amber h asked in Business & FinanceCredit · 1 decade ago

Our credit scores are 520 and 580 - we make about 90000 yrly - can we get a mortgage in the next 6 months?

We filed bankrupcy in 2000 and have had a charge off that was paid in full - currently we have small past due acounts all about 2 yrs or older. We have 5 credit cards that we opened within the last yr and all are maxed out but paid on time - We have both bought new cars within the past year - We are currently renting with option to buy in 6 months - our rent is equal to that of a 9% interest mortgage - will we qualify for a 9% mortgage in 6 months - how can we be sure?

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  • Anonymous
    1 decade ago
    Favorite Answer

    Hello...

    I have read some other "answers" and may I say, you do not need to be judged and criticized. You need information and information is POWER. You are reaching out & asking for advice & help. I commend you for that as many people just suffer and pay through the nose in silence due to past financial mistakes. All is not lost my friend!

    I work with a credit education and restoration program that intends to help people restore their credit and teach them what they need to do to maintain and continue to improve their credit. The program comes with full year of consultation.

    We also have real estate experts/agents, mortgage brokers and loan officers on our team that can help you obtain the home of your dreams.

    First things first, however...

    We need to get that credit of yours in better shape first. Many people in this country are dealing with situations similar to yours. There is hope & help for you.

    For instance, with credit cards you need never to use more than 35% of your available credit in order for them not to cause your score to go down. You also should own no less than 1 and no more than 6 credit cards that you keep in that 35% range.

    You can get a mortgage within the next 6 months BUT your first priority MUST be to get yourself in better standing with your credit because as it is, your credit scores will just cost you money in terms of your mortgage payments. Why do that to yourself?

    Look at how credit or FICO score affects your monthly payments:

    If your FICO score is... Interest rate is... Monthly payment is...

    720-850_____ 5.72%_____ $872

    700-719_____ 5.84%_____ $884

    675-699_____ 6.38%_____ $936

    620-674_____ 7.53%_____ $1,052

    560-619_____ 8.53% _____ $1,157

    500-559_____ 9.29%_____ $1,238

    So you can see how your credit/FICO score can cost or save you money. Therefore even if you can get someone to help you get a mortgage with those scores (and you likely can due to the fact that many individuals do not have the client's best interest at heart) you would NOT want to get a mortgage...NOT YET!

    There is a program that helps build your scores and educate you at the same time so that you can fully understand how your scores are determined and how you can keep your score high for life. It's called the RFG Credit Education and Restoration Program. You and your spouse may want to look into it. RFG can definitely help improve your scores within 60 to 90 days by 50 to 200 points depending on your unique situation.

    After that you can get that new home you both are dreaming of!

    Here's the site:

    www.StrategicCreditRestoration.net

    I hope this has helped you!

    Best Wishes for a Prosperous 2007!

    LB

    PS: To begin learning more about the credit scoring industry and what one can do to gain freedom from its control, RFG has welcomed the public to listen in on their Free RFG Recorded Conference Call. This special call will be available for the next few months. Callers may call at their convenience 24 hours a day – 7 days a week, listen, take notes, learn valuable information about the credit industry. The call may be accessed by dialing 1.641.985.5700 access code: 387017# IMMEDIATELY followed by 411 to listen in on the call.

    Source(s): www.StrategicCreditRestoration.net
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  • 1 decade ago

    I have processed mortgage loans for years. You could get a mortgage right now, providing your debt ratio isn't too high. With your scores, you would have to go through a sub-prime lender and you would have a higher interest rate.

    There was a suggestion from one of the other answers to go to a credit counselor. This is not a good idea if you are trying to get a mortgage. To a lender, this is just as bad as a bankruptcy.

    What you may want to take a look at is your spending habits.Maxing out your credit cards is always bad. You need to keep your credit card balances at half of your credit limit. When you max them out, you appear to lenders not to have control over your spending habits.

    If I were you, I would take the next 6 months to pay down your balances on the credit cards. Double up on your payments if you can. Don't get anymore credit cards and don't buy any more cars or make any more large purchases. Make sure that you make all of your payments on time or early. The reason that your scores are so low is because you have too much credit. Paying these credit card balances down will help raise your scores and qualify you for a better interest rates when you go to apply for a mortgage.

    Source(s): I am a mortgage loan processor
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  • 1 decade ago

    Hello Amber,

    Let's take this one point at a time. OK the credit scores are low without question ... but lenders often times are willing to loan money on a mortgage at times when they won't loan money on other things like cars, etc. for a few reasons -- most notably you can't drive a car off and disappear and never pay again (unless it's a motor home! LOL) and unlike a car you can't take it out some day and crash it (sure it can be damaged but it would be rare for it to get totaled where the lender could lose the whole investment) ... plus lenders like mortgages because if you default, they get the house free and clear and you lose all the money you've paid to them up to the default.

    Now .. having said that ... DON'T default on a mortgage loan ... EVER. You could lose your house in just 1 or 2 missed payments and there is no refund of your payments when that happens. If you've made solid ground on making all payments on time for the last several years my guess is you will find a lender that will lend you the money ... perhaps the interest will be a little higher and you'll probably have to pay PMI (Private Mortgage Insurance - A ripoff, but you have no choice if you make less than a 20% down payment) ... but you'll probably get the loan.

    BUT ... before you even consider going for the loan you need to sit down and do a little financial planning and make sure you know you can afford the house payments and all of your other debt and still have a solid amount of money left over to get ahead on the bills AND to cover the constant stream of "emergencies" that come with owning a home that you don't have to deal with when you're renting. i.e. the Furnace dies in the middle of the Winter ... can you come up with $2,500+ to replace it or would that just make you go deeper in debt?

    I honestly don't know enough about your situation to give you solid advice about buying a home, but based on the little I do know this is my opinion. 90,000 annually is a respectable salary and you should be able to get the debt paid off fairly quickly if you're disciplined. Focus on doing that first! If you're in a situation where you have an option to buy in 6 months and you like the house and it's a reasonable cost, see if the owner is willing to extend the option to buy out 9 months or a year ... just to make sure you have all the other debt paid off and build a little more down payment.

    I am torn when it comes to recommending buying the house ... you'll probably get the loan, but houses can be a lot more expensive to own than rent so you need to proceed cautiously ... you need to have more money available than just the money to make the monthly payment. However, there are solid benefits from ownership ... everyone has to have a place to live, so why not make your payment build you some value, if you're handy you can save a ton of money decorating or repairing things yourself and increase the value substantially at a lower cost, and you can write off the interest on your taxes so if you have a 9% interest rate it would effectively drop to about a 6% interest rate after tax refund. 6% still is money down the toilet so make sure you don't buy more house than you can afford or need, but it makes it a little more desirable.

    Just approach this decision carefully and thoughtfully and really know what you're getting into before you sign the dotted line. Oh and one last bit of advice ... completely ignore the recommendations from writers suggesting you go to a credit repair websites and credit counseling services and the like ... these "services" are often scams and even the ones that are not scams (the so-called "legitimate" ones) are little more than bankruptcy in disguise ... they will not help your credit score and will probably make it worse. NO ONE can "Repair" your credit and anyone that claims they can is either not being completely honest, plans to charge a big fee to do something you can do yourself for free, or is a scammer. The only way to improve your credit is by the time tested method of making payments on time and getting your finances under control.

    Good Luck!

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  • logan
    Lv 5
    1 decade ago

    Honestly no. Your credit scores are really bad right now. Lets add to the fact that in one years time you got 5 credit cards that are maxed. also you have two cars that are financed less then a year. Lets not also forget that you state you have past due bills on your bureau report. The bankruptcy is 6 years old so that looks better. But you are showing massive irresponsibility with the credit you were given. Banks and lenders see this. The only chance you have is to have a very nice sized down payment. But even then you are a high risk.

    You have a golden oppurtunity in front of you to improve your credit. Pay down those credit cards quick. You never want your cards to be more then half of its limit. also the two car loans are hurting. Keep the payments on time. If you can accomplish these simple goals you should be able to bring your scores to a better playing field.

    But honestly you are a high risk to lend to and will have a very hard time getting a good rate if you can get an approval at all.

    Sorry but your credit mix is not good. Past due bills, charge cards are maxed and only a year old, plus two new car loans.

    You make a great income but spend foolishly. No offense but it shows. work on spending your money more wisely and pay down those charges. Don't close them but pay them down, way down. If you can pay down those cars also.

    Source(s): credit consultant
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  • 1 decade ago

    Amber, I apologize in advance, because I am not going to tell you what you want to hear...

    As you know, you're credit scores are quite low. I once held the exact credit score of 520 also, and I can almost guarantee that you will not qualify for a home loan with either of those credit scores. You would need a massive down payment, and, quite frankly, you already have a mortgage in the form of the 5 credit cards. That consumer debt will prevent you from doing so much.

    There is good news for you both, though. But it will take time and discipline. You will need to begin budgeting your spending so that you do not use credit cards to make purchases that exceed your monthly income. More importantly, you'll need to make double or even triple the minimum payment on your credit cards to begin to pay those down. Both of these are EXTREMELY HARD, because you both already have habits of spending that prevent this ability. You will need to break them.

    Once you have established a monthly surplus, start snowballing your credit cards -- pay off one, then use that same amount you were paying to pay off another, and pretty soon all those lesser monthly payments will allow you to save and pay off debt. In addition, this time will give your credit scores time to heal, and show that you are good consumers with a good track of paying off what you owe. This will lower your mortgage rate, lower your debt, and lower the stress from money problems. Please, please, please -- if you are Christian, or even open to some Christian concepts check out Crown.org, they have some solid money management techniques, more in-depth than what I described, that can help you. As I said to being with, you just need discipline and time, and you can get the house you deserve without sacrificing your lifestyle.

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  • Anonymous
    1 decade ago

    Its not a matter of if you can get a mortgage, because there are always lenders willing to bottom-feed and charge high interest to risky borrowers.

    The question is if you SHOULD get a house. It does not appear that you have the discipline to own a house and you would be unable to manage the eventualities that come with buying a house. 5 newly maxed out cards after bankruptcy in 2000, 2 new cars??!? Your priorities are all screwed up.

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  • Jana
    Lv 4
    4 years ago

    With those scores, you should be able to get good financing. FHA would work, possibly even a conventional Fannie Mae loan too, especially with a decent down payment. A good loan officer will try a few things, such as putting more money down, or leaving $10K in the bank for reserves, and see what happens. Bottom line, you shouldn't have to get a high rate. You should be able to get a 30 year fixed rate loan under 7.00% with those scores and down payment. Anyone pushing a 2 year fixed ARM (2/28 is the typical name), find another loan officer.

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  • 1 decade ago

    Go see a loan officer now at a mortgage company in your town. They can tell you, and also tell you what to work on with your credit so you will be ready in 6 months to a year if you cant buy now. You will get the best rate buy getting an FHA loan. The rate on that is in the 6%.

    Source(s): I am a Loan officer
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  • 1 decade ago

    Your credit scores are low. You may have a difficult time getting a mortgage. Talk to a mortgage broker and see.

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  • Anonymous
    1 decade ago

    I would not leave it to chance. A solid credit repair company with a money back guarantee should fit the bill. Check out

    www.totaldebtsolutionsllc.com (credit repair link)

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