My fiance and I are considering buying a condo since we have been renting for 4 years and will probably be settling in our new area for the next 4-5 years.
My fiance has extremely bad credit with debt, and mine is actually pretty decent now in the 650-660’s and rising =) We’ve made ALL of our utility bills, car payments, rent, everything on time. He makes $92,000 a year, but will be going up to $130,000-160,000 within the next 6 months due to a permanent position. Our current monthly bills are around $2,500 (incld. rent) and we usually have about $3,500 left over. Taking this all into consideration, what would be the suggested max. amount for a home loan we should (or could) consider getting? We were thinking $100,000-150,000 range for buying our first home, but could we consider going up to as much as $250,000? Even though his credit is extremely bad, would his income help us to still get some kind of loan? Any help or advice would be very much appreciated =)
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You can still by a house.
I would talk with a lender ASAP (this week) and have them pull a credit report on both of you and find out why the credit scores are so low. PS 650 is NOT a decent credit score.
Are there any judgements. If so PAY THEM OFF NOW. Is there any thing that can be fixed. If so, fix them now. Then the lender can do what is called a “RAPID RESCORE”.
What about down payment. If you have had 3,500 left over each month and you don’t have any savings, then you really don’t deserve a home yet.
You need to be saving, saving, saving.
No matter what you do, you should be saving at least 10% PLUS maxing out your 401k programs.
There is no reason ANYONE can’t be saving month each month. PAY YOURSELF FIRST and don’t spend more then you earn.
With his income you should have no problem coming up with a good downpayment. Save until you have about 20% of what you want to buy, by that time maybe both or your credit scores will have risen. Right now even with steady income it’s difficult to find a deal with a credit score lower than 660. The subprime market is basically dead and without a downpayment those with even good credit let alone your bf’s or your ok credit could get a loan. And without knowing your monthly liabilities credit cards, car loans, etc. there’s no way to say what you could afford, but I’d say stick whatever amount you can save up 20% of.
It truly depends on just how “bad” your fiance’s credit truly is. If there are judgments against him, a recent foreclosure, or a bankruptcy within the past 2 years, then there would be issues in finding financing. However, if his poor credit is a result of being late on credit cards, owing more than the balance on credit cards, many collections, then these obstacles may be overcome to improve his credit rather quickly…especially with the amount of money you have left over each month to help his credit situation. Also, if his credit is above 580, then currently you may qualify for an FHA loan allowing for minimal down payment with little credit repair. There is a mortgage site that offers free credit counseling for individuals in your situation, http://www.mortgageer.org. Hope that helps.
Actually, the fact that you bring in considerable amount of monies and now pay all your bills on time is great. You’ll defiantely be able to qualify for a home and probably one beyond your own expectations. I would first talk/meet with a reputable lender and discuss finance options. Check out this site for more help:
http://www.credit-card-loans-debt.com