trying to buy my first home but no luck?
ok me and my significant other have been living in a rental home for almost a year and we pay 700 dollars a month. Our only source of income is Social Security and rent takes up over half of our income. So we are trying to get a house but I do not think we have the credit to get a house citimortgage and wells fargo and unfortunately I have one credit score that’s 15 points short. i tried hud homes and they want 650 which is odd because a bank only wants 600 or 620 . I have no idea on how to get a house or anything. I am trying to move before Feb. 2013. My credit score is currently getting repaired and it is going up 10 points a month. Any hints or tips in how would I go about getting a house ( hud, foreclosed, whatever I can get) will be helpful. if it helps I reside in Alabama.I just do not want to rent anymore.
First, you will have trouble getting a mortgage with less than a 650 score…while some banks may take a look at your 620 score, the chances of getting the mortgage with less than a 620 are slim, and you will be paying at least 1% if not more over the best rates. Your other option would be an FHA loan – while FHA does not require any specific score, your credit must be clean for at least 2 years (that means no late payments in the past 24 months) and then it is up to the lender (yes, even though FHA does not require specific scores, they also give the lender considerable leeway which lenders are now using to tighten up their basic requirements).
10 points up per month is about the best you can hope for. Credit scores are based on credit history – what is past is done and you can’t change the past. You can only change you present and future, but time only goes by at its current pace – since scores are based on time, you can’t hurry up scores or time.
If the $700 is taking up half your income, that means that your monthly income is less than $1,400 and your annual income is about $16,000 – assuming you could qualify for a mortgage, the most you will be able to borrow is $48,000. Note you will need a minimum of 3.5% down (no borrowing for a down payment) plus 5% for losing costs – this puts your house price at no more than $50.000 total and you needed almost $5,000 to actually close on the house and move in – and that is $5,000 in cash. So the question is, do you have the $5,000 in cash and if not, can you save it by February?