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First Time Buyer Jitters

Would you guys mind giving a first time home buyer with not so good credit score some tips? I'm just nervous about the whole situation and a little conversation might ease my mind. It's a lot to step into! And, I'm under-researched for sure. that's the way it will have to be as I don't have much spare time these days. Hopefully a good buyers agent can help guide me!

Anyway, my general situation is I earn around $50,000/yr, and have had this as stable income for around 10 years, with the same company. I am in a small apartment with my fiance and our 2 year old. We also have another on the way, due next year. We need more room! We are in Central FL (incomes are low, home values are low).  

My fico scores are TU660 EQ645 EX596. So no help there. It's pretty much summed up by-- a 6yr old secured CC I stopped paying on, an old phone bill and two ER visits (less than $200 each for the ER visits). The credit card is really haunting me 6 years later. Also, my two credit cards that I currently have, I have only had for about 2 years. And no personal loans. So I have little positive credit history. But, never late on a payment.
 
The lenders don't know it, but I am actually someone that is low risk to lend to, with my situation, but my credit profile is no reflection of that. 
I want to put down about $20,000, but I could come up with more if absolutely necessary.  

So, for someone like me, any tips? I'm thinking of contacting a buyer's agent to help me. 

Should I even attempt to apply for a conventional loan. (middle score 640, 50K income, $20-40k down)?
FHA a better option?
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October 08 2013 - US
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Answers (10)

Although your credit is a bit low there are still lenders like myself that can accept your scores. For example, I have been able to give out loans with scores as low as 580. When it comes to your down payment, that depends on what you can afford, the down payment required for your conventional loan, and your lender. Some conventional loans may only require 5% down as others may require up to 20% or more down. The best thing for you to do is to speak with a lender. Speaking with a lender will get your questions answered quickly and efficiently. There are lenders like myself that would be glad to speak with you to help you get the loan that you need!

Well I hope this helps! If you have any other questions or if you would like a loan, feel free to contact me.

Good Luck
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October 09 2013

**Getting Approved**
*By that you probably mean how do you get approved for a home mortgage loan in order to buy a home.
*First check your credit score with the three credit reporting agencies. If in the mid 600's or better, then seek out a mortgage broker (I can give you at least 3 names of very good ones) who will talk with you first on the phone or by email in order to get a sense of your total financial "picture".
**That way the mortgage broker can tell what level of mortgage and what kind of loan you would qualify for. There are many good programs for first time home buyers.
*The mortgage broker will provide you with a pre-qualification letter with which you can provide to a realtor who will use it to help you find and place an offer on a house that fits within your needs and budget.
**You can have a realtor help you in your home search then based on what you will now know re. your qualification level, or you can visit an up-to-date web site that will give you the most current lists of homes for sale in your price range. For example [Hotlink removed by Zillow moderator. Please see  Good Neighbor Policy for information.]

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October 09 2013
Yes, you should find a good Buyer Agent to help you. They will also be able to assist with a lender who can answer all of your financing questions as well.
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October 09 2013
At the moment you are not ready, though it sounds as if you are starting to prepare. Yes, begin to clean up your credit. Yes, keep saving so you have cushion, Yes, begin to look for an agent now to help you through the process and keep looking for one that you feel comfortable with.

The tight quarters will be (a little) more tolerable once you begin on achieving the goal of getting into something more suitable and the jitters will subside as you gain more information and become more prepared to finally purchase.

P.S.
Make your good, well thought out decisions now and when the jitters reappear at closing, ignore them.
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October 09 2013
FHA or USDA will be the best choices, the difference is that with a USDA you don't pay for the mortgage insurance premium, a payment that is paid when less than 20% down is given. ZERO down payment.
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October 09 2013
Please speak with a lender  - they can go over programs that you may qualify for!  Also, work on your EX score.  The others don't knock you out of the ball game.  Good luck!
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October 09 2013
Not being able to see your report it is hard for me to give advice.  First thing to do is see if the credit card account is being reported by the actual card company ie:Cap 1 or has it been sold to a collection agency. That is probably the largest balance and the one that may continue to haunt you.

Copy all 3 of your reports.  Google on the internet free credit repair.  This you can do yourself.  Don't pay a credit repair company. Read some of the blogs about debt validation and how to get negatives off your credit.  Get some understanding about the process before you jump in.

Google debt validation letter. There are tons of sample letters for free you can use to fit your situation.  Send a certified validation letter using to each and everyone of your negatives.  Keep the two receipts you get from the PO.  One is green and white.  One will later come in the mail all green.

Now see how they respond.  They have 30 days to either validate the debt (read very carefully what items the validation letter requests) or remove it from the credit bureau.

I do subscribe to a monthly service to watch my account.  Transuion has one called Truecredit.  I recommend to anyone trying to cleanup their credit to do it at least until you have things cleaned up.

If the creditor does not respond there is another letter you can use to notify the creditor bureau they are reporting an unvalidated debt.  Copy the letter to the creditor and the green card you got back.  Send the removal letter with the attachments certified mail to the credit bureaus who are reporting the debt.

There are a lot of laws and compliances concerning reporting credit.  You need to become familiar with them and the steps you can take to help yourself.

Since your scores are pretty good you may be able to make a huge improvement by cleaning up some of the old items.  I will tell you Experian is the worst at removing stuff.  If the creditor does not voluntarily remove a debt they cannot validate - it is tough getting Experian to comply.

I started working on someones file who had 14 collections.  Some were duplicates.  In 6 months I got it down to 3 which have to be negotiated.  It takes time and effort but you can make a huge difference if you are pro-active.

Good Luck and let us know if you have any other questions
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October 09 2013
Well, you will never know if you do not get started :-)
I suggest to first and foremost find a good agent and a good loan officer.
How to find them:  call a local title company or simply go to a local title office, tell them you are looking for a good first time home buyer's agent and ask who consistently closes with happy clients and which bank/loan officer that agent is working with the most. See to going to a local bank, not one of the big ones, ask if the bank you are visiting has "in house underwriting" and how if they close their loans on time in the absolute majority of the cases (again, title should know).
That should give you a decent start. Then contact the recommended agent, contact that loan officer and spill the beans. If there is a loan program out there for you that loan officer should know. Be honest and forthright so that there are no funny little things coming up later. 
And it is possible that all you get is a list of tasks to up your scores but even that is a start and you are well on the way to achieve your goal. Maybe your wife works and has better scores, that might to something to explore as well. Or you have parents who are willing to cosign...
In any case you will not get answers without asking questions so I encourage you to get going :-) Hope this helps!
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October 08 2013
I completely agree with everything Joseph said. You need to start with a lender you feel comfortable with and then it is a great idea to find a ABR Accredited Buyer's Representative as we have to take hours of extra training targeted at helping buyers.

Good Luck!
Brian
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October 08 2013
Actually your credit is not that bad, I am concerned that you cannot get the Exp score corrected, because if you can clear that up you will be good.

If you have not been working with a lender, you should be.  Most lenders will work with you to help you resolve credit problems and rescore you to qualify. As long as your debt to income ratio is good you should be good in central FL.

Try talking with a couple of loan officers and share you finances with them.  Find the one you like best and is willing to assist you to get qualified. It may take a few weeks or even months, but it will be worth it.
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October 08 2013
 
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