Financing in Oakland>Question Details

Gil, Home Buyer in California

Can I get a FHA loan or any other loan?

Asked by Gil, California Thu Sep 15, 2011

my land lord is increasing my rent from $1000 to $1200 next month. I had a 60 days past due on my student loans last oct 2008, paid charge offs in 2008, paid collection in 2009, and a disputed entry in 2008. now my fico is 620 (trans) and 629 (equifax). I am trying to increase it by 650-680 this year by paying off my one and only credit card debt of $1000 this year, and paying bills on time. my student loan is current since oct 2008 from $24k to 14K by the end of this year. i have $12k down payment from my 401k plus $5k tax refund next year and steady federal employment for 4 years with $70K annual income. i want to buy $150K house either in oakland, vallejo, pittsburg, antioch by early 2012...please help me and mom with our goal...i so HATE my landlord increasing my rent during the near holidays and not even improving any stuff in it.

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I understand your concerns by everything you have heard on the radio and read on the web. You are correct that loans are not cookie cutter type deals anymore. Since you have a few months before you're ready to buy, I would highly recommend that you have an experienced and reputable loan officer review your credit and qualifying (before getting a forebearance). Your loan officer will be able to review your credit and provide some guidance on steps you can take to increase your credit score. While FHA doesn't have as strict of credit score minimums as other type of loans, the majority of lenders require at least 640 and some at 620, and even fewer less then that. What that translates to you is interest rate. The higher your score, the better the interest rate. It doesn't necessarily mean you can't get an FHA loan. It sounds like most of your issues are older and hopefully you have rebuilt some credit since then. Again, you need someone to review your situation to prepare your in the following months to purchase. I hope that helps some :)
0 votes Thank Flag Link Tue Dec 13, 2011
The FHA government loan has the lowest credit score requirement for a loan. If you have student loans on your credit report, try to request a forbearance to keep them out the qualifying debt ratio. Try picking up some credit score points by paying down credit card balances to 35% of the high limit. You will want to be approved by every lender that offer a good rate, but understand the limitations regarding credit inquires. In respect to credit inquires, you have soft or hard credit pulls, meaning it depend's on the inquiry you have a certain amount of days to count the inquiry as 1 credit inquiry. Make sure your pre-approval is very specific to the terms of the Good Faith Estimate the lender gives you, it should indicate if you have underwriting APPROVAL and indicate the credit score, closing cost, reserves and down payment grant/gift assistance guidelines!! You need to have a complete understanding of these credit approval guideline condition's or your credit pre-approval can easily become a denial. I believe that the credit score's and source of down payment are the two major area's of concern, everything else is negotiable based upon the lender you pick. Credit should be protected everyday with credit monitoring and the (5)FIVE area's of identity theft protection. Also do some reading on the Fair Credit Reporting Act of 1971 or check my web reference
0 votes Thank Flag Link Wed Sep 21, 2011
Hi Gil, your debt ratio will be fine, it's just going to come down to your credit which like I said you look far enough away from the delinquencies that FHA should be a pretty realistic option for you to get approved with. I'd recommend you pay down/off the credit cards, wait until the lower balances report/so you can get the score boost that comes along with it, and speak with a loan officer about getting pre-approved so you have a game plan whenever you want to actually buy a home. I understand it can be pretty confusing, which is why I feel it's important to have a loan officer who'd be able to answer all of your questions, to make it as easy to understand as possible. I'd be happy to help you along the way if you wish.
0 votes Thank Flag Link Fri Sep 16, 2011
i pay about 200 per month on my student loan. my employer, federal govt, pays a ballon payment of 5,500 per year. i attended the first time home buying seminar last 2008 given by the credit counseling of san francisco and have the certificate to prove it. it just seems that the tight lending market making me berserk thinking the whole process.
0 votes Thank Flag Link Thu Sep 15, 2011
Hi Gil, it sounds like the bumpy credit was 24+ months ago and so your credit history should be in good condition for FHA financing, you'll have more lending options (and easier underwriting) with the scores you are aiming for, but your scores now would also be OK (it looks like you got them from annualcreditreport.com or myfico.com - either place gives FICO scores which is what us mortgage lenders use). If all you have is the student loan & credit card debt (which you'd be paying off you say) then I don't imagine the student loan payments would get in the way from you qualifying for what you are looking at (unless the payments are like $1,500/mo - which I doubt). At a $150k sales price, 3.5% down payment, on an FHA loan including taxes/insurance/mortgage insurance, you could expect your total payment to be about $1,075/mo. You said you and your mom would be living there, there is a down payment assistance program called CalHFA, but it has household income limits - you can check more information on it at http://www.calhfa.ca.gov/homebuyer/index.htm ... overall you look to be in pretty good shape to qualify. I'd suggest you and your mom attend a first time homebuyer education course before though, it'll help you understand the homebuying & mortgage approval process and what to expect after you own your new home.
0 votes Thank Flag Link Thu Sep 15, 2011
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