Looking for options

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My wife and I are looking at new construction purchase in late August 2008. Current home sale profits are 50K with closing in July. Current credit scores not real good but moving up Me- TU-631, Eq-619, Ex-649, spouse - TU-683, Eq-642, Ex-647. We have another 25K for downpayment - total cash = 75K. No foreclosures / BK, etc.

Combined income is 18,000 (pre-tax) monthly. 11,000 (post tax) - Both of us in current job for 4+years and 14+years.

Monthly commitments = 1,200 / mo (cars) without home (no credit card debt)

Home price is 540K with new conforming limit of $428K in this area.

We have worked real hard to increase credit score over past 6 months, with a 40 point increase since January. Hopes are to be around 680 by end of August, yet I need to make sure that if they dont get there we have options.

With the current market conditions I am concerned credit scores will drive the lendability rather than the financial side. I am looking for suggestions on what is available in the market for someone in our situation.

Thanks in advance

adonis · Posted: Tue May 06, 2008 10:14 pm Post subject:

Welcome Glock,

It's good to know that you're buying a home now. I suppose you've sold your old home and have incurred 50K as the profit. So, just check out with a tax advisor whether you need to any capital gains tax.

Your credit score isn't good but your spouse's scores are impressive. So, you can use his credit and get a loan in both of your names. If your score reaches 680, then that's a good one to get qualified for a home loan. Now, would you like to go with a fixed rate or variable? this matters a lot.

Just to tell you that home prices will be falling down in the coming months, so just in case you can't pay, you'd have to sell your home to recover the proceeds. In such case, an FRM is prefefrable. But hey, do you have a short term plan or you'd like to stay long in the same home?

Guest 0.10 Dollars($)

Email me, I have some options for you!

"martytheloanofficer@gmx.us"

Marty

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gmakerley · Posted: Wed May 07, 2008 10:16 am Post subject:

glock, please ignore any blatant advertising you may see in these forums. it is expressly prohibited.

as for your situation, you'll likely find that fha would be a viable alternative, considering the fairly low credit scores. with a conforming loan, there will be pricing adjustments - weigh the two alternatives and see how they look.

if your credit scores can be improved by mid-to-late summer, then you'll qualify for something a little better on the conforming side. still, take a look at fha for comparison.

0.10 Dollars($)

my concern is that we will not meet the $428K threshold for conforming (not enough cash in pocket). We will be looking at financing somewhere around $460 - 480K.

The magical 680 threshold.... does that have to be for both of us or just one with the other's scores falling just short??

larry · Joined: 27 Jun 2007 Posts: 3051 428.03 Dollars($)

Hi Glock,

Welcome back.

I think you can go for FHA loan and Fixed rate mortgage will be better for you if you are planning to stay in that property for a longer period of time.

You can also be able to get finance near about 455K with your joint income. You should shop a bit for lenders. You can even request for no-obligation free mortgage quote with minimum detail so that the community lenders may check it out and help you to get the mortgage.

Feel free to ask if you have any further questions.

Best of luck,
Larry

gmakerley · Posted: Thu May 08, 2008 6:04 am Post subject:

glock, standard practice is for the lower of the two middle scores generated by your credit reports will rule. in other words, is your score is 679 and your wife's is 680, the one used would be your 679.

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