Home Buying in Wisconsin>Question Details

Andrew Bethel, Home Buyer in De Forest, WI

Credit score is 548. I want to by a home.

Asked by Andrew Bethel, De Forest, WI Wed Jun 16, 2010

The renting market in my area is almost as expensive as a mortgage payment, and so I'm looking at buying a home. I can't offer much up front, but I have two years at my current job and make 38k a year. I have a car and student loan, otherwise no active credit. There's some medical collections littering my credit report, but my car loan and student loan both have perfect payment histories. Is it possible to get a loan in my position?

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7
Andrew,

-It sounds like you've done some homework and research, which is great!
-Try contacting a credit coach. Credit coaches aren't just for people who are really underwater with their credit, they also help those who need to fix a couple of "hiccups".
-Make sure to close any open credit accounts (credit cards) that you aren't using. Little things like that can help to bring your score up a little.
-Sometimes different lending institutions can also use, good payment history on cell phones and renting history to help with underwriting and get you approved for a loan. As quoted from the below answers too, check with more then 1 bank/mortgage company. And make sure to get all of your options explained to you from Conventional Loans to WHEDA loans.
-Lastly, home ownership undoubtly has it's benefits and perks. Just make sure to not over extend your income limits. Sometimes taking 1 more year to drive down your debt and increase your credit score and savings will produce a more favorable home buying experience for you. Keep your eye on your goal and don't just settle!

I wish you the best of luck!
Carey
1 vote Thank Flag Link Wed Jun 30, 2010
Andrew,

According to the FHA, which does most mortgages right now, you need at least a 585 credit score to qualify with that program. However; most banks are requiring at least a 620 score or higher today. I deal with one bank that will go as low as a 600. But do nto currently know of anyone issuing mortgages to people below that score.

the fact that you have and continue to pay your car loan and student loans on time will help you. Those are things over time that will help boost your score. I recommend getting a copy fo your credit report. You can then do one of two things. Pay off(if you can) the medical collections on your account. Once paid off go back and dispute them. A lot fo times a collection agency will look at the dispute and see it was paid off and throw it in the trash. if they do not respond to the credit reproting agency within 30 days the credit reproting agency is required to remove the claim.
if that is not an option right now. Then challenge every little negative credit on yoru report. You may get lucky and get enough to not respond back that it will actually come off of your report.

You can alsways talk with a mortgage lender. i recommend talking to at least three different ones. Do not let them pull your credit. Just give them a snapshot of what is on your credit report and ask them what you shoudl do to qualify for a mortgage. If you find oen you are comfortable with then have that person pull your credit and help you get some of the items fixed to get your score up to an acceptable level for the bank
Web Reference: http://www.davedicecco.com
0 votes Thank Flag Link Thu Jun 17, 2010
Andrew,

Simply stated, focus on creating a functional personal monthly budget and improving your credit rating before venturing down the home ownership road. In doing so you may find yourself on much more solid ground and will be ready to enjoy the success of home ownership.
0 votes Thank Flag Link Thu Jun 17, 2010
Contact a mortgage broker direct. However if your scores low most lender require a 625 +

Perhaps the loan officer can assist you in right direction. If the debt is less than 2 years old more best "hang tight" HOWEVER if debt is over 2 years than work on credit repair issues.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Wed Jun 16, 2010
Andrew, while rent in your area , as you put it, is "almost" as expensive as a mortgage payment - let me tell you that owning a home will certainly cost you more than that rent payment. You will have to factor in higher utility bills than in an apt., insurance costs, lawn care and snow removal, general maintenance, etc. If the furnace breaks, there is no super to call to fix it.....same with the refrigerator and AC........if the roof leaks, YOU have to pay to fix it. Maintenance and repair items can certainly add up to a lot of money. If you don't have a cushion (savings) you may find yourself in a very precarious position.

You will need at least 3.5% as a down payment.

Any financial planner will advise you to have several month's expenses saved up before buying a home.

I applaud your desire to own a home, but I think you need to do some planning and saving, first. You don't want to be strapped to a house you can't afford to maintain. One big expense, and you may fall behind, unless you have that cushion I mentioned.

Speak to a mortgage broker, and go over your credit issues. Work on getting that score up - you need to do that before you can get a loan.. Find out how much your income would qualify you for in a loan. Start saving money with your goal in mind.

Once you have this mapped out and you have a plan - you will eventually be in a position to buy a home.

Best wishes.............
0 votes Thank Flag Link Wed Jun 16, 2010
You may find the only way to fix your credit is to pay off the medical collections. If that has already happened and it took insurance some time to pay them off contact those who sent the bills. They may even agree to remove the information from your credit reports.
0 votes Thank Flag Link Wed Jun 16, 2010
Most lenders will require at least a 620 score. I would suggest you activate some credit. The best way to get your score up is to use credit responsibly. If any collections are open, you'll want to resolve those as well. Also, you'll need to save up 3.5% (or more) for a down payment on an FHA loan. I have seen 1% down loans, but I would guess you need excellent credit to qualify. Best thing to do would be to interview a few lenders and start working with one to get a preapproval. With a little time, work, saving and luck you could be ready to buy before too lon.
0 votes Thank Flag Link Wed Jun 16, 2010
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