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First time homebuyer looking for clarification on the buying process

I have been saving to get a house and I believe I am at the point where I should be taking the first steps, but I'm not sure what to do. I have been doing research for a while now, I know exactly where I want to live and what price range is reasonable for me (about $80,000 - $100,000). I know that I am interested in an FHA loan, mostly because I do not have the funds for more than a 10% down payment. I have applied for one FHA loan, but was denied because of the number of trade lines I have. I have multiple credit cards which count as a trade line, and student loans that count as another trade line. I needed at least 3 trade lines to be preapproved. Because I am living with family to save for a house I do not currently have any utilities in my name, however for the past 3 years I have paid rent and multiple utilities. I closed my utilities in May of this year, which is when I moved in with family. My credit score is good, 730 was my high school and 656 is my medium score. I have about $12,500 in savings and a 401k with a couple thousand in it. I am not looking to close on a house until January of next year, so will have more in savings by then. I make $64,000 a year. I do not have any co applicants.

Here are my questions:
Would I be able to use my past rent and utility lines of credit for trade lines?
What else could I use as trade lines? Could I use any other alternative lines?
Should I get a preapproval before going to a real estate agent/looking at houses?
Does it seem like I could qualify for a mortgage given my information?
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September 20 2013 - Dearborn
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Answers (9)

Honestly based on your particular situation I would recommend a USDA mortgage. USDA Home Loans* allow 1st time home buyers to purchase homes with as little as zero down. FHA on the other hand requires the 3.5% down but they also have very expensive mortgage insurance.

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December 25 2013
You may need to use a mortgage broker instead of a bank.  I would find an agent you are comfortable with and have them refer you to a lender that they've worked with.  You will need a pre-approval before writing an offer on a property. 

Good Luck!!


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September 20 2013
There are lenders out there that can use rent and utilities as a line of credit. Not every lender, including major banks, will accept those as trade lines though so you need to find the right lender for your situation. Also, it seems to me that you should be able to qualify with the information you have shown so far, but there are still other factors that would need to be looked at. It is also a good idea to get pre-approved before shopping for houses. The reason why this is important to do first is because it gives you an idea of what you can afford and look at. Lastly, offers from potential buyers with pre-approvals are take more seriously than offers from buyers who don't have pre-approvals. I recommend you speak to a lender like myself who would be more than willing 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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September 20 2013
Do not waste your time! Get preapproved! It takes 15 minutes. Call a professional lender. You may call [Contact information and promotion removed by Zillow moderator. Please see our Good Neighbor Policy for posting guidelines]
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September 20 2013
My advice contact an experienced mortgage person at a Bank I would suggest:
Chris West at Fifth Third Bank he is the area sales manager.
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September 20 2013
You should definitely get pre-approved before searching for home. You need to know exactly what you are qualified for. Too many people look at homes, fall in love with one, but aren't qualified. In process of getting qualified, the changed are the home they fell in love with has accepted a offer. The saying "line up your ducks in a row" ... well this is the "first duck".
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September 20 2013
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All of my credit cards are in my name only, no one else is authorized on them. I have had my student loans since 2009 and I have paid on them monthly since then. I do not have any late or missed payments. I was denied for preapproval because they said they required 3 trade lines and I only have 2 (credit cards count as 1, student loans count as 1).
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September 20 2013
You may qualify for a conventional loan if you have 10% to put down, but may prefer a FHA loan. There are some mortgage lenders that consider alternative credit lines - like your cell phone. Shop around and ask several lenders what you should do. You have a bit of time yet. Good luck.
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September 20 2013

Good Morning,

Sounds like you are on the right track. It also sounds like you may just be an authorized user on your credit cards? How many of those cards are in YOUR NAME ONLY? This is important. Also, how many months have your student loans been in place? I'm confused as you said you have multiple tradelines...but were denied because of not having 3???

No you probably will not be able to use past rents, but if paid on time you could use it as a possible compensating factor (if needed). What about a cell phone? Do you have one in your name?

Yes, you should absolutely get a pre approval before going to a Real Estate agent. This way you know where you stand and won't be wasting your time (or theirs). Being pre approved upfront gives you negotiation power as well.

Yes, it seems that you will be OK. Keep shopping. All lenders are not created equal. Find a broker in your area that has been around for a while. They will have multiple outlets to try and get you a mortgage. Tell them you may have to use traditional credit to get approved...if they are seasoned, they will know exactly what you mean.

Good Luck!

Tom

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September 20 2013
 
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