bad tradelines and looking for a mortgage?

[jamied66]

What is the name of your state? VA

My wife and I are looking to buy our first home in the next 6 months. We have a perfect payment history over the past 24 months, and have opened several new tradelines (approx. 6 mos. old now) to demonstrate an ability to use credit wisely. Currently, we are saving as fast as we can for a down payment. We're looking mainly for an FHA loan or a similar low/no down-payment program. Our mid-fico's are 620, +/- 5 points.

Our major problem is that we (more I than she) have several (4-5) charged off CC's from November 2001. We're working on them, but they won't all be cleared off my reports in 6 months, barring some miracle.

My question is: Can we still get into a mortgage with some thought of a livable interest rate? Also, how far back to mortgage company's look when deciding whether or not an adverse account needs to be paid before closing?

Thanks for any help.

-jamied66

[seniorjudge]

Q: Can we still get into a mortgage with some thought of a livable interest rate?


A: Yes, depending on what you call a livable interest rate. Even if you get one that is high, pay it down for a couple of years and refinance.

[jamied66]

Thanks.

Getting into a house, so long as we can afford the payments, is a priority over the actualy terms of the mortgage, just so long as there is no pre-payment penalty.

Is there any thought on my second question, on what guidelines are followed as far as paying off old charge-offs? We have no judegemnts, BK's, repo's or any kind of public records. Just collection accounts and charge-offs.

thanks again.

[jjr62]

Hi how are you I would say you would not have a problem getting a mortgage, 620 is not a bad score but the higher you can get it the better. those chargeoffs are old, but be carefull not to open to many accounts.I can help you with both of these situations just email me and I will respond If you want the help. [email]jjr62@optonline.net[/email] my name is John

[HomeGuru]

Originally Posted by jamied66

What is the name of your state? VA

My wife and I are looking to buy our first home in the next 6 months. We have a perfect payment history over the past 24 months, and have opened several new tradelines (approx. 6 mos. old now) to demonstrate an ability to use credit wisely. Currently, we are saving as fast as we can for a down payment. We're looking mainly for an FHA loan or a similar low/no down-payment program. Our mid-fico's are 620, +/- 5 points.

Our major problem is that we (more I than she) have several (4-5) charged off CC's from November 2001. We're working on them, but they won't all be cleared off my reports in 6 months, barring some miracle.

My question is: Can we still get into a mortgage with some thought of a livable interest rate? Also, how far back to mortgage company's look when deciding whether or not an adverse account needs to be paid before closing?

Thanks for any help.

-jamied66

**A: have a meeting with a mortgage broker who can discuss your various options.

[safeber]

What is the urgency of getting into a house so soon? If you are in NOVA area the sellers market is now dead. So don't think any significant appreciation is around the corner anytime soon. And for Pete's Sake I'll pray for you if a interest only loan is being pushed on you. Not a pretty picture in the future given current trends.

Waiting a bit longer for your credit score to pass 680 will do wonders for your quoted interest rate. Savings over several years on the interest spread alone will be thousands of dollars.

Don't expect anybody, including your friendly neighborhood Loan Officer, to be able to give definitive answers about FICO and how they hand out scores. There are guidlines, but the spaghetti code computer models are a close held secret.

[jamied66]

Thanks for the thoughts. It's not the Fico scores that baffle me. It's how to qualify for a mortgage. What's acceptable, what's not. How much do you need of this, how much of that.

The problem with my scores (in a nutshell) is that I assumed $10k in debt from my parent who were having problems in 2001. I was working 70 hours a week (2 jobs) and had almost no overhead, and was happy to do it. Unfortunately, I was unexpectedly laid off from my second job for a few months and everything snowballed.

We're not in the NoVA area, we're in Richmond. We want a house because we want to own our own house, we're tired of renting. It's time for us (late 20's) to have a place that we can make our own.

If we can get into a loan that we can afford w/o a prepayment penalty we can refi in 2008 when all of the nastiness ages off my reports and our credit will be sterling at that point in time. Currently nothing is being pushed on us because we're still researching the issue. We haven't filled out any kind of paperwork. Interest-only is not an option. Most other things would depend on the situation, though.

Again, all thoughts are appreciated. With charge-offs from 2001:
1. Will they have to be paid at/before closing?
2. Will they stop us from getting approved at all? Particularly of interest is the FHA program.
3. Our mid-Fico's will be approx. 600-620 in January (waiting on a few things to report, etc.). In June it will be somewhat higher, but probably not 680. So if we can get into a house in March with the same rates our scores will qualify us for in June then we'd rather be in the house in March.

Thanks again for everyone's opinions.

[HomeGuru]

Originally Posted by jamied66

Thanks for the thoughts. It's not the Fico scores that baffle me. It's how to qualify for a mortgage. What's acceptable, what's not. How much do you need of this, how much of that.

The problem with my scores (in a nutshell) is that I assumed $10k in debt from my parent who were having problems in 2001. I was working 70 hours a week (2 jobs) and had almost no overhead, and was happy to do it. Unfortunately, I was unexpectedly laid off from my second job for a few months and everything snowballed.

We're not in the NoVA area, we're in Richmond. We want a house because we want to own our own house, we're tired of renting. It's time for us (late 20's) to have a place that we can make our own.

If we can get into a loan that we can afford w/o a prepayment penalty we can refi in 2008 when all of the nastiness ages off my reports and our credit will be sterling at that point in time. Currently nothing is being pushed on us because we're still researching the issue. We haven't filled out any kind of paperwork. Interest-only is not an option. Most other things would depend on the situation, though.

Again, all thoughts are appreciated. With charge-offs from 2001:
1. Will they have to be paid at/before closing?
2. Will they stop us from getting approved at all? Particularly of interest is the FHA program.
3. Our mid-Fico's will be approx. 600-620 in January (waiting on a few things to report, etc.). In June it will be somewhat higher, but probably not 680. So if we can get into a house in March with the same rates our scores will qualify us for in June then we'd rather be in the house in March.

Thanks again for everyone's opinions.

**A: read my post. This is a legal advice website.

[jamied66]

Again, thank you for your opinion. I've made contact with several local brokers with hopes of setting up meetings in the next few weeks.

I'm simply pursuing as many avenues to gain information/knowledge as possible. If my question is too far off topic please let me know and I'll close the thread.

[HomeGuru]

good luck...