Profile picture for kbridges0904

Is there a chance?

I pulled my credit score and reports yesterday. My FICO score is a 619. I am a First-Time Home buyer interested in a FHA loan that will offer down payment and closing cost assistance (also, if its possible to include funds for repairs/furniture, that would be great). My debt to income ratio is about 34% and I am only looking to finance about $90,000. Do you think that I have a good chance of getting a loan with all of my needs? 
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January 01 - Ferry Pass
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Profile picture for wetdawgs
Glad you are investigating your credit report.   There are often many actions besides identifying incorrect marks on your record that can be taken to improve credit.  How are you doing in that arena?

The phrase " If I had to wait until I saved money for a down payment; I would never be able to get a house" confirms that you aren't ready to buy.     If you haven't been able to save money for a down payment, you also aren't like to save the reserves that are required for maintaining your home (which could easily average 2 to 4% of the market value of your home annually).    Wayne's response is spot on.

How does one save?   Our approach was to pay ourselves (i.e. our savings ) first.  The minimum we've ever put in savings has been 10% of our take home pay.   When money was tight, we then budgeted around what was left - no, it wasn't always easy.  In fact, sometimes is was darned hard.   Our first home was purchased with 20% down.  

You are also asking about borrowing money for repairs and furniture, do you really wish to buy furniture on a 30 year payment plan?  That is mighty expensive furniture.

Home ownership isn't a right, it is something you earn.    Perhaps you'll get a mortgage at this stage, perhaps you'll find a down payment assistance program (have you looked? they tend to be local), perhaps you'll find a seller who will cover your closing costs - many won't.  But, don't do it lightly.   Beans and rice are inexpensive at Costco.
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January 01
Well if you are considering an FHA loan, then your credit score should be good to go. Lenders like myself have been able to give out FHA loans with scores as low as 580. Also, it is good that your DTI is under the 43% maximum which will help you out in the mortgage application. The problem would be your down payment. You will need a 3.5% down along with closing costs. There are community grant programs that can help you cover 3% out of 3.5% down payment. This will leave you with only .5% left to pay as a down payment along with other closing costs. On the other hand, if you are seeking a loan that will cover renovation, that is a whole different type of loan. There are still FHA loans like the 203k that are renovation loans that help you with this situation, but it is very different compared to the standard FHA loan. Either way, the best thing for you to do is to speak with a lender directly to see if you can get started on financing with your situation or advice on what to do next. 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 further questions or if you would like a loan, feel free to contact me.
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January 02
There is a chance for you, and I agree with much of what has been said on here about saving and watching your current debt situation, but as the rental market costs have spike you could potentially be paying less each month to own. How much are you paying in rent each month? We could work it where I can give you a lender credit to help offset closing costs/down payment, and you can have your realtor negotiate up to 6% seller concessions. If you need to get a gift from a family member for the down payment you can do so. Just keep in mind we need to keep you at a monthly payment you are comfortable with. Owning is much different from renting and it is important to have cash on hand should you need to make repairs and or fix things (A/C, roof leaks, etc).
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January 02
You have a good chance, visit with your local lender and complete a loan application to know what products that lender can offer you.  

Best of Luck in 2014
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January 02
Some excellent answers here.  I simply wanted to add a comment that has been on my mind for months...maybe years.  When I read some of these inquiries that mention credit scores in the low 600's or lower, I want to ask if they have investigated why the scores are as they are.

I must say that when credit scores first became a major part of the mortgage process (yes, I have been around that long), I balked at it thinking that, "I can judge my clients better than some computer software."  Well, I am now a believer.  Sure, there are some unfair credit scores, but in the vast majority of cases there are valid reasons for low scores. So when I read someone saying that they have scores in the low 600's or below, my first instinct is to ask, "Why" before I would respond.  Just my 2 cents. 
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January 02
Profile picture for wetdawgs
Thanks for thinking of this positively.  

You are doing the right thing evaluating your habits and identifying behaviors that aren't to your benefit.  Controlling impulse buying is a good one to work on.  I'd tend to use two aspects - 1)  Put money in savings at every paycheck, and don't touch it.     2)   Make a budget.    We  have no idea what you buy impulsively, but put a budget amount on the categories.   Books?   Clothes?   Whatnots?   You could even have a "general entertainment purchases" and put a limit of $100/month on it. Put it in cash, and when the cash envelop is empty that's the end for the month. 

Other aspects to control impulse buying is to avoid the situations when it occurs and avoid the situations to trigger the response.   When does it occur?   What are some alternatives?
1.  Ads on TV?   mute the ads.
2.  Cruising stores for entertainment with your friends?   Why not go for a hike in the park instead?
Remember that the advertising specialists are working extraordinarily hard to make you buy things.  Sit back and recognize how creative they are, then laugh at them and say you won't be suckered into it.
3.  Credit cards too accessible?   Put your credit card in a glass of water and put it in the freezer. 
4.  Boredom?  Time for a hobby that keeps your mind engaged - tatting, learning German, doing Sudoku puzzles, exercising, studying budgeting and 100,000 other possibilities.

Creating a plan and step by step improving your financial skills will help you achieve your goals.   Home buying is not an emergency, it is something you want to do right so you aren't dependent on the beans and rice at the big box stores, or having to buy Ramen by the case.    When you've achieved the dream of home ownership, you also want to enjoy other aspects of life and not have the house as a noose around your neck.

Good luck.



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January 01
Profile picture for kbridges0904
Very good advice! I literally just started looking at places and researching loans this week which, is why I'm asking questions. I figured people here would be able to offer good advice to a First-Time Home buyer. 

As far as my credit goes, I'm young and don't have a long credit history. The oldest account I have is a bank loan from college that is 6 years old (and is in good standing). I also have a car loan and two credit cards, also all in good standing. I make all my payments all time!!! One thing that will help my score is paying the balances down and i have already started working on that. I've never been good with saving money but I've been making huge strides in improving that and have another 7 months before my lease is up on my apartment to save.

Do you all have any other advice on saving? My biggest issue is impulse buying and wanting to be able to go out when I feel like it. Are there any tricks to get around that?
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January 01
It is best first to conquer your debt and get that out of the way which will help boost your credit score. Establish a savings account and start setting money aside for a down payment. This way when you go to purchase a home you won't have any worries about extra expenses that come up in the escrow process such as inspection fees and closing costs. And you'll have the comfort of knowing if any financial emergency comes up after buying a home you only have your mortgage payment and utilities.
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January 01
Profile picture for kbridges0904
@wetdawgs
 I did discover that there are two derogatory marks on my credit report. It looks like the same debt was reported twice! The name on the debts is not mine so, I'm guess there was some confusion on the collectors part as to whom the debt really belongs too. I have filed disputes on these marks and am waiting for the results. 

I am also well aware of what owning a house entails. If I had to wait until I saved money for a down payment; I would never be able to get a house however; I do believe that I am financially stable enough to make payments on a mortgage! I have also gotten quotes on things like home inspections, taxes, fees, etc and am able to afford the upfront cost!!
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January 01
Wetdawgs gave the best answer......... millions of homeowners lost their homes over the past 4-5 years, and a major reason was that were not financially prepared for the expenses of owning a home.  Liberal loan programs allowed them to borrow money, but many found out that with a huge increase in housing cost, repairs, utilities, etc they did not have reserve funds for the additional cost. Some were in financial difficulty after only a few months in the home.
Homeownership is a worthy goal, but for it to be for the long term it needs to be based on a solid financial position which includes having sufficent assets for down payment and reserves,  good credit, and income/job stability. Leasing until that happens is a much better alternative IMHO.
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January 01
Profile picture for wetdawgs
Let's see, what you are saying is that you have a poor credit score and little to no savings.    While there is a chance that you can find down payment assistance and a chance that a home owner will pay your closing costs (neither are guaranteed),  perhaps it is a good time to ask yourself the question what steps are you taking to improve your chances?  Have you initiated a savings program?   Have you studied why your credit score is poor?  Put together an action plan to improve it?

Home purchase has other costs, such as inspections. 

Home ownership has maintenance costs that aren't covered by the mortgage,  and these can run several percent of the market value of your home.   Are you prepared for these?

Put together a plan and your chances of successful home ownership will be great in the long term.
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January 01
FICO score at 619, yes there is a chance, yes there is a chance for assistance to close, Yes you have a good chance to get a loan with all your needs. I have a list of bankers that can tell you for sure email or call my profile I will see what I can do to help you from my end.
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January 01
 
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