I certainly hopes she likes that piece of jewelry! If you're purchasing a home, it's better to finance a piece of furniture, which would be seen as an installment loan, I believe.
Your credit score is atrocious from the lender's point of view and just barely within the limits of a sub-prime loan.
I'd say that your fiancee is in much better shape than you are, but you should both wait for several months before applying for a mortgage. During this time, SAVE MONEY FOR A DOWN PAYMENT. If you put down at least 20% (and closing cost), you can avoid PMI (private mortgage insurance). This will save you $45/month, which is roughly $600 per year in your case. The other way to avoid PMI is by paying up-front (about 1%) and rolling this into the cost of your mortgage.
I guess since you're paying collections, you can't settle for a lower amount. Are you paying your original creditor or are you paying a third party? You should see if they'd be willing to erase the item from your credit report if you paid them. Of course, I don't know what kind of luck you'd have with that.
If you pay bills on time and in full, it looks really nice to those who are looking at your mortgage application. Reducing your debt is another good thing, but if you have too much available credit, your lender may want you to close the accounts and this would hurt your score.
Is there any way that your fiancee could qualify entirely in her name with her income?
AVOID ARMs LIKE THE PLAGUE!!! Interest rates are going nowhere but up, ESPECIALLY for sub-prime.
(1) I don't know enough about your credit report to give you an accurate answer. I'm assuming that since your bill went into collections that it was severely late. Late payments can really ding your credit score, considering that it accounts for 35% of the FICO. Debt-to-credit-limit ratio is 30% and you should keep this ratio as low as you can. 15% is calculated from the age of your accounts, so do whatever you can to keep your oldest credit cards. Reduce the credit limit if you have to, but keep them open! Pay the balances off in full each month if you can. If you use the card frequently enough, you won't show $0 as the balance on the credit report. (TRUST ME! I've paid my credit card off in full every month and it always shows a balance.) 10% is mix of credit and you have the least control over that aspect, really, since no one says what the prime mix is. (You don't need a loan of each type to have a good score...) 10% is the search for new credit. Since you both recently got secured credit cards, it may take a few months to get your scores up as these inquiries hurt your score.
(2) I'd still suggest giving at least a 20% down payment. As for interest rates, if you get a fixed-rate mortgage, it will be cheaper in the long-run. The method the lender will take to figure out your FICO score will depend on who the lender is. Some will average all 3 FICO scores (1 from each credit bureau), some will take the middle score, some will take the lowest score.
(3) Consult the website's FAQ section.
· 1 decade ago