Home Buying in Houston>Question Details

Erika, Home Buyer in Houston, TX

i am a first time buyer with not so good credit is there any way i can get help?

Asked by Erika, Houston, TX Tue Jan 6, 2009

Help the community by answering this question:


I offer free one-on-one credit consultations. Many of my clients started the process many months ago and with my advice, got the financing they need. http://dallasloanguy.com/Credit_Consult.shtml
This is a free service with no obligation.... So you will have to supply a copy of your credit report and read my free ebook before we begin. The ebook is a free download here => http://dallasloanguy.com/docs/about_credit.pdf

If you are patient and follow my advice, you will know exactly where you stand and what it will take to get to your goals after our conversation.

I wish you luck!!
0 votes Thank Flag Link Tue Jan 6, 2009
A lot of people will define "Not So Good Credit" in a number of different ways. Us lenders also perceive negative credit differently. If you are simply basing your credit rating on your score, then you may be selling yourself short. Sometimes we have low scores for no good reason or maybe we just haven't established enough good credit yet. It just depends.

I will tell you that you need to get inside the mind of a mortgage underwriter for a second. Say you have 2 borrowers both with a 580 score trying to qualify for. One has 2 or 3 credit cards with relatively on time statuses but they have $30,000 in medical bills from 4 years ago when their child had cancer and they had to accumulate a huge amount of medical debt during that time. The other borrower has 10 lines of credit, car loans, etc. all of which have been on time for 2 years. However, 2 years ago the had their home foreclosed. The reason they went into forclosure was only because they owed more on it than it was worth and just didn't want to pay on it anymore (not a good reason by the way).

Along with that, buyer 1 wants to buy a $120,000 home, has 5% to put down and their housing debt will only be 20% of their gross income. Also, their mortgage payment will be equal to the rent they pay every month.

Buyer 2 wants to buy a $300,000 home, put 3% down (which is a gift from family) and their housing debt will be 35% of their income and all of their debts combined will be around 50%. Plus their monthly living will increase by $500/month.

Now ask yourself, if you can only approve 1 borrower, which do you approve? I would say that 4 out of 5 times, buyer 1 has an easier time with their approval than buyer 2. That's not to say they couldn't get approved - only to tell you that credit score does not tell you the whole story and you should not be pigeonholed into thinking it does.

My best advice for you would be to call me and discuss where you are right now. At least you will then know what you can do specifically to improve your credit (if need be) and qualify down the road. I can reivew your credit with you and let you know what you need to do to qualify for a mortgage.

Let me know if I can help.
Luke Allison
Flagstar Bank
Applu Online @ flagstarloans.com/lallison
0 votes Thank Flag Link Tue Jan 6, 2009
There're many ways to improve your credit, first and best thing you can do is to pay off credit cards on time every month or at least the required minimum payment due; same thing to car loans or any personal loans. Download & free credit reports from this website http://www.freecreditreport.com/ to see whether anything wrong with your credit history and correct that with the credit bureau. Don't pay anyone who claims they can repair your credit. If you are thinking to purchase a home now, there's still lender providing loan program without checking credit and income but interest rate would be higher thou.
0 votes Thank Flag Link Tue Jan 6, 2009
Depending on how far out you want to buy you can do some things yourself to clean up your credit a bit. You may not want to wait for a year to pass if you had late payments recently.. check with a mortgage broker (or three) to see what you can qualify for now. Ask about FHA loans - you can put less $ down for them.

If your rating is below 650 or 600ish you may have some trouble getting a loan.

Remember that your interest rate can have a HUGE affect on how much you end up paying for a home over the years - by tens of thousands or more - so I'd recommend doing what you can to improve your rating, especially if you plan to keep the home for a while.

here is an excerpt from an eBook I'm writing for my website -

Improve Your Credit Score

Your credit scores, along with your overall income and debt, are a big factor in determining whether you’ll qualify for a loan and what your loan terms will be. You want to do what you can to improve and maintain your credit score before you apply for a loan.

Pay all of your bills on time for at least year. Many companies let you set up automatic payments, which is a great way to make sure you never forget to mail a check!

Check your credit reports for errors – if you find any get them fixed. Mistakes happen, and you could be paying for someone else’s poor financial management. Each of the three major credit reporting companies has to give you a free credit report every year if you ask for it. They have set up a central website to handle the requests – visit http://www.annualcreditreport.com and check on your credit info every year.

Credit cards and how you manage them have a huge affect on your credit score. Transferring credit card debt from one card to another could lower your score. Don’t open new credit card accounts because having too much available credit can lower your score. If you have extra accounts that you don’t use consider closing some of them.

Manage your accounts. Your score will usually be higher if you have a couple different types of credit, but make sure none of them are charged to the limit. If you owe a lot of money on many different accounts it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits. Also, the longer you have had your accounts open, the better. If there is an account you are ready to pay off consider keeping it open and using it once in a while rather than closing it when you make your final payment. Avoid finance companies - even if you pay the loan on time, the interest is high and it can be considered a sign of poor credit management.

Too many credit reports being requested can lower your score, so try to shop for mortgage rates all at once. Multiple inquiries from the same type of lender are counted as one inquiry if they all come in over a short period of time – like a week or two.

If you have had credit problems like missed payments, judgments, etc., wait 12 months to apply for a mortgage. You’re penalized less for problems that happened over a year ago if you have had a good payment record since then.

Finally, don’t order items for your new home on credit — such as appliances and furniture — until after the loan is approved. The amounts will add to your total debt and you could be surprised on the day of closing to find out you no longer qualify for your loan!
0 votes Thank Flag Link Tue Jan 6, 2009
Hi Erika:

To help rebuild credit get with a good banker, many will work with you and have programs set in place to help re-build your credit quicker. As you are going thru this try to set you budget to save at least 3.5% of the price of home your looking for and as of now the FHA plans are areound to help first time buyer get a home they so much want and plan to keep for years. FHA are more flexable on credit also but a min. down of 3.5 % went into effect January 1st 2009. Good luck and I hope this helps.
0 votes Thank Flag Link Tue Jan 6, 2009
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