Buying a home no money down - where to start?

[dorelle]

Hello Credit Boards,

 

I recently came across a house that sparked my interest in buying a home about 6 months earlier them I intended. It is a foreclosure up for auction at a ridiculous price. So I went to Chase bank to sit with a pre-qualifier. They pulled my credit report and the score I saw on Free Credit Score .com was very different. While my Kroll report numbers were different and my consumer online

 

KROLL : Trans: 637 Equifax: 602 and Experian: 551

 

FCR : Trans: 595 Equifax: 629 and Experian: 629

 

All this with 91% credit used and only one collection or less then $500 which can be paid off in 30 days. So my Journey begins.

 

I paid off my Credit Card within 95% of the balance. it is 6/13 and my balance is reported to the credit bureaus between 6/15 - 6/20. Consumer reports say that will boost my score 20- 30 points. This may help the middle range to get up to 640 or higher which is the standard for FHA, Chase and other Loan companies. Being that there is that 30 day window where you can go to as many mortgage brokers as you can without it looking so bad on your FICO score. Given my situation:

 

1- Should I go shopping like crazy for a Mortgage being I have had one pull done already?

 

2- Being that the numbers are so different will the Kroll numbers be different within 30 days? meaning do they change rapidly?

 

3- Is there a change with this timeing game and numbers game to get pre-qualified in time for the auction 6/30? (I don't know how auctions work)

 

4- would it be best to go back to my 6 month plan and look at the end of the year? but then all my mortgage inquiries will show on my report...? SMH

 

5 - DO I shop like crazy for a house and mortgage since i know it is not that bad and I just have to find the right program/broker to work with.

 

Help me I know a lot but I am having trouble putting the pieces together.

 

D~

[david_weaver]

With auctions, you typically need 10% deposit based on opening price even to bid in addition to being pre-approved for the amount of your bid. Most foreclosures will have a hard time qualifying FHA if there are condition issues. With credit scores in the 620-640 range, FHA would be the only option, as there is almost no chance of going conventional. And if you found someone other than FHA for a mortgage with a 640 score, there is no way it would be at a lower down-payment than FHA.

 

The part of the post which stands out to me is the title. Even with amazing credit, you would likely not find a single loan with no money down. And most of the loopholes where the seller provided down-payment are long gone. The seller can help with closing costs, but the lowest you are going to find as far as down-payments would be 3.5% with an FHA loan. That can be a gift under certain circumstances, which may help you out.

 

The only other option would be a USDA loan, if the property meets the criteria. That is the only thing I know of that allows 'no money down' but the property needs to be rural (you would be amazed how much actually qualifies) and you must be low-to moderate income.

 

I am in a similar situation, although with higher credit scores. Have a house I found, also a foreclosure, but not an auction. Pre-approved, just need to finish gathering down-payment. At this point, I am saving and waiting, which is all there really is to do.

[CharLyn]

Dorelle,

 

I do not know about auctions, but I agree with David that the days of no money down are over. However, depending on income, there are still some areas that offer down payment assistance. I did not qualify due to my income, but a girl at work did. She only had to put $1,000 down and was able to $20,000 towards the purchase of the home. They do put a lean for the assistance, but that only lasts 5 years. She went through "Family Housing Resources".

 

My opinion, and only my opinion, is that you should stick to your original plan. You will have some money saved up, credit scores will be in place and you won't have to drive yourself so crazy. I don't think the effect of a few mortgage inquiries will hurt you but maybe a few points.

 

There will be another amazing house that will make your heart flutter, trust me. In my search, many perfect houses slipped by and then when I got my perfect house (and it is perfect), I would see another and wish I had not bought yet.

 

A good plan has a place, good luck with whatever you decide,

Char

[Glacier]

You may also wish to google to see if there are any Down Payment Assistance programs in your state.

[doodlebugger]

USDA loan would give no money down, but here's the "catch" - you have to get the sellers to agree to pay everything....closing costs, pre-paids, etc. if you want a true no-money down loan with the USDA. That also doesn't cover any appraisal fee or the earnest money you have to put down on the house when you write the contract. As for your scores, I think the midscore is going to be too low for an auto approval which means they will do a manual review and those have a lot more requirements. I am no expert, just writing on what I have experienced personally, and maybe someone can chime in that knows more than me. Good luck to you.

[mariuszh]

USDA loan would give no money down, but here's the "catch" - you have to get the sellers to agree to pay everything....closing costs, pre-paids, etc. if you want a true no-money down loan with the USDA. That also doesn't cover any appraisal fee or the earnest money you have to put down on the house when you write the contract. As for your scores, I think the midscore is going to be too low for an auto approval which means they will do a manual review and those have a lot more requirements. I am no expert, just writing on what I have experienced personally, and maybe someone can chime in that knows more than me. Good luck to you.

 

Agree with everything here. USDA will allow for up to 6% seller assistance towards your closing costs. This may or may not cover all of your closing costs. The tax rate on the home will be a facor in this. And of course, the seller will have to agree for the seller help, as it is coming out of their bottom line.

[Brian B The Loan Professor]

USDA and VA are the only loans that offer 100% - VA is available to those that have served in he armed services

USDA is available to low to moderate income familes where the homes are in a rural area.

It is Not a loan that is available to everyone like FHA or Conv.

If you can make it work it is one of the best programs out there.

B

[Redskin547]

With auctions, you typically need 10% deposit based on opening price even to bid in addition to being pre-approved for the amount of your bid. Most foreclosures will have a hard time qualifying FHA if there are condition issues. With credit scores in the 620-640 range, FHA would be the only option, as there is almost no chance of going conventional. And if you found someone other than FHA for a mortgage with a 640 score, there is no way it would be at a lower down-payment than FHA.

 

The part of the post which stands out to me is the title. Even with amazing credit, you would likely not find a single loan with no money down. And most of the loopholes where the seller provided down-payment are long gone. The seller can help with closing costs, but the lowest you are going to find as far as down-payments would be 3.5% with an FHA loan. That can be a gift under certain circumstances, which may help you out.

 

The only other option would be a USDA loan, if the property meets the criteria. That is the only thing I know of that allows 'no money down' but the property needs to be rural (you would be amazed how much actually qualifies) and you must be low-to moderate income.

 

I am in a similar situation, although with higher credit scores. Have a house I found, also a foreclosure, but not an auction. Pre-approved, just need to finish gathering down-payment. At this point, I am saving and waiting, which is all there really is to do.

Don't forget VA loans, no down payment and I had seller give me a 10K credit towards closing costs. I only had to bring $550. to closing. Also always check with your county you live in as they sometimes have down payment assistance programs that are never advertised. They do in Palm Beach County FL where I live, I think the catch is you have to occupy the residence for 5 years or else pay the money back. Check with HUD also. I did a closing for someone who received 20K from United Way for their down payment, so you never know just be persistent and ask every government office you can think of.

[jst300z]

I did a closing for someone who received 20K from United Way for their down payment,

 

I better be crying my eyes out when I hear that story.

 

-----

 

VA is the way to go. I got in back when conventional offered only a few points down, very lucky. I do plan on using my VA in the future for our final home.

[SE7EN57]

We got approved for the FHA-Plus here in VA and seller agreed to pay for closing cost. We only had to pay for the appraisal and EMD roughly $1000. They do require you have at least 1% of the cost of the house in your bank account and we had to do a free online course for being a first time home buyer as a requirement as well. I think minimum credit score had to be 620 or better which wasn't a problem. We close on the 27th and got locked in a 4% with zero points.. We couldn't have bought a house if these programs didn't exist and I'm truly grateful!

[cputrwz]

Grats SE7EN57, I'm jealous. I wanted to do the 100% FHA loan through VHDA as well but I make 5k over their income limit! Boooo....

 

Credit Unions also offer 100% loans but unfortunatley they require steller credit to qualify. I tried to get the 100% financing through Navy Federal but they wanted 7 years since a foreclosure and I only had 3.

[Redskin547]

If anyone is on the fence and serious about REFI or purchase lock your rate now, rates could go even higher this week

[saladdin69]

Hello Credit Boards,

 

I recently came across a house that sparked my interest in buying a home about 6 months earlier them I intended. It is a foreclosure up for auction at a ridiculous price. So I went to Chase bank to sit with a pre-qualifier. They pulled my credit report and the score I saw on Free Credit Score .com was very different. While my Kroll report numbers were different and my consumer online

 

KROLL : Trans: 637 Equifax: 602 and Experian: 551

 

FCR : Trans: 595 Equifax: 629 and Experian: 629

 

All this with 91% credit used and only one collection or less then $500 which can be paid off in 30 days. So my Journey begins.

 

I paid off my Credit Card within 95% of the balance. it is 6/13 and my balance is reported to the credit bureaus between 6/15 - 6/20. Consumer reports say that will boost my score 20- 30 points. This may help the middle range to get up to 640 or higher which is the standard for FHA, Chase and other Loan companies. Being that there is that 30 day window where you can go to as many mortgage brokers as you can without it looking so bad on your FICO score. Given my situation:

 

1- Should I go shopping like crazy for a Mortgage being I have had one pull done already?

 

2- Being that the numbers are so different will the Kroll numbers be different within 30 days? meaning do they change rapidly?

 

3- Is there a change with this timeing game and numbers game to get pre-qualified in time for the auction 6/30? (I don't know how auctions work)

 

4- would it be best to go back to my 6 month plan and look at the end of the year? but then all my mortgage inquiries will show on my report...? SMH

 

5 - DO I shop like crazy for a house and mortgage since i know it is not that bad and I just have to find the right program/broker to work with.

 

Help me I know a lot but I am having trouble putting the pieces together.

 

D~

Stop looking, it will only drive you crazy. Save for a year, work on scores and try again next year. A

 

Auctions require money at the time of sell, usually 10%, and you have to close fast. Have you even looked to see if there were liens or taxes due on it?

 

You are not ready. Give it a year.

[Redskin547]

+1 Very true about the title history, I have seen deals die or get delayed recently because of some sort of lien or lis pendens being filed on the title. You should stay away from auction properties if you are going FHA. Quite a few foreclosures come from bankruptcy sales. There are some words that don't mix well here: foreclosure, FHA loan, and auction. FHA requires inspection in addition to the appraisal for them to approve, and often times these properties need work. Auctions are better for cash investors not financing.