Mortgage Info.

[Just Me]

My dh and I would really like to be able to buy the house we are living in. However, I am scared about trying to qualify for a mortgage. We could do a first time home buyer mortgage through our credit union, and our payments would be about what we are paying to rent.

 

Can someone give me info. and help calm my fears? What exactly will they look for? Does my credit score (or Dh's) need to be some magic number? I don't really want to begin the process, only to be turned down. Are companies stricter now on qualifying, since the recent mortgage problems? (That last sentence didn't really make a lot of sense, did it?)

 

TIA!

[Pamela H in Texas]

I'm just going to be REAL honest. We are THE least likely people to get a mortgage and we did with HORRID numbers (but we did have some alternative credit).

 

BE CAREFUL though. The first time we tried, they gave us a C rate which would have killed us. We scrapped the idea thinking we just couldn't do it. But we tried again, got the going rate and was fine.

 

And your mortgage should not be what your rent is (though possibly counting both insurance and taxes, it could get up there). But the people renting you the house are paying all 3 and still have money to take care of maintenance and make a couple bucks.

 

I DID hear from a friend that they have gotten stricter since the recent problems. I have wondered if we could have done it now. Thankfully, we don't have to.

 

I hope that helps a little,

Pamela

[Angel]

Our credit was less than stellar. Did I say LESS than stellar? We were/are currently working on rebuilding it. A year ago we were able to purchase a home. We have a high interest mortgage that we can't refinance for 3 years (1 down now) but it was so worth it to own our own home and begin that credit rebuilding phase. I would definitely check it out if the home you're living in is the right one for you.

 

Angel

[Marie in Oh]

take a loan out for more than you can afford. And don't do anything than a traditional 30 or 15 year fixed rate. People are in trouble because the got sub-prim mortgages 5-6 years ago. They had low interest rates and payments they could make. Well, these loans had adjustable arms on them, and they are all coming to term, meaning the rates are changing to much higher interest rates making their payment out of reach. Some got interest only for the 1st 1-5 years and now they can't afford their payments. It really boils down to, can I afford the payment, plus insurance and taxes. Our insurance and property tax is part of our monthly payment and goes into an escrow account and is paid from there. No surprises that way. Just be cautious and know what you can afford.

[Nestof3]

The mortgage companies have gotten stricter, but only because they had to. There were too many people who mortgaged houses beyond their means. Honestly, if I had bad credit and was unsure if I could pay the mortgage, I would seriously wonder if this were the best thing to do.

 

Could you buy a different house that costs less?

 

I think the best thing to do is speak to your bank about what you would qualify for.

 

Perhaps this can help?

http://www.salary.com/personal/layoutscripts/psnl_articles.asp?tab=psn&cat=cat011&ser=ser035&part=par236

[jmgconner]

Have you pulled your credit report from the 3 companies? Make sure everything is correct. It would stink to go in and try to qualify for a mortgage only to find out that you don't qualify because of an inaccuracy on your report.

 

Do you have your down payment saved up? 20% will keep you from paying PMI. Also, check with your lendor. We were able to take a class through our bank - successful completion meant that we didn't have to pay PMI even though we didn't have 20% to put down.

 

Once you've done that, go in and talk to the credit union. See what they have to say. Don't get too caught up in the 'monthly payment', but make sure you're getting a 15 year (or 30 year if you must) mortgage at a decent rate. If they can't give you a good rate, ask what's keeping you from getting the good rate, and then spend a year or so fixing that credit problem. It's hard to walk away from that, but OH so worth it. DH and I did the exact thing - we spent a year paying off all debt (except student loans). When we went back in, we were able to qualify, and at an even better rate than we expected.

 

Good luck to you!

[OH_Homeschooler]

You could play around online a little just to get a feel for what you might be able to get if you're too afraid to just go straight to the credit union. There are companies that could give you a pre-approval letter right online. Honestly, I think you should just go to the credit union and see what they say before you get too overwhelmed by doubt. If they have to turn you down, they have to, KWIM? And I love credit unions, they're so friendly and really want to help. So if they do have to turn you down right now (and who's saying they will?) they can offer you advice to help you.

[Tarheel Heather]

And our credit is very good. They were much stricter and we have had the same mortgage lender for nine years. The banks make sure they have everything. We had to wait three hours after closing because the underwriter had to recheck all paper work. Like someone said before, stick with a conventional mortgage and well in within your means. I have known some who got really stuck trying to do the interest only thing.

[Just Me]

Thanks for the advice, ladies!

 

The rent/mortgage amount is well within our 30% range, so making the payment is not the problem. We will have no debt, other than my college loan. I am just worried that I will look foolish if I go into the credit union, and they say "No way!" :blushing:

 

I know that is silly, and I won't know until I try! So, give me a quick kick in the pants, and I'll go!! :D

[Audrey]

Don't be scared of them! The worst they will say is no, and what's so bad about that? No need to be embarrassed. It's a very different mortgage world now than it was just a year or two ago. You won't know unless you ask, right? And, if they do say no, then take the time to ask them exactly "why" you were refused. It may be that you'll learn some things that you could actually work on and improve so that next time around you're on surer footing.

 

However, like others have said, don't fall into something you can't reasonably manage. If they offer you a mortgage, take some time to really look over the rates and terms offered to make sure you're comfortable with EVERYTHING before you commit.

 

Good luck!

[Kari C in SC]

We own a rental home that we want to sell to our current renters. I just spoke with our tenant today and she was telling me her loan officer was helping clear up any credit problems. She said they were hoping to get everything taken care of to be able to purchase the home in the next 6 months. So, possibly, even if your credit isn't perfect - they will work with you to get it where it needs to be. I hope it all works out for you!