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imatter

Family of 4 trying to buy a home.

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Hey All,

 

I am here for advice, No one I know owns a home or is any good when it comes to credit, loans, mortgages etc... Looking to the community to help me out a bit to get a future mortgage loan. I am 28 with 2 kids 1 of which is my own, the other my step son. When I met my girlfriend I jumped right into the family dad role and we eventually had a baby boy together which is 1 1/2. When we received news that we are having a baby, My concerns arise of getting a place for us, so we jumped right into an apartment in a not so good neighborhood with high rent, and 1 year after I decided the best thing to do is move back home with my family of 4, clean up my credit and save. But enough of my family tree....

 

The credit part is almost done (but not really). Since my move I have removed 13 negative items off my credit report from all 3 bureau but still have a low score. I have 2 credit cards with a $300 limit, one from CreditOne and the other from FirstPremier (Yuk, I know) A Fingerhut account $300 limit, Express store card $500, Buckle $300, Jcrew $250 & Student Loan from Nelnet of $1,800 (I am paying $50 a month). My 3 scores range from 585 to 606 (USAA ECM Scores)

 

I am here seeking direction, what to do next, how do I go about removing the negative items? Do I simply pay them off? Even though I cannot really afford & how.. Schedule PFD, Schedule a payment plan? I've sent Verification letters to them, some are still in the works. But the main 2 that are stuck are the auto loan and first premier. The FirstPremier I have no problem paying off, I called to see if it were possible to re-activate the account if I paid in full, they declined of course, should I just take the loss with a paid?

 

All advice, positive or negative is appreciated.

 

My Goal

Save for a down payment to buy a home within a year, limit is 150k-250k.

 

Credit Summary of Negative items remaining on my report

If someone would like to view my entire credit report, I can send a PDF or copy and paste it in a DM (All personal information have been redacted)

 

 

Experian®

Equifax®

TransUnion®

Account Name

ACCELERATED FINANCIAL

No Data Returned
For This Bureau

ACCL FIN SOL

Account #

Account Type

Collection Department / Agency / Attorney

Collection Account

Balance

$5,474.00

$5,474.00

Date Opened

8/1/2012

8/22/2012

 

Experian®

Equifax®

TransUnion®

Account Name

FIRST PREMIER BANK

FIRST PREMIER

FST PREMIER

Account #

Account Type

Credit Card

Revolving or Option

Revolving account

Balance

$429.00

$429.00

$429.00

Date Opened

4/1/2008

4/1/2008

4/6/2008

 

Experian®

Equifax®

TransUnion®

Account Name

SANTANDER CONSUMER USA

SANTANDER CONSUMER U

No Data Returned
For This Bureau

Account #

Account Type

Auto Loan

Installment

Balance

$0.00

Date Opened

7/1/2008

7/1/2008

 

 

Experian®

Equifax®

TransUnion®

Account Name

US DEPT OF EDUCATION

No Data Returned
For This Bureau

No Data Returned
For This Bureau

Account #

Account Type

Education Loan

Balance

Date Opened

1/1/2010

 

Experian®

Equifax®

TransUnion®

Account Name

US DEPT OF EDUCATION

No Data Returned
For This Bureau

No Data Returned
For This Bureau

Account #

Account Type

Education Loan

Balance

Date Opened

1/1/2010

 

Experian®

585

Equifax®

594

TransUnion®

606

Edited by imatter

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First off, don't rely on those USAA scores. Those are FAKOS, as in fake credit scores. You'll want to pull your real FICO scores from Myfico.com. You'll need a 620-640 mid score for an FHA loan, if you go that route.

 

Secondly, you'll get more responses if you post this in the main credit forum.

 

Thirdly, have you looked into first time homebuyer programs in your state? Every state has a housing finance agency that probably funds to lenders for first time homebuyer loans. These are low interest loans, often with downpayment assistance available. Google your state and "housing finance agency".

 

Hope this helps!

Edited by RedHairedLady

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First off, don't rely on those USAA scores. Those are FAKOS, as in fake credit scores. You'll want to pull your real FICO scores from Myfico.com. You'll need a 620-640 mid score for an FHA loan, if you go that route.

 

Secondly, you'll get more responses if you post this in the main credit forum.

 

Thirdly, have you looked into first time homebuyer programs in your state? Every state has a housing finance agency that probably funds to lenders for first time homebuyer loans. These are low interest loans, often with downpayment assistance available. Google your state and "housing finance agency".

 

Hope this helps!

Red, I highly appreciate your comment and suggestion. this does seem like the best solution and I will look into it, make some calls and see if i am eligible for this oppertunity.. THANK YOU!

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First off, don't rely on those USAA scores. Those are FAKOS, as in fake credit scores. You'll want to pull your real FICO scores from Myfico.com. You'll need a 620-640 mid score for an FHA loan, if you go that route.

 

Secondly, you'll get more responses if you post this in the main credit forum.

 

Thirdly, have you looked into first time homebuyer programs in your state? Every state has a housing finance agency that probably funds to lenders for first time homebuyer loans. These are low interest loans, often with downpayment assistance available. Google your state and "housing finance agency".

 

Hope this helps!

Red, I highly appreciate your comment and suggestion. this does seem like the best solution and I will look into it, make some calls and see if i am eligible for this oppertunity.. THANK YOU!

 

You're welcome!

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Just from a personal standpoint non credit related as I've been there before - you should narrow your price range on your future home. If you are saying 150k-250k most of the time that means the 250k isn't really ideal. Don't start off being a homeowner by being "house poor" - meaning struggling to make ends meet as you pay an $1800 mortgage.

 

I only say this as the last time I was home shopping I started with a broad range (and was prequalfied for the the amount and would have been approved on the high end) and of course fell on love with ever house on the high end, but I realized it would have over extended me and it was humbling going back and looking at houses on the lower end of my original "range". But I'm glad I did, because things changed (divorced) and I wasn't stuck with a foreclosure as a result.

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Just from a personal standpoint non credit related as I've been there before - you should narrow your price range on your future home. If you are saying 150k-250k most of the time that means the 250k isn't really ideal. Don't start off being a homeowner by being "house poor" - meaning struggling to make ends meet as you pay an $1800 mortgage.

 

I only say this as the last time I was home shopping I started with a broad range (and was prequalfied for the the amount and would have been approved on the high end) and of course fell on love with ever house on the high end, but I realized it would have over extended me and it was humbling going back and looking at houses on the lower end of my original "range". But I'm glad I did, because things changed (divorced) and I wasn't stuck with a foreclosure as a result.

Excellent advice.

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Just from a personal standpoint non credit related as I've been there before - you should narrow your price range on your future home. If you are saying 150k-250k most of the time that means the 250k isn't really ideal. Don't start off being a homeowner by being "house poor" - meaning struggling to make ends meet as you pay an $1800 mortgage.

 

I only say this as the last time I was home shopping I started with a broad range (and was prequalfied for the the amount and would have been approved on the high end) and of course fell on love with ever house on the high end, but I realized it would have over extended me and it was humbling going back and looking at houses on the lower end of my original "range". But I'm glad I did, because things changed (divorced) and I wasn't stuck with a foreclosure as a result.

That is beautiful advice Gerray! thank you!

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Don't pull your scores at all, even the FAKO's, for 6 months. They don't tell you anything beyond a snapshot of a useless scoring model.

 

Some of the loan programs I used required 12 months with no active collections. They didn't care that they were on there, just that they had been paid 12 months before.

 

As someone else stated, look for a new/first time home buyer class. It should be free and mine even gave me $250 off closing. I learned a lot in the class because I could ask the quirky questions the internet couldn't easily answer.

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In case you don't know, if any of those collections turn into a judgement you'll have to fight it (in court not the CRA's) or pay it. FHA in particular will not approve you with an unsatisfied judgment. Whatever you do, if any of them try to sue you don't allow it to get to that point.

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as someone said, there are several banks who work with first time home buyer classes. if you can take a class, do.

 

secondly, you took an important first step.... just figuring out where you are and trying to figure out where to go.

 

IMO there are 3 components to credit repair.

1. repairing your report - removing baddies, etc.

2. keeping your utilization down/adding positive TLs.

3. changing the behavior that brought you to this place to begin with

 

 

A few questions to help triage your report.

 

What state are you in?

Have you disputed with the CRAs yet? or just with the creditors?

You listed a few open TLs, What is your utilization?

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as someone said, there are several banks who work with first time home buyer classes. if you can take a class, do.

 

secondly, you took an important first step.... just figuring out where you are and trying to figure out where to go.

 

IMO there are 3 components to credit repair.

1. repairing your report - removing baddies, etc.

2. keeping your utilization down/adding positive TLs.

3. changing the behavior that brought you to this place to begin with

 

 

A few questions to help triage your report.

 

What state are you in?

Have you disputed with the CRAs yet? or just with the creditors?

You listed a few open TLs, What is your utilization?

Hey Jen!

 

Thanks for your response, it is greatly appreciated! I have signed up for a Chase My New Home Webinar on the 7th of may to get my knowledge started, I live in Manhattan, NY but I work from home so something outside of the city is what I am going for. I have disputed with both CRA's and Creditors & have removed tons of baddies. My utilization is currently at 27%. as far as behaviors, 90% if not 100% of the baddies on my Credit report are from when I was not as responsible as I am today, just 2 years ago I was a single guy from the city, now I am a father of 2 worried about the future of my 2 boys. The auto loan I owe is from a car financed in 2008 when the recession hit, I lost my job and couldn't afford the car, I was out of work for 2+ years and tried going back to school (hence the student loans).. FYI to all, my current job is very stable, small company so no benefits whatsoever, no 401k, no health, no dental, nada, nothing, zilch but as the company grows I grow with it and they have great raises.. I make 50k a year & my GF makes anywhere from 28k-35k (shes hourly)

 

 

thanks again to all!!!

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If you're going to include her income, you'll both want her order her reports as well. Even if she says she has never defaulted, there could be mistakes. It also sounds like she has an ex... I learned the hard way that they know how to use your social security number just fine.......

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And, you'll want to consider the chances of her becoming pregnant again, now or in the future. My fiance makes a base of 50k, but in the end makes over 70k. We're still only basing how much we can afford off of his 50k. We've decided that we don't want to really spend more than 1100 a month including taxes and insurance. In Maryland, that means we can purchase at $100,000 ONLY because the taxes are high (much like NY), but in VA, we can spend up to $150,000. Taxes and insurances are by far lower. You need to take this into consideration.

 

If you buy a home that has yearly taxes of $3,000... you'll have to add $250/mo to the mortgage. $1,200 property taxes add $100/mo. If you put down less than 20%, you can add pmi.

 

 

So a house that a simple mortgage calculator tells you would cost <$900/mo ($175k w/ 5% down) would end up costing about $1,250/mo. Plus utilities.

Edited by amandanicolem87

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Applying for a mortgage within a year might be a bit soon. Definitely feasible but requires some effort.

 

1) Pay down your balances.

2) Continue cleaning up your credit profile.

3) Apply for new credit cards (perhaps start with Capital One or secured cards). If approved, terminate the garbage CreditOne and First Premier. No application for at least 6 months prior to new mortgage.

4) Use your credit and pay on time.

 

5) SAVE. SAVE. SAVE.

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Congrats all around. Lot's of sage advice given here.

 

I would approach it as a power play not just because you qualify. Maybe look at buying both sides of a town home, rent one side out. Maybe make the first purchase what would be a perfect rental then make a play for a better home on your terms in the future while having an additional income stream(s). Given my druthers I would buy the smallest house I could easily afford and like Bob says maintaining said home will cost you the rest you think you saved :)

 

Now would be a good time to never deal with crappy predatory banks ever again. Develop a nice relationship with a credit union even if it starts via secured.

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Home ownership comes with SO MANY unexpected large expenses.

So very true. About 6 weeks after I bought my house I had to get a plumber out on a holiday. That wasn't cheap but it wasn't the most expensive thing that could have happened.

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Congrats all around. Lot's of sage advice given here.

 

I would approach it as a power play not just because you qualify. Maybe look at buying both sides of a town home, rent one side out. Maybe make the first purchase what would be a perfect rental then make a play for a better home on your terms in the future while having an additional income stream(s). Given my druthers I would buy the smallest house I could easily afford and like Bob says maintaining said home will cost you the rest you think you saved :)

 

 

Considering all the advice given here, it sounds like a small place is ideal, something not so updated and in income tax season we can reno a part of the house so within time and more money saved, sell the updated little house for more or maybe even rent to keep the additional income like you said and work on getting our dream home.

 

 

 

Now would be a good time to never deal with crappy predatory banks ever again. Develop a nice relationship with a credit union even if it starts via secured.

 

So very true, that is why I signed up for a checking and saving at DCU. Spoke to a rep and informed her of my intentions of building a relationship for a future mortgage loan.

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If you're going to include her income, you'll both want her order her reports as well. Even if she says she has never defaulted, there could be mistakes. It also sounds like she has an ex... I learned the hard way that they know how to use your social security number just fine.......

She just insured me that he has no info of hers or her sons whatsoever. thanks for the advice!

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Home ownership comes with SO MANY unexpected large expenses.

 

 

YEP. We haven't even bought a house yet, but if we buy the house we're in, we already have to put a new roof on it and upgrade to a heat pump... we're talking $10-12k here. Luckily we'll be buying from family if we do purchase it SO we can work around that to add it into the mortgage. And to think, the roof seemed just fine a year ago- until the last hurricane season and snow.

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Just from a personal standpoint non credit related as I've been there before - you should narrow your price range on your future home. If you are saying 150k-250k most of the time that means the 250k isn't really ideal. Don't start off being a homeowner by being "house poor" - meaning struggling to make ends meet as you pay an $1800 mortgage.

 

I only say this as the last time I was home shopping I started with a broad range (and was prequalfied for the the amount and would have been approved on the high end) and of course fell on love with ever house on the high end, but I realized it would have over extended me and it was humbling going back and looking at houses on the lower end of my original "range". But I'm glad I did, because things changed (divorced) and I wasn't stuck with a foreclosure as a result.

I agree so much with this ..... I was pre-approved for $225,000, wound up buying a modest home for $115,000. Since you never know which direction life will take you, never-ever max yourself out on the most they claim you can afford.

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