What are my chances of buying a house in October?

[Joemonkey]

My wife and I moved here to Louisville last September and are renting an apartment where the lease expires at the end of October. Currently paying $759/mo in rent

When I moved, my mom moved into our old house and is paying me ~$500 a month in "rent" while the mortgage is $580/mo. We still owe ~$65,000 on that house.

We don't have much debt, ~$2000 in student loans and ~$1000 on a credit card, both of which should be paid off before October. I also have a personal loan for $1800 from my work's credit union that I took out to help pay for a vacation. It is also going to be paid off before October as it is an auto deduct from my pay check. Borrowing $1800 and paying back $1884 over 6 months was a pretty good deal I thought

anyway, we declared bankruptcy in December of 2005 and when I applied for my loan at the credit union they told me my credit score was 609. By the time rolls around for us to buy a house I expect the ONLY debt I will have is my old house. Is there any chance of getting a zero down loan these days any more? especially in my boat?

Ideally we would LOVE to sell our old house and use the profit as a down payment on our new one, but I really can't just kick my mom out. There are also 2 other houses on the street that have been on the market for quite some time, so there is no telling how quickly we could even sell our old house anyway

EDIT: Looks like we're buying a house with 3.5% down via a gift from my inlaws. Have a great realtor and set of helpful friends (property paralegal, landlord that owns 15+ houses, other realtor). Just wanted to let you guys know we made it work out

EDIT2: They accepted our bid and we'll be closing within 45-60 days. Screw all you haters

EDIT3: Moved in! Just have to grab a couple of carloads of random stuff from the old apartment and we're good to go.

 

[Chryso]

Originally posted by: Joemonkey
My wife and I moved here to Louisville last September and are renting an apartment where the lease expires at the end of October. Currently paying $759/mo in rent

When I moved, my mom moved into our old house and is paying me ~$500 a month in "rent" while the mortgage is $580/mo. We still owe ~$65,000 on that house.

We don't have much debt, ~$2000 in student loans and ~$1000 on a credit card, both of which should be paid off before October. I also have a personal loan for $1800 from my work's credit union that I took out to help pay for a vacation. It is also going to be paid off before October as it is an auto deduct from my pay check. Borrowing $1800 and paying back $1884 over 6 months was a pretty good deal I thought

anyway, we declared bankruptcy in December of 2005 and when I applied for my loan at the credit union they told me my credit score was 609. By the time rolls around for us to buy a house I expect the ONLY debt I will have is my old house. Is there any chance of getting a zero down loan these days any more? especially in my boat?

Ideally we would LOVE to sell our old house and use the profit as a down payment on our new one, but I really can't just kick my mom out. There are also 2 other houses on the street that have been on the market for quite some time, so there is no telling how quickly we could even sell our old house anyway

<wince>

 

[DrVos]

It's pretty much impossible to get a 0% down mortgage nowadays. Your best bet may be a FHA Loan, which would allow you to put as little as 3% down. I'm not too sure on the requirements to qualify though. Depending on how much equity you have in your home, your lender may calculate it as another liability against your debt to income ratio. BTW, have you looked into what your current DTI is? You should also get new credit score/report to better estimate your lending potential.

 

[OCGuy]

Eh...FHA 3.5% down is your only hope, and you will have to qualify for both payments + all your other debt and be < 55% DTI, unless the underwriter doesnt like your previous BK and keeps you < 45%.

Also a 620 minimum low-middle score between you and your wife.

 

[StageLeft]

Chances are pretty darn low. You have no deposit so need 100% and have a terrible credit score.

I have to be a total ass and ask why you're borrowing money for something as frivolous as a vacation.

 

[BlahBlahYouToo]

how does one person take out a loan on a non-necessity like a vacation.
does not compute to me.

 

[Krazy4Real]

There is no chance of you getting a 0 down loan.

 

[Joemonkey]

Originally posted by: Skoorb
Chances are pretty darn low. You have no deposit so need 100% and have a terrible credit score.

I have to be a total ass and ask why you're borrowing money for something as frivolous as a vacation.

it was one of those things that i could afford, but rather than risk paying cash and something unexpected coming up, or putting it on a high interest credit card, borrowing $1800 and paying back $1884 didn't seem like that big of a deal. It will be paid off in <5 months anyway, not sure why everyone is harping on it. The credit union loan officer said it would actually help my credit score in the long run to show that I took out an unsecured loan and paid it back without issue.

again, when it comes down to actually applying for the loan, the ONLY debt I will likely have is my old house and MAYBE some of the student loan

 

[vshah]

Originally posted by: Joemonkey

Originally posted by: Skoorb
Chances are pretty darn low. You have no deposit so need 100% and have a terrible credit score.

I have to be a total ass and ask why you're borrowing money for something as frivolous as a vacation.

it was one of those things that i could afford, but rather than risk paying cash and something unexpected coming up, or putting it on a high interest credit card, borrowing $1800 and paying back $1884 didn't seem like that big of a deal. It will be paid off in <5 months anyway, not sure why everyone is harping on it. The credit union loan officer said it would actually help my credit score in the long run to show that I took out an unsecured loan and paid it back without issue.

again, when it comes down to actually applying for the loan, the ONLY debt I will likely have is my old house and MAYBE some of the student loan

IMHO that means you couldn't really afford it.

 

[ViviTheMage]

Originally posted by: BlahBlahYouToo
how does one person take out a loan on a non-necessity like a vacation.
does not compute to me.

Maybe it was perfect timing? Just not enough cash at the time?

 

[DingDingDao]

Originally posted by: Joemonkey

Originally posted by: Skoorb
Chances are pretty darn low. You have no deposit so need 100% and have a terrible credit score.

I have to be a total ass and ask why you're borrowing money for something as frivolous as a vacation.

it was one of those things that i could afford, but rather than risk paying cash and something unexpected coming up, or putting it on a high interest credit card, borrowing $1800 and paying back $1884 didn't seem like that big of a deal. It will be paid off in <5 months anyway, not sure why everyone is harping on it. The credit union loan officer said it would actually help my credit score in the long run to show that I took out an unsecured loan and paid it back without issue.

again, when it comes down to actually applying for the loan, the ONLY debt I will likely have is my old house and MAYBE some of the student loan

It's not about what debt you currently have (well it sort of is). What lenders want to know is your overall history with regard to loans and debts (hence your credit score). Your credit score is pretty crappy, and on top of that, you have a bankruptcy in your history as well, which is bound to hurt. Add to it the fact that you spent $1800 on a vacation instead of saving it towards a down payment. Top it off with the fact that it's 2009 and lenders aren't giving out mortgages like candy anymore.

Sorry to be so negative, but I'd say your chances of getting a zero-down mortgage are close to nil.

 

[Joemonkey]

Originally posted by: vshah

Originally posted by: Joemonkey

Originally posted by: Skoorb
Chances are pretty darn low. You have no deposit so need 100% and have a terrible credit score.

I have to be a total ass and ask why you're borrowing money for something as frivolous as a vacation.

it was one of those things that i could afford, but rather than risk paying cash and something unexpected coming up, or putting it on a high interest credit card, borrowing $1800 and paying back $1884 didn't seem like that big of a deal. It will be paid off in <5 months anyway, not sure why everyone is harping on it. The credit union loan officer said it would actually help my credit score in the long run to show that I took out an unsecured loan and paid it back without issue.

again, when it comes down to actually applying for the loan, the ONLY debt I will likely have is my old house and MAYBE some of the student loan

IMHO that means you couldn't really afford it.

i was talking about medical emergencies or an expensive car repair for example, if people ALWAYS took those things into account they couldn't ever afford anything now could they? same mentality for people that say they are waiting until they can "afford" a kid, good luck with that too

 

[DingDingDao]

Originally posted by: ViviTheMage

Originally posted by: BlahBlahYouToo
how does one person take out a loan on a non-necessity like a vacation.
does not compute to me.

Maybe it was perfect timing? Just not enough cash at the time?

Just not enough cash = not perfect timing.

If going on vacation is going to put your bank account in a hurt locker, then you probably shouldn't be vacationing.

 

[ViviTheMage]

Originally posted by: DingDingDao

Originally posted by: ViviTheMage

Originally posted by: BlahBlahYouToo
how does one person take out a loan on a non-necessity like a vacation.
does not compute to me.

Maybe it was perfect timing? Just not enough cash at the time?

Just not enough cash = not perfect timing.

If going on vacation is going to put your bank account in a hurt locker, then you probably shouldn't be vacationing.

I guess i'd agree with joe then, when would anyone ever go on vacation then? timing is never right then.

You only live once

 

[nickbits]

Originally posted by: Joemonkey

Originally posted by: vshah

Originally posted by: Joemonkey

Originally posted by: Skoorb
Chances are pretty darn low. You have no deposit so need 100% and have a terrible credit score.

I have to be a total ass and ask why you're borrowing money for something as frivolous as a vacation.

it was one of those things that i could afford, but rather than risk paying cash and something unexpected coming up, or putting it on a high interest credit card, borrowing $1800 and paying back $1884 didn't seem like that big of a deal. It will be paid off in <5 months anyway, not sure why everyone is harping on it. The credit union loan officer said it would actually help my credit score in the long run to show that I took out an unsecured loan and paid it back without issue.

again, when it comes down to actually applying for the loan, the ONLY debt I will likely have is my old house and MAYBE some of the student loan

IMHO that means you couldn't really afford it.

i was talking about medical emergencies or an expensive car repair for example, if people ALWAYS took those things into account they couldn't ever afford anything now could they? same mentality for people that say they are waiting until they can "afford" a kid, good luck with that too

People DO take those things into account. It's called an emergency fund. Maybe you don't but people do. If you have to take out a loan for a vacation you can't afford it.

 

[Joemonkey]

Originally posted by: nickbits

Originally posted by: Joemonkey

Originally posted by: vshah

Originally posted by: Joemonkey

Originally posted by: Skoorb
Chances are pretty darn low. You have no deposit so need 100% and have a terrible credit score.

I have to be a total ass and ask why you're borrowing money for something as frivolous as a vacation.

it was one of those things that i could afford, but rather than risk paying cash and something unexpected coming up, or putting it on a high interest credit card, borrowing $1800 and paying back $1884 didn't seem like that big of a deal. It will be paid off in <5 months anyway, not sure why everyone is harping on it. The credit union loan officer said it would actually help my credit score in the long run to show that I took out an unsecured loan and paid it back without issue.

again, when it comes down to actually applying for the loan, the ONLY debt I will likely have is my old house and MAYBE some of the student loan

IMHO that means you couldn't really afford it.

i was talking about medical emergencies or an expensive car repair for example, if people ALWAYS took those things into account they couldn't ever afford anything now could they? same mentality for people that say they are waiting until they can "afford" a kid, good luck with that too

People DO take those things into account. It's called an emergency fund. Maybe you don't but people do. If you have to take out a loan for a vacation you can't afford it.

I COULD go ahead and pay it all off now, but why should I? and, last time I'm going to say this...

The credit union loan officer said it would actually help my credit score in the long run to show that I took out an unsecured loan and paid it back on time without issue.

 

[oznerol]

Originally posted by: Joemonkey

I COULD go ahead and pay it all off now, but why should I? and, last time I'm going to say this...

The credit union loan officer said it would actually help my credit score in the long run to show that I took out an unsecured loan and paid it back on time without issue.

I'm assuming you don't have any credit cards because of the bankruptcy? I don't think taking that loan out is as bad as everyone is making it out to be.

But still, based on what you've posted, you won't be getting a 0% down mortgage any time soon. Keep saving for a bit after your debts are paid off to get at the very least 5% down and your chances will be much higher.

The house prices in the south still blow my mind. If I could buy a decent house with a $65K mortgage here, I'd shit myself.

 

[JTsyo]

Originally posted by: Joemonkey
...

I COULD go ahead and pay it all off now, but why should I? and, last time I'm going to say this...

The credit union loan officer said it would actually help my credit score in the long run to show that I took out an unsecured loan and paid it back on time without issue.

I believe that's correct. Having loans that you paid off counts as a plus.

I would think you would be better off to wait another year and save up a down payment or find your mother an other place. I'm not sure how owning another property with a mortgage on it looks when you are going for a new mortgage. Though I guessing it's not very good. I would also suggest that any house you look at should be easily affordable, don't stretch your budget. Then when you can free yourselves of the first house, you can move up if you want to.

 

[BlahBlahYouToo]

we're harping on it because it's irresponsible, you know... sorta the reason we're in this financial mess right now?

 

[Joemonkey]

Originally posted by: BlahBlahYouToo
we're harping on it because it's irresponsible, you know... sorta the reason we're in this financial mess right now?

Taking out a loan I didn't have to in an attempt to raise my credit score so I can hopefully qualify for a lower interest rate on a mortgage is irresponsible? wow...

and ducci, we do have a credit card, and no, we DON'T pay it off every month on purpose.

 

[DrVos]

Anyways, getting back to the possibility of buying a house....

Looking back at your original post, I'd say your best course of action is to get your most recent credit score (annualcreditreport.com) first. FHA loan requirements aren't as stringent as a traditional 30yr fixed and having a combined score of 650+ might be enough.

Continue making your min. monthly payments on the student loan, pay off the credit cards, and pay off your personal loan ASAP. Then start saving for your downpayment. Assuming $150,000 loan with 3.5% down that's like 4500 + closing costs.

I think its do-able to buy a home this year, but 0% is a thing of the past. Feel free to talk to a mortgage broker to get an idea of what kind of loan you qualify for. You'd want a pre-approval letter before you start shopping anyway.

 

[OCGuy]

Originally posted by: DrVos
Anyways, getting back to the possibility of buying a house....

Looking back at your original post, I'd say your best course of action is to get your most recent credit score (annualcreditreport.com) first. FHA loan requirements aren't as stringent as a traditional 30yr fixed and having a combined score of 650+ might be enough.

620

But yes, DrVos is basically correct about everything he said.

 

[Joemonkey]

Originally posted by: DrVos
Anyways, getting back to the possibility of buying a house....

Looking back at your original post, I'd say your best course of action is to get your most recent credit score (annualcreditreport.com) first. FHA loan requirements aren't as stringent as a traditional 30yr fixed and having a combined score of 650+ might be enough.

Continue making your min. monthly payments on the student loan, pay off the credit cards, and pay off your personal loan ASAP. Then start saving for your downpayment. Assuming $150,000 loan with 3.5% down that's like 4500 + closing costs.

I think its do-able to buy a home this year, but 0% is a thing of the past. Feel free to talk to a mortgage broker to get an idea of what kind of loan you qualify for. You'd want a pre-approval letter before you start shopping anyway.

thank you for some actual advice instead of "wtf are you doing taking out an unsecured loan!!" bullshit

which would a creditor admire more, the fact that i am debt free or the fact that I have $ down? if $ down wins, then I may not pay down my student loan as fast as possible

 

[Bignate603]

Originally posted by: Joemonkey

Originally posted by: vshah

Originally posted by: Joemonkey

Originally posted by: Skoorb
Chances are pretty darn low. You have no deposit so need 100% and have a terrible credit score.

I have to be a total ass and ask why you're borrowing money for something as frivolous as a vacation.

it was one of those things that i could afford, but rather than risk paying cash and something unexpected coming up, or putting it on a high interest credit card, borrowing $1800 and paying back $1884 didn't seem like that big of a deal. It will be paid off in <5 months anyway, not sure why everyone is harping on it. The credit union loan officer said it would actually help my credit score in the long run to show that I took out an unsecured loan and paid it back without issue.

again, when it comes down to actually applying for the loan, the ONLY debt I will likely have is my old house and MAYBE some of the student loan

IMHO that means you couldn't really afford it.

i was talking about medical emergencies or an expensive car repair for example, if people ALWAYS took those things into account they couldn't ever afford anything now could they? same mentality for people that say they are waiting until they can "afford" a kid, good luck with that too

Hardly. It's not hard to have a few thousand in the bank at any given point in time to cover that. You don't need to have $100k available, just something reasonable. Anyways, having 0 savings is a great way to end up losing everything. Without savings even a month or two without a job could put you in a position where you can't pay your bills.

Set a goal for how much savings is your safe level. My wife and I decided that 6 months of my take home pay after all taxes, health care, 401k and savings is what we wanted to have as savings. We got that last month so now we feel we're in a position to have a bit more fun with our money. Our goal is to get enough by next year to do a trip to Europe.

 

[Bignate603]

Originally posted by: Joemonkey

Originally posted by: DrVos
Anyways, getting back to the possibility of buying a house....

Looking back at your original post, I'd say your best course of action is to get your most recent credit score (annualcreditreport.com) first. FHA loan requirements aren't as stringent as a traditional 30yr fixed and having a combined score of 650+ might be enough.

Continue making your min. monthly payments on the student loan, pay off the credit cards, and pay off your personal loan ASAP. Then start saving for your downpayment. Assuming $150,000 loan with 3.5% down that's like 4500 + closing costs.

I think its do-able to buy a home this year, but 0% is a thing of the past. Feel free to talk to a mortgage broker to get an idea of what kind of loan you qualify for. You'd want a pre-approval letter before you start shopping anyway.

thank you for some actual advice instead of "wtf are you doing taking out an unsecured loan!!" bullshit

which would a creditor admire more, the fact that i am debt free or the fact that I have $ down? if $ down wins, then I may not pay down my student loan as fast as possible

At this point its hard to say. We made an offer (today actually, hope we get it) for 3 1/2 percent down on an FHA loan. We've got about $7k of low interest student loans between us and they didn't seem to care about them. The payments were low at ~$110 a month and our combined income was easily enough to cover that and a loan for twice as much as we're taking out. The house we put an offer on will be about $150 less for the mortgage, PMI, homeowners insurance, and taxes than our rent is each month.

There's quite a few things that go into the mix. Your bankruptcy will be a big part of it. My personal bet is that you have no chance of getting a 0% loan but you might have a chance at a 3 1/2% down loan with a few grand left on student loans. However, I'm not a mortgage broker so you can take that for what it's worth.