Posted on: 05th Nov, 2009 07:59 am
Hello,
Due to the ecomony and the burst of the housing "bubble" I know that banks are hesitant to lend out money for mortgages. Can someone review the requirements for a first time home buyer during these times? I am looking to buy a house and wanted to see if I should not even try. 2 credit bureaus list my score as 682 & 686 the third lists it at 639. I have a collection on an apt from 6/04, and a charge-off on an auto loan from 8/06. I have since got back on my feet and have been working extremely hard to fix my credit (which now only has these two derrogatory items). My approx salary is $25,500/yr.
1. Would I be a lost cause or a possibility?
2. What interest rates should I be expecting to receive?
3. Who is the best bank to get my loan from?
4. Are there still any first time homebuyer programs that do not require me to put a down payment?
Due to the ecomony and the burst of the housing "bubble" I know that banks are hesitant to lend out money for mortgages. Can someone review the requirements for a first time home buyer during these times? I am looking to buy a house and wanted to see if I should not even try. 2 credit bureaus list my score as 682 & 686 the third lists it at 639. I have a collection on an apt from 6/04, and a charge-off on an auto loan from 8/06. I have since got back on my feet and have been working extremely hard to fix my credit (which now only has these two derrogatory items). My approx salary is $25,500/yr.
1. Would I be a lost cause or a possibility?
2. What interest rates should I be expecting to receive?
3. Who is the best bank to get my loan from?
4. Are there still any first time homebuyer programs that do not require me to put a down payment?
#1 - no you are not a lost cause;
#2 - if you look at fha rates, you'll get the best available;
#3 - the best bank to get your loan from depends on who answers you...the answer is always "it's me!" frankly, there is no "best bank" but you need to find a loan officer who will represent you in the best way and provide excellent service. we do exist.
#4 - that depends on where you live; you can do an internet search for the housing agency in your state to see what programs exist for you. most states, however, require a 3.5% downpayment, which coincides with fha guidelines. if you are eligible for a usda loan, those are available at 100%, but your property would have to be in an essentially rural area.
virtually every lender is going to want to see that you've paid off those 2 accounts that still show up.
#2 - if you look at fha rates, you'll get the best available;
#3 - the best bank to get your loan from depends on who answers you...the answer is always "it's me!" frankly, there is no "best bank" but you need to find a loan officer who will represent you in the best way and provide excellent service. we do exist.
#4 - that depends on where you live; you can do an internet search for the housing agency in your state to see what programs exist for you. most states, however, require a 3.5% downpayment, which coincides with fha guidelines. if you are eligible for a usda loan, those are available at 100%, but your property would have to be in an essentially rural area.
virtually every lender is going to want to see that you've paid off those 2 accounts that still show up.
Even though my scores are not that bad, I will still have to pay off the two debts?? That definitely will NOT be possible as one is $14K and the other$5K. There's no way for me to obtain $19K to pay them off. If I enter into some sort of payment agreement with my creditors, will this suffice or will I have to wait until it's paid off? I read on another forum that if the debt is 2 years old, most lenders won't consider it?? I guess you're saying this is incorrect??
most lenders are far more conservative than they were yesterday. if you enter into an agreement, any lender will then want to see that you've lived up to the terms of that agreement, which is impossible to do if you enter the agreement today and apply for a mortgage tomorrow. but of course you already have an application in place.
So basically... I AM a lost cause unless I find $19K under my pillow tonight to pay off my bad debt, regardless of my "good" credit score now???
That's a bummer... :(
That's a bummer... :(
Hi jaguilera,
You will have to pay off those two accounts in order to qualify for a new loan. In case you do not have a lump sum of $19k to settle the accounts, you can enter into a repayment plan to pay off the debts over a certain period of time. But, with a repayment plan in place, you will have to wait for at least 6-12 months for a new loan. Lenders would want to see if you have made payments as per the plan for the past 6-12 months before approving your home loan.
You will have to pay off those two accounts in order to qualify for a new loan. In case you do not have a lump sum of $19k to settle the accounts, you can enter into a repayment plan to pay off the debts over a certain period of time. But, with a repayment plan in place, you will have to wait for at least 6-12 months for a new loan. Lenders would want to see if you have made payments as per the plan for the past 6-12 months before approving your home loan.
Hi Jaguilera, here's something else to consider.
Those before me have given you good advice. The debts will have to be paid, but it may not necessarily be a lost cause.
You might want to try a "debt settlement" company to help you negotiate a lower amount and if they're good they may be able to get the creditor to report as "paid as agreed".
BUT! be careful! there are a lot of these companies that are scams and will collect money upfront and do nothing. I ran across a company on a thread on this site, called "debt consolidation cares". I don't know anything about them but it doesn't hurt to investigate. Make sure you get references of past clients, check with the Better Business Bureau etc. If somebody has been burned by one of these companies you can bet there is something on the web that talks about it.
If they start using the word "guaranteed" run don't walk away.
You're not a lost cause, but it will take time and effort on your part to fix it.
Good Luck!
Those before me have given you good advice. The debts will have to be paid, but it may not necessarily be a lost cause.
You might want to try a "debt settlement" company to help you negotiate a lower amount and if they're good they may be able to get the creditor to report as "paid as agreed".
BUT! be careful! there are a lot of these companies that are scams and will collect money upfront and do nothing. I ran across a company on a thread on this site, called "debt consolidation cares". I don't know anything about them but it doesn't hurt to investigate. Make sure you get references of past clients, check with the Better Business Bureau etc. If somebody has been burned by one of these companies you can bet there is something on the web that talks about it.
If they start using the word "guaranteed" run don't walk away.
You're not a lost cause, but it will take time and effort on your part to fix it.
Good Luck!
Thank you for all the advice... I guess I should start trying to figure this out now for when I get married next year!!!
greg, i was wary when you first mentioned a debt settlement service, but i see later that you threw a warning in there. thank you for that. yes, indeed, there are plentiful scams out there, and "guaranteeing" results is a sure sign of an outfit that simply wants to make money. there can be no guarantee when you come right down to it...hopefully, we are educating more and more consumers to know that for themselves.