Mortage questions

the biggest thing i believe they want is that all your bad debts are paid in full.

 

if you're going for a VA loan, they're going to look at your last two years (no lates), and will want all bad stuff like chargeoffs/collections paid off. VA is stricter on credit than FHA.

 

I am pretty much in the same position... I have found out a bunch of stuff over the past few months that may be helpful because a few months ago, I really knew nothing about what to do and how to qualify for the VA.
We have a bankruptcy that will be two years old in Jan. We have been dealing with a mortgage broker, we havent had to pay him anything, which is fantastic. Dont go to a subprime lender just because you have previous credit problems, they will charge you more, and make you feel scummy. The company I have been speaking with told me that we need 2yrs from BK, all collections or anything like that paid off...All debts dont have to be paid off, just the collections. He told me that the VA doesnt go by your FICO to determine your rate which is great news to me. My Fico is about 590. He says if its below 500, that can be a problem, but in the mid 500's and up will be fine. You may have to write a letter of explanation as to why you had problems.

He says they go more by ratios, like debt to income ratios, etc.. He also said that even two years out of BK, we will get the 6.5% rate...I figured they'd jack it up to 9-10% He also said that even with a spotty past, no down pymt. So they want 2 years good history with established credit.

We are just paying off a couple more bills sp we can qualify for more of a house, plus waiting until Jan for our two year mark, and we are going for it.

I would go talk with someone, its been a lot easier than I would have ever imagined. Even with FHA, most time you;d have to put money down, Im thrilled we have VA, because we couldnt pay 10k-15k down, VA is definatly the way to go if you are eligible. Depending on the severity of your credit, they may do it before two years...Id just go talk to someone, your credit may not be as bad as you think, they may just require a letter of explanation.

Good luck, we hope to be in ouor new home by March-April.

Jamee

 

The VA does not set the interest rates. The lender does. You still have to qualify with the lender. The lenders WILL use scores.

One good thing about VA guaranteed loans is you won't have to pay PMI. VA won't allow it.

SK

 

As I understand it the VA is more strict with credit requirements as they don't require mortgage insurance (so I have been told). They do not go by Fico but by your debt to income ratio and payment history - also they tend to be more critical as in most cases you can walk away from closing with the keys after little to no money out of pocket.

FHA on the other hand will not always require you to have all your collections/charge offs paid in full, but may require you to provide a written explanation for any negatives.

I am dying to use my VA, but like many I am struggling to pay down the balance on one particular account - one late and they have hammered my report with late after late after late. Oh well...someday...

 

BruteForce-

Go here:

http://www.smartmoney.com/home/buyi...m?story=howmuch

http://www.bankrate.com/brm/calc/afford_home.asp

 

If you have zero debt and a good steady payment history you can comfortably afford $125 - 150K.

Dani

 

Looks like the Smartmoney link is broken now. Sorry 'bout that. It's a "how much" calculator.. Probably there on the site somewhere.

SK

 

I want to buy a new home in 2 years but am credit challenged for now. Who can I talk to to see if I'm on the right track?

 

When my husband and I were looking for homes, two banks we talked to both said in determining an amount you can qualify for, go for about 4 X your income.

That being said, we applied for a VA loan and were denied. We are gonna try in about 3 months after we get that couple of things off my report.

MistyEyed