Do we have a chance to get mortgage?

[marzipan13]

Here is the info:
My Ch7 bk was discharged 10/2007.
My husband is immigrant w/ SS# since 11/2007.
We each have financed auto loans:
Mine- 4/2009, Paid off ~$5k, balance = $4k (paying off 10/2011)
His - 11/2009, Paid off ~$3k, balance = $8k (want to pay off in 2012)
I have student loans (bachelors & masters) ~$80k (payments begin next summer ~$300/mo)
We have ~$9k in credit card/revolving debt
Once car is paid off & student loan payments start, our monthly payments will be $700
I have 2 medical bills to pay off that are delinquent (small amounts).
My husband has never been late. What's bringing his score down is length of credit history and using too much of available credit (high balances).

I start a new job Monday and we will have a combined income of ~$70k
Our gross monthly income will be ~$5,750
My husband has been with this company for a couple years
Our tax income for the last 3 years has been ~$45k
Myfico scores:
Me: TU629/EQ572
His: TU653/EQ623

We want to mortgage between $100k-$125k, with 10% down.
I've tried mortgage calculators based on last 3 years salaries and it comes to ~$100k that we could afford. If I use my new salary, it says we could afford ~$225k



My questions:
1. If both of us are on my car loan and we pay it off, will it boost both our credit scores or only mine?
2. How much should scores go up if I pay off those 2 delinquent accounts?
3. How much should scores go up we pay off majority of credit cards?
4. Will bank only take in consideration our past 3 years taxes and job history or will they accept paystubs from new job?
5. Should we just go to apartment for 1 year or try lease-to-own?

We're not sure what to do! We are living with my grandfather who had a stroke, now his kids are trying to kick us out, and we have a deadline of 10/31 - 2 months away. But my grandfather says we can stay until 11/30 - not sure what is happening. Luckily, my husband works for a hotel and the owner says we can stay there for free for a few months until we get house or apartment. We're not even sure if we'll be able to get an apartment since our credit scores are so low.
If we stay at hotel for a few months after deadline and use our income to pay off my car, pay off my credit cards, and pay off 75% of his credit cards, then we'll have $10k saved and hopefully it'll increase our credit scores enough to get a mortgage.
Is there a minimum credit score required in order to get a mortgage or apartment?
We've been looking at houses online, and have seen something called Fannie Mae Home Path - looks like a good deal, but scared that we'll end up getting a bad deal.

[HHM]

Many mortgage brokers (the good ones, anyway) can help you with your questions. Your EQ score is too low, something must not be correct on that report, but even then, the scores are a little low over all. A mortgage broker can suggest ways to increase the score.

1. Not sure if paying off car will help or hurt, a mortgage broker can probably address that issue. However, if paying them off would affect your down payment, don't do it, the money is more important.
2. Were these medical bills included in the BK. Are the medical bills actually on your credit report?
3. 4 years out of BK, and you carry a 9K balance on CC, really....yes pay it down.
4. typically, the bank will look historically, and is looking for job stability which seems to be lacking here.
5. Probably, a year of you paying rent could only help.

But again, the only way to know for sure is to get with a mortgage broker.

[marzipan13]

Those medical bills were after bk. Emergency room 2x in a week. There were actually 4 bills sent to collections and on my credit report. I paid off 2, but still have 2 left.
Of the CC debt - $3k is mine (70% of limits) and $6k (55% of limits) is my husbands. I was the only 1 to do bk, not him.

There is also a debt from bk that the creditor won't discharge and I'm not sure how to fight. Since I did pro-bono, I've called around to lawyers in Baltimore area and nobody will help me fight it. I even tried legal aid but no one wants to help. It's a $7k debt owed to a community college for 2 semesters of tuition, books, & fees. I had originally gotten financial aid for both semesters (stafford loans), but some things came up and I failed the classes due to non-attendance. Which made me ineligible for the stafford loans after-the-fact, so they canceled them in retro - as if they never existed. The Master Promissory Note was canceled, the college paid back the lender, and now trying to collect the cost from me. I had a similar debt discharged for a different school years before where I had received refund check then had to withdraw, changed my status and lowered my loan eligibility, so they billed me for the refund check amount - $1000. They accepted the bk discharge and allowed me to return to school where I've graduated and now a grad student. I've asked about this situation on bk but no one is sure if it can actually be discharged or not. Each school was in a different state, 1 was private school and 1 was state-run. I'm not sure if that matters. I would like to get it off my credit report though. I guess my dispute would be that since I didn't actually receive an educational benefit - I didn't attend and didn't earn credit - that it could be eligible for discharge. But if a lawyer wants to take the case, then the cost might be just as much as if I paid off the debt myself. The debt from the college was handed over to the Maryland Central Collection Unit, who then turned it over to NCO Financial. They stopped sending me letters and calling years ago, but I still get a letter every new fiscal year (July/August) that they'll take any MD tax refunds and NCO sends me a letter soon after. I'm wondering if prior to the 7 years they'll try to get a judgment against me or since it's a government agency they'll let NCO negotiate with me into paying 1/2 the debt before it's wiped off my record for length of debt, which should be in 6/2013.

Another thing that happened was that my verizon wireless account that was discharged and was reporting correctly all this time, ended up getting duplicated on EQ credit report. I've disputed it through Verizon and they said it'll take up to 2 months for my report to get updated. But that is now showing, and could be bringing down my score.

Getting an apartment might be the best option - since it would allow us to pay off all our CC & auto loan debts, try to take care of this school debt, & save more $ for house.

[no_it_all]

I have student loans (bachelors & masters) ~$80k (payments begin next summer ~$300/mo)

How is it that you are paying only 300/mo for $80K in loans? That is unreal. My guess is that number will soon go up, and the mortgage company will probably guess the same thing...

The best advice would be the post that suggested you talk to a mortgage broker.

[mountanddo]

If your low credit scores are partly due to using too much of available credit I would start with paying off the credit cards first. I'm pretty sure your credit score doesn't increase very quickly. I'd rather have auto loans on my credit than actual CC debt. Also, where I live 100k-125k house doesn't buy much here but your area might be better.

[marzipan13]

$80k student loans w/ $300/mo payments - is based off of consolidation and payment cap of 10% (2012 student loan repayment program)

[keepsmiling]

So what's the latest over the past few months? did you move into the hotel? chat with a broker?
Interested to hear how it's going. Good luck!

[marzipan13]

Yes, we're at the hotel for 2 months now - paying off bills and slowly saving... haven't yet spoken to a broker, not sure where to start! lol

However, we decided to just to pay off my car this month, then sell his asap (even if we only break even with his loan balance).
Here are the details now:

My car = $1900 - orig. loan $9,600 (, paid off 80% of principal in 2 1/2 years of the 5-year loan
His car = $7300 - orig. loan $11,200, paid off 35% of principal in 2 years of the 5-year loan, and will sell asap to pay off this debt
CC debt = $7900 - orig. $11750, paid off 33% in the last 4 months (if we make another $2k on different cards, we'll get below 50% of credit limit usage - I am at 59%, he is at 44% - combined 48%)
Student loans = $75k (payments start Summer 2012 - $300/mo based on 10% income-based cap)
4th month at my new job ($47k year)
2nd year husband working at same job ($33k year)
Total income = $80k year, $6700 monthly gross/$5350 net
Savings = $5k

I know we should talk with a mortgage broker - but I don't even know where to find one. Are they in the phone book? Would a broker help us find a bank that might be willing to lend to us?
We've started looking at online listings again and found a house that seems like a really good deal.

myFICO scores:
09/01/11 - Me: TU629/EQ572 His: TU653/EQ623
12/04/11 - Me: TU645/EQ598 His: TU682/EQ653
Increase - Me: TU+16/EQ+26 His: TU+29/EQ+30
Is that a significant jump in 3 months?

I have a 2 past-due doctor bills that I'm going to pay off - maybe that'll up my score, too.

[marzipan13]

I've noticed that a lot of the experiences in this section are of people that are trying or have tried to get a mortgage after foreclosure/losing house in BK. But what about those that went through Ch 7 BK and were never homeowners?
This would be our first time trying to get a mortgage.
Are there any success stories of post-BK 1st time home buyers?
I am 4+ years after discharge, my scores are still kinda low - yet improving a lot in the last few months.
My husband's scores are kinda good (mid-600/almost to 700), and improving too.

We're going to sell his car to get rid of the loan and save more money. What if we waited longer to get mortgage, sold my car too and financed a newer car? Both of our cars are older and breaking or too much maintenance costs. (no warranty!).

[stdogz]

My concern for you is that you are still carrying CC Debt after filing BK. So it seems that you are still living beyond your means. Right now you need to clean up your spending/living habits and think about going into purchasing a home with ZERO debt.

My BK was discharged 2/2010 - and I have ZERO debt right now. I have $12k saved towards the downpayment of my house and I have ONE credit card (secured) with a $300 limit on it. I use it weekly to purchase my gas and then I immediately pay it off - so it doesn't carry a balance.

[marzipan13]

Well, we ended up trading in both our cars (w/ high interest rates) and getting a new car that is just a little bit more than the balance on our 2 auto loans, got good trade in deal - plus we got 3.55% interest & low monthly payment. Our credit scores were high-600s to low-700s.

FYI - We are not living beyond our means. We have a combined income of $70k and are only using ~50% of our available credit, which we will pay down now that we're not paying so much every month on car payments. It is that high because we used CC to buy groceries while I had been laid off and my husband had been laid off. We both are doing a lot better financially. $5k+ take home a month less bills/CC payments $1750 = $3,250 to sock away each month for house down payment. We don't have much right now because we were paying down my car payment. Went from 2 car payments to 1 (where I will make double payments), where we were paying $1k+ a month just to build up our credit - which we have and will continue to do so.

[stdogz]

Well, we ended up trading in both our cars (w/ high interest rates) and getting a new car that is just a little bit more than the balance on our 2 auto loans, got good trade in deal - plus we got 3.55% interest & low monthly payment. How long is the loan for? This makes a huge difference because now you've taken 2 payments, sunk them into another vehicle and have another loan....doesn't matter the interest rate. you have another loan!

FYI - We are not living beyond our means. We have a combined income of $70k and are only using ~50% of our available credit, - first of all, anyone who has filed bankruptcy should NOT have ANY credit card debt and you are only 4 years out of BK and you already have a crazy car loan and carrying 50% available credit...........How much interest are you throwing into that payment(s) every month?


$5k+ take home a month less bills/CC payments $1750 = $3,250 to sock away each month for house down payment. We don't have much right now because we were paying down my car payment. Went from 2 car payments to 1 (where I will make double payments), where we were paying $1k+ a month just to build up our credit - which we have and will continue to do so.

So now you should take that $3,250 and slam the car and credit card payments. You should NOT be saving for a house right now. The saving for a house comes after your debts are satisifed. I am trying to help you understand the slide you're heading down - and you seem to justify all of your spending.

[Freddy03]

Well, we ended up trading in both our cars (w/ high interest rates) and getting a new car that is just a little bit more than the balance on our 2 auto loans, got good trade in deal - plus we got 3.55% interest & low monthly payment. Our credit scores were high-600s to low-700s.

FYI - We are not living beyond our means. We have a combined income of $70k and are only using ~50% of our available credit, which we will pay down now that we're not paying so much every month on car payments. It is that high because we used CC to buy groceries while I had been laid off and my husband had been laid off. We both are doing a lot better financially. $5k+ take home a month less bills/CC payments $1750 = $3,250 to sock away each month for house down payment. We don't have much right now because we were paying down my car payment. Went from 2 car payments to 1 (where I will make double payments), where we were paying $1k+ a month just to build up our credit - which we have and will continue to do so.

I am not trying to come across rude but you are living in a hotel for the past 2 months for free and still have CC debt and medical bills and haven't started paying your student loans. IMO I would rent first for a year to make sure you can afford a mortgage payment.

[marzipan13]

Well, we ended up trading in both our cars (w/ high interest rates) and getting a new car that is just a little bit more than the balance on our 2 auto loans, got good trade in deal - plus we got 3.55% interest & low monthly payment. How long is the loan for? This makes a huge difference because now you've taken 2 payments, sunk them into another vehicle and have another loan....doesn't matter the interest rate. you have another loan! Interest rate makes a huge difference - the loan is for 5 years but we NEVER make the minimum payment - we always make double or triple payments to pay off the car loan within half the time



FYI - We are not living beyond our means. We have a combined income of $70k and are only using ~50% of our available credit, - first of all, anyone who has filed bankruptcy should NOT have ANY credit card debt and you are only 4 years out of BK and you already have a crazy car loan and carrying 50% available credit...........How much interest are you throwing into that payment(s) every month? Well, I came out of bk and got a good job - this was 2007 early 2008, then the economic crisis hit - I was laid off without a job for 1 year then could only find part-time until Aug 2011. We needed to finance 2 cars in order to get to our jobs - mine being a 65 mile one way commute for only 30 hrs a week! This led to us to have to depend on credit cards to help make up the difference - what else were we supposed to do? We had no family or friends that could help us - we were on our own. A lot of people on here seem to be doing bk due to the economic crisis - but what about those that did bk before the crisis and then had no credit whatsoever. Didn't you read anything that I said before - we've paid off a lot - $24000 in 2 years! So, please don't get on my case when we tried to survive the best that we could - it's not OUR fault that the economy got so bad in less than a year after bankruptcy - we had NO money going into this global issue, unlike a lot of people who had great credit and good lives then lost everything. We were at a disadvantage and are still recovering from it.


$5k+ take home a month less bills/CC payments $1750 = $3,250 to sock away each month for house down payment. We don't have much right now because we were paying down my car payment. Went from 2 car payments to 1 (where I will make double payments), where we were paying $1k+ a month just to build up our credit - which we have and will continue to do so.

So now you should take that $3,250 and slam the car and credit card payments. You should NOT be saving for a house right now. The saving for a house comes after your debts are satisifed. I am trying to help you understand the slide you're heading down - and you seem to justify all of your spending.

You really should read EVERYTHING before posting - we are not saving every penny. We make double/triple payments on our cars and gained a lot of points in that type of credit for doing so. Take a hike

[LadyInTheRed]

marzipan13, stdogz is giving you good advice. Regardless of why you incurred the credit card debt, your priority should be to pay it off. Using 50% of your available credit will keep your credit rating down. It should be no more than 30% and ideally only 10% for credit rating purposes. It should be down to 0% for smart financial management purposes. It would be better to make the minimum payments on the car loans and put as much as you can towards the credit card debt. I bet you are paying a lot more than 3.55% on your credit cards. It never makes sense to pay off lower interest debt before higher interest debt. If you still have the car loans by the time the credit cards are paid off, then you can focus on paying off the cars and/or saving for a down payment on a home.

You have made progress on improving your credit scores, but you have a long way to go before you will get the best rates on a mortgage. Try registering with creditkarma.org. It doesn't give you a fico, but it gives you a score based on TransUnion's system and has a tool that allows you to see how doing certain things will effect your score.

ETA: As already mentioned, the best advice on how to qualify for a mortgage would come from a mortgage broker. Check the yellow pages, search the internet for brokers in your area, ask a realtor for a referal or ask homeowners you know if they used one they would recommend.