Profile picture for Hardcore4x4

When is it time to buy?

Hi all,
Exciting site for sure!  I'm a story of a lost soul found and slowly being repaired.  Sadly, I didn't know much about credit as a young man and I wasted away my credit.  Thankfully in my 30's I woke up but really had no idea what to do.  Here I am on the cusp of my 40's and looking to buy a home.

I married an amazing woman, her credit score is around 810.  No joke.  My credit score is just a tad over 500.  Yeah, I know.  I have pulled my credit report and there is a 100 here, 200 there, 1000 over there.  Nothing I can't pay off quickly.  I have 0 credit card debt and my wife has about 6k in credit card debt.

Combined we make about 150k a year, have about 2k in bills every month.  That includes a car payment, business class internet, etc. 

We pay 1,500 in rent right now.  What should we be doing to prepare for a home?  I have done the mortgage calculators and if we saved 20% it looks like we could easily fit into a 400k home.  But 80k is nothing to sneeze at. 

I'm lost in all this, and could use some sound financial advice on how to proceed.  I have some lofty goals and really, I have waited 20 years to buy a home, what's another 2 or 3 years to save?

Thank you all for your advice and help!
  • December 27 2011 - Littleton
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Answers (12)

  Good luck and please do keep me in mind when you are ready! 
Shannon Miller
  • January 19 2012
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Profile picture for Hardcore4x4
Thanks Shannon,
I agree I need to proceed carefully.  Just checked my credit score and I'm in the 650 range.  Crazy how fast I can get it to raise. 

Anyway,
We are currently in a lease and I agree, we don't want to fall in love in a home and not be able to buy.  That's just asking for a marital fight.  When we are ready, we will keep you in mind for sure.

Thanks again
  • January 19 2012
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I would be willing to show you and your wife around when ever you are ready to begin your search.  If you are not ready or able to purchase something right now it may not be in your best interest to start looking quite yet.  I'd hate to see you fall in love with the perfect house and not be able to do anything about it.  That being said, if you can handle the disappointment, and would like to just get an idea of what's out there I would be happy to show you some places.  You can email me and we can talk more about what you are looking for.
Shannon Miller
  • January 19 2012
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Profile picture for Hardcore4x4
Thank you all for your advice.  It's an uncertain time in American history for sure. 

Shannon,
I am indeed looking in the Littleton area, and wouldn't mind looking at some of the homes that I have saved as favorites.  With that said, I can probably assure you that we won't be buying for at least a year and a half.  More than likely I will get my score up around low 700's by then and my wife has an amazing credit history.  I have spent a considerable amount of time on this site and have probably looked at every home between the $250k to $450k mark (And a few million+ homes :-))

We have done some calculations and are figuring our top end is $420k.  We will probably have about 10% down considering 20% is a pretty large chunk of change.  I am actually surprised by the lack of quality and uniqueness of homes in the area for the cost.  But I guess that's the price for living here.  My tastes and wants are very specific however; I'm not sure if looking is such a good idea until we have a check in our hand.

With that said,
If anybody is interested in showing my wife and I around, we wouldn't object.  And of course, who wouldn't want to be on one of those tv shows if they ever came out to Littleton Colorado!

Anyway,
Thank you all, I appreciate your time.
  • January 19 2012
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There's never been a better time to buy. The rates will never be this low again. No one knows how long they will stay this low but something has to change for the ecomony to improve. That being said, there are huge values and many homes to choose from. The sellers are looking for buyers more than ever and you might be surprised at the deal you can find out there. Since you do have the resources to make it happen, give some strong consideration to doing it now. You are in the drivers seat in todays real estate marketplace. The buyers I've assisted this past year have done very well in the transactions. Thank you for your question and Good Luck!!
  • December 27 2011
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Congrats on getting married, and deciding to buy a home.  It sounds like you have done a lot of research on your own....that's great.  It is always good to have an idea of how the process works.  Your next step is to find a mortgage broker who can help.  Start asking around for recommendations from friends, family and co workers.  You can also ask a real estate broker for a recommendation.  There are good and bad mortgage brokers.  If you meet with a good mortgage broker they can help guide you in the right direction.  They can tell you what options you have and what you should be doing to put yourself in the best situation for approval.  They can also help you determine what price range you would be approved for.  You may be able to start looking for a home before you thought.  There are so many benefits to buying right now.....great home prices, great mortgage rates, and a buyers market.  Also, do you know where you would like to buy at?  Are you planning on buying in Littleton?  Have you narrowed it down to a few neighborhoods?  You should also start thinking about what you are looking for in a home...# of bedrooms/bathrooms, sq. ft., yard, type of floor plan, proximity to highways, parks, work, shopping, etc.   I work in the foothills area and would love to help you when you feel ready to start your search.  Good luck
  • December 27 2011
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Save the 20% down, and pay off all of your debt, THEN start to buy a home. DO NOT LISTEN to the bad advice below, about uisng FHA 3.5% etc. You pay more upfront fees, you pay more in insurance in each payment. Do the mature patient thing of saving the 20%, being debt free, and having an emergency fund. 
  • December 27 2011
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I got some advice to get my old stuff paid off and that is not really the best thing to do (assuming you mean things that have basically been sitting...charge offs?). It may be very helpful for you to negotiate with those companies to get paid for deletions. This will increase your credit scores, whereas JUST paying them off will lower them. Also, if she has some long standing well-paid credit cards she may be able to add you to them as an authorized user to bring YOUR scores up. I've learned all this stuff at www.myfico.com on the community forums there. You might consider FIXING your credit is all I'm saying.
  • December 27 2011
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HC- A4HB gave you excellent advice. The one thing I would suggest changing is the 15-year FRM, in your situation.

You have recently demonstrated your commitment to saving for a 20% down payment. Using the same discipline and tenacity, I suggest exploring the benefits of a 5/1 or 7/1 ARM. .... Best wishes.

Happy funding, Rudi
  • December 27 2011
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Paul's suggestions are PROBABLY right, but that's assuming that you've laid out all of the important information about your situation.  The problem is that you do not know what's important with respect to lending rules regarding your situation, so Paul...and everyone else responding here...may give you bad advice because they haven't had the opportunity to talk through your situation with you.  That's what you need...is to sit down with a very knowledgeable lender and talk it all through.

A lender up here in Boulder who I would strongly recommend as a starting point is Terri Wolf with Premier Mortgage (303-530-7362).  If you'd rather talk to someone in the Littleton area, call Russ Murray with Buyer's Resource Southeast ((303) 721-1100 x 1 ).  Russ specializes in representing home buyers down in that area...as we do in the north metro area.  He can give you the names of some very knowledgeable lenders down in your neighborhood.
  • December 27 2011
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Since you can pay off your debt quickly, do it now while you're considering all of your other options.  It still will take time for a payoff today to improve your credit scores significantly.  While you can get a mortgage with less than 20% down,  that level downpayment will keep you from having to deal with paying PMI, which is an extra monthly mortage cost that is not tax deductible.  Good luck!

  • December 27 2011
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You need to start with a good mortgage lender and then find a real estate agent who is fully committed to representing your interests as a buyer.  This is complicated stuff, and your situation somewhat (though not unusually tricky).  You can read yourself to death and you won't learn what a good mortgage lender can tell you about your loan options in a 1 hour meeting.  Once you've met with one knowledgeable mortgage lender, call a ccouple of others and talk through the approach you've settled on with the first, and see if they have other ideas.

Two quick comments though:

1.  Unless there is something unusual here, thre is no reason to be thinking in terms of 20% down.  With an FHA loan you can do about 3.5% down and with others in the 5-10% range.
2.  What many people do in your circumstance is qualify for the loan using only the income of the spouse who has good credit.  This will limit what you can afford, but it may be the only way to buy right now.  If so, do it on a 15 year loan so that you can make a serious dent in the payments over the first few years with both incomes, or do it with a 30 year loan and a plan to keep your first property as a rental for the next 20 years.
  • December 27 2011
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