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588 credit score. 38,000 income plus 10,000 part time job which reports as non profit. single mom fi

588, 586, credit score. 38,000 income plus 8,000 part time job which reports as non profit1 year (credit union says it won't count until 2 years). single mom. first time homebuyer. Looking to buy between August and October. What are my chances of qualifying for an fha loan for 120,000? Paid off all debt except car. I still owe 10,000 on a 17,000 loan for car. What else can I do to raise credit score?
  • March 16 2009 - Miami
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Answers (11)

Rent... Do not buy now.. Market will drag for a long time in Miami.... Patience.. pay your bills... clean your old debts up... save money.. let the market come to you.  Good luck.
  • March 16 2009
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Profile picture for John Paunan
Listen to the man...he know of what he speaks.  Pay down the car loan, stay on top of your bills and your credit rating will improve.  From what I've read and heard from experts on the Florida market, including Mr. Wareing, it's going to take some time for real estate to rebound down there, so I wouldn't be in any rush to buy.  There will be bargains for a while. 
  • March 16 2009
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Profile picture for SlickPoetry
ditto. you shouldn't even be thinking of buying now. What fields do you work in? Are your jobs 100% recession-proof? What would happen to you if you lost one, or (heaven forbid) both of them? With a credit score that low you will not qualify for a good interest rate, your payment will be high, etc. etc.

to raise your credit scores, just continue to pay your bills on time and lower your debt. There's no other magic trick to it, really.
  • March 16 2009
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Profile picture for briyasmom
I am a teacher. We do have some budget issues in Dade county but I am confident that my job is secure but not 100%. Great advice. You don't have to tell me twice. Im going to wait. Thank you
  • March 17 2009
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Hi Briyasmom,
Good question about how to raise your credit score.  If you paid down your debts you're on the right track and time will be your best friend in terms of raising your score, but you should review your credit report with a fine tooth comb to check to make sure that companies are reporting that you have paid them back...  Even if you pay them, if you had any charge-offs or accounts you were late on and then paid and closed, you need to call those companies and ask them when they will remove them from your account.  It's worth the time and effort and you will feel great when you see your score going up.  

While you're waiting on the market (which by the way, sales are up in FL unlike the rest of the country) make sure to get a credit monitoring service.  I found a great resource through the Suze Orman (the financial guru) website - she has a program which not only texts you anytime someone makes an inquiry, but it also includes amazing amounts of advice and even a credit simulator (you can see how your score will change by doing things like closing a credit card account or lowering you balances, etc.  You can buy it for like $50 at www.myfico.com and they have coupons online, so check out www.ecouponspro.com for a 25% discount (if I would have known when I paid full price that would have been helpful).  


Definitely stay on top of your credit and the best of luck to you!  By the way, there are some Teacher Homebuying assistance programs you might like to take advantage of, including one offered by HUD called the Teacher Next Door program.  Here's a link I found on the Florida Dept of Education website which gives a basic description...

http://www.teachinflorida.com/Recruitment/FinancialServices/HousingAssistance/tabid/132/Default.aspx


Best regards,
Audra
  • March 17 2009
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Profile picture for briyasmom
Thanks a lot. I have noticed sales are going up in Miami. Especially in souh miami where I am looking. Specifically Cutler Bay. My concern is the prices rising. Im not really worried about interest rates as much. What do you think will happen if I wait one more year?
  • March 17 2009
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Profile picture for briyasmom
I also failed to mention that my car will be paid off before August. Will that change my credit enough?
  • March 17 2009
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Paying off the car should certainly help, but make sure to go over the entire report and contact any creditors who have given you negative marks in the past and ask them when they will be removed.  As soon as they fall off the report your score will go up.  I can tell you from experience that if you call back and keep asking you may eventually get someone on the phone who will send a letter to the credit agencies and ask them to remove it earlier :)
The thing about buying is this - nobody and I mean NOBODY has a crystal ball and no one can tell you when prices will go up.  Or down.  Or stay put.  My personal opinion is that they will continue to go down for a little longer and then stabilize, but we won't see appreciation for a while.  That is just my opinion and everybody on Zillow has one :)  It all depends on the LOCATION.  Some areas in the country (and from reports I have seen, even some areas within Miami) are actually appreciating - granted they are very, very few and far between.

If I were in your shoes, I would probably keep renting for another six months and then see how the economy is looking AND how your credit score is looking.  I'll be happy to email you listings which meet your criteria in order for you to stay on top of the market.  Feel free to email me at my profile and good luck!

Best regards,
Audra
  • March 17 2009
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Profile picture for briyasmom
If I call the creditors to remove the negative remarks, will they only remove those negative remarks or will they remove the entire posting? If it is the latter and I am successful with most of the five once negatives on my report, won't it look like I have no credit? Although creedit is probobaly better than bad credit.
  • March 18 2009
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Briya.

Sounds like that wouldn't be so bad.  You will not know if the market hits bottom until it has passed and prices begin to rise again.

Teachers are pretty secure.  Just get prequalified with your primary.  I don't ever recommend someone to use a part time income when getting pre-approved.  Sounds like you will be in a better position in August with the car paid off, too.

From what I understand, real estate has plummeted in Florida and you might be able to find some good deals......maybe even a few foreclosures at a good price.

Also, if you are a first time home owner, you could qualify for an $8,000 tax credit. 

FHA would be the way to go and the adjustments for that score would be minimal.  .325% points on $120,000 would be $390.

  • March 18 2009
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Audra also gave some great advice with the:

http://www.teachinflorida.com/Recruitment/FinancialServices/HousingAssistance/tabid/132/Default.aspx

There are fewer lenders out there doing scores that low on FHA, so you may have to look around a little harder today versus a few months ago.
  • March 18 2009
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