etc.), and you also want to factor in property and school taxes for a home. You can often get an average for a home's utility cost for a year or so to get an idea of what to expect. Renting a house is not always practical--sometimes you are better off saving the difference in rent and putting it in savings for a year than moving and paying more each month. We can't afford a bigger place but we are outgrowing our 2-bedroom, so hope to be able to buy a house by the time we bust the seams, so to speak. I also like how someone points out that renting is not really throwing away money (not that you phrased it that way!), but to make you feel better in the meantime, you can look at it as having a repair service at your beck and call. I can't wait to scratch up my own counters and mop my own floors, but keep trying to practice on my rental for now. Anyway, I feel your pain, shop around, try a mortgage broker, or your own credit union or bank (that's how I got my car loan). Sometimes the biggest strikes against you for your credit are a short credit history, and limited available credit.
If you set a specific credit and home buying goal for, say, a year from now, consider a monthly update (I think some of the three reporting agencies charge $10 to $15 per month for a monthly update and they notify you if there is any change in your score). You can monitor and contest anything. You said you have limited/new credit history--if none of your debt is credit cards, open one or two, use them carefully instead of cash so you can pay them off as you use them (some also have incentives for this) but you are not putting yourself at risk (for example, if you have $50 and need groceries that will cost $45, buy them with the credit card, wait for your statement, then use your grocery money to pay it). This will give you "available credit," help establish a credit history (which will still be newer, but at least will look good), and show a mortgage company that you can pay your debt. Find out what they are requiring and then make a plan to get there. Good luck!!
S.C. answers from Columbus on April 12, 2010
With a VA Loan there are certain qualifications you have to meet. The best way to find out all of this is to go to www.va.gov. There is a section under Veterans services about Home Loans. I do know that you have to have a certificate of eligibility from them to go with a va loan. Your lender should be able to get that for you, if you do not already have it before hand. The absolute minimum credit score that they will accept for a loan is 620. Thats low compared to some banks / mortgage companies. There is also company called VA MortgageCenter.com that is a VA approved mortgage lender. They can help step you through the process. Also, if your not quite where you need to be to qualify at this time, they will work with you to get you where you need to be at no cost to you. Hope this helps some...
T.B. answers from Chicago on April 13, 2010
Make sure you can afford a house --- I know we all love the idea of a house, but in the end, sometimes it makes more sense to rent. Run the numbers to see what you can afford.
There's no shame in renting. If you want more space you can always rent a house.
You are not "throwing" money away by paying monthly rent. A house has a lot of cost associated with it... Mortgage, taxes, maintenance. By renting you have none of the unexpected cost.... i.e. furnance breaks, washing machine on the fritz, leaking pipes, etc. These always come up and you have to have some $ tucked away to deal with them.
IF you shop around some one will probably give you a mortgage, but remember that does not mean you can actually afford the terms of the mortgage. It's their business to make money..... that means they want your business, it's up to you to determine if that's the right situation for you.
A.J. answers from Indianapolis on October 26, 2010
My husband is a really good source to ask any questions you may have about improving your credit. He used to own a non-profit Hud approved credit counseling agency and helped so many with their loan modifications, home buying, and credit problems. Currently he is a licensed mortgage broker as well as a credit repair agent for a company called Financial Education Services. You can simply call him or email him if you like about any questions you may have. He's really knowledgeable and super helpful and kind. He loves to help people :)
Here is his contact information:
His name is AJ
Best of luck to you!
J.S. answers from Cincinnati on April 13, 2010
I, too, was looking for a house last year. My credit was not-so-good. I went to one mortgage broker, and basically he said to pay down my credit cards first, then come back. I didn't have that kind of time, as I wanted to get the Homebuyer Tax Credit.
I ended up moving in with my mother for 6 months to save my money for a downpayment. I'm a single mother to a 3 year old, so it was just the two of us. I was able to save enough for my downpayment that way. So during my saving process, I went to a different bank. I knew off the bat due to my lower credit score, and that I wanted a lower downpayment, that I wanted an FHA loan. So I went to a different lender with all of my information, and told him how much I wanted to be approved for, and he did all the work for me! It turned out great. Once I got the pre-approval (different than pre-qualification), I took my letter and went looking at houses with my realtor.
So since October I am now a homeowner, got my tax credit and paid off my credit cards. Sure, it was a little backwards, but it worked out how I had planned.
I can recommend the mortgage broker if necessary. Good luck!
K.B. answers from Milwaukee on April 12, 2010
First I would do some research... sit down together and figure out what you can afford as a monthly mortgage. Many relator websites will have a mortgage calculate on how much a house is total and what the monthly mortgage break downs to. Loan places bank, or others, will give you a ball park in what they think you can afford BUT they do not add in the other expenses like electric, gas, water and other bills you have (car, other loans, food, clothes, or items you need). So make sure to not get to excited when you see a big number because morethenlikely you may have to go down a few notches to make sure you can pay all your other bills too.
How about going through a bank, that is what we did, we used the bank we had our account with so they knew our banking history. When we bought a house; both hubby and I had student loans as well as one car loan (added up to $15,000 in loans, but these are good type of loans and we were paying them off every month), I had no credit cards (which is actually bad because then I have very little to base my credit score on), hubby had two credit cards (neither had a balance which shows we pay what we borrow right away), I had been working part-time for two years and hubby had been working 5 years... I remember the bank saying they like the person who brings in the bulk of the money to have the job for at least a year so they know it is a job they will be staying at (therefore they feel comfortable giving out the load). Rental history kind of played into it, but if you have bad rental history it ways into it a lot more, while a good rental history they look at and say ok you paid that on time, good.
I would try other loan places, getting a fixed rate is the safest way to go. You might also want to wait till July 2010 that way you have a year of work under your belt and a loan company may feel more comfortable about taking a chance on giving you a loan. Everyone is still cautious, it is better then it was a few months or a year ago but people will still want to make sure you will be able to afford it. The better you are prepared going above and beyond besides the simple stuff they ask for you can show you have done your research and know what you can and can not afford.
C.R. answers from Dallas on April 13, 2010
Do you know why the mortgage company turned you down? VA loans generally have the most relaxed guidelines. Finding out the reason for being denied would be the first place I would start.
I wouldn't go around applying at many mortgage companies. You need to find a mortgage specialist that will talk to you about the requirements and see if your situation would meet them. A good mortgage specialist would be able to discuss your situation and have a pretty good idea whether you could be approved or not. If you aren't approved, they should tell you exactly why.
Also, do not call RMCN. They will charge you through the nose to "fix" your credit, but it won't last. The negative stuff will show up again and RMCN won't care unless you pay them more.
Feel free to send me a message if you have other questions I can answer.