kevellis32

Due to my job, I am hardly at home and I am sick of paying rent and utilities on a house that I'm never at anymore. I have been thinking of buying a house for the past year or so and now I am dead set on doing it. I don't have to worry about making the whole mortgage payment on my own (I could if I wanted too) because I have two current roommates/good friends that I have lived with for the past 3 years that will pay me rent. I just want to be getting something out of my money that I throw at a place to store all of my junk every month. I have a decent amount of money to put down, but not close to 20% on a 165,000$ house, and my credit is so so due to two issues with the same hospital and the insurance company that should have paid them, not paying them.

One of them is a funny story that I have to say first. I was in a truck that got hit by an ambulance (the ambulances fault), it hurt my back a bit and we went to the hospital that owned the ambulance, we were told that they would take care of it. Meanwhile I get sent to collections because the hospitals insurance company for the ambulance didn't pay, so I got sent to collections by the hospital after their ambulance hit me sending me to their hospital. The other was me being hit by a stanley steamer (their fault as well) van while I was on my motorcycle and they negated/forgot to pay a 256$ bill after paying the other 7,000$ in bills and that one took me to court before it all got sorted out.

So with a credit score with a gouge in it, what kind of interest rates am I looking at? I am wanting to do a FHA loan due to not being able to make the 20% down payment, and my FICO credit score is about 40pts lower than my other two scores, and an FHA loan doesn't take FICO into account. Any advice would be greatly appreciated!
Thanks.

Fern

All the rates are dependant on your credit score and they will most likely require you to pay off the collections. FHA is full documentation of income and assets. Well I think the stated loans are long gone anyways. Shop around and definately negotiate the points to do the loan. Interest rate are low and so are housing prices. Look into forclosure and pre-forclosure for the best prices.

67HotRod

You can also add comments to the negagtive stuff on your credit report to explain the reason. I've been through the medical ins nightmare and I was able to bring up my rating after the comments were added. Good Luck!

Dodgezilla

Just make sure that you could muster up the $$$ to pay the mortgage yourself in case the roomies took off. It is always a possibility and you can't just move out of a house you bought as easily as you can a rental and get away with it.
If it were me, and my credit rating was being affected by just a couple hundred bucks, I'd go ahead and pay it. If your interest rate is even 1 point higher you will pay a whole lot more than that over the life of your loan. You do have to make sure they remove the negative remarks on your credit rating. I would get it in writing before sending the money.
If you are dead set against paying it then do as 67HotRod said and make a statement about the circumstances. I have extremely good credit and even I had to do that when I bought my house when we found a slightly negative issue on my credit report that was not even true.....

Chrisreyn

This stuff can be very case-specific.. probably your best bet will be to go to your bank or lender with a copy of your credit report and talk to them. they will be interested in helping you, so as to get your loan business, and are a lot more familiar with the market, mortgages and such in your area...

RickG

If you collect rent you'd better be ready to accept the responsibility of keeping records and paying taxes on the rental income . Real estate is not a good investment . If you have to relocate in a few years you may find you are facing a loss of thousands of dollars . Checking the selling prices of homes in that area over the past few years and see how long homes stay on the market as well as the foreclosure rate .

roughstock

I agree with Dodgezilla, make sure you can afford the house, when your friends leave, for what ever reason. Even if it is for a few months until you get new roommates.
Usually, when you cant put 20% down, you will have to get PMIn (private mortgage insurance). Unless, the house has enough equity versus the purchase price and the money you have to put down.
AVOID ARMs---adjustable rate mortgages. This is part of the reason why we are in a housing crisis.
Get a fixed rate, 15 or 30 year traditional mortgage.
Do shop around. Make sure you know all the other costs of buying a house such as closing costs, fees, Property Taxes(can be expensive), and repairs are now your responsibility.
I finally bought my first house after years of renting. Its a good feeling and generally a good move for you financially.
If you are worried about your credit, find a bank who will do a manual underwriting. this is where they actually look at you, you bills/income, your payment history, and the situation that you are in. Instead of some bank that looks at your credit score and little else. This can help you get a loan, or possibly a better loan, because bad things happen to good people sometimes. You may have to look a little harder to find one of these.

Have fun and do not rush in to anything, if you are not sure, just wait another day to think about it. Big money and purchasing things can be an emotional process, so dont let the emotions cloud your judgment.
Hope this helps.

kevellis32

Forgot to mention...Those issues with the hospital were taken care of already, once I found out about having to go to court, I paid then got re-reimbursed and so on, still doesn't take away the hit. And I won't have any problem paying the mortgage payment if noone but me lives there. It just makes it cheaper for me if someone else does.

And how do I go about trying to remove those remarks on my credit?

I just got a subscription to one of the online things. its a 671 from experian. Says it puts me in the average among americans.

kevellis32

No Offense, but that is wrong. Buying in a down market that will eventually reverse itself is a good investment. Its like buying stocks, you buy when they are down, sell when they are up. Main difference is that houses have been proven for O the last 60+ years to appreciate.

D2 Cat

RickG- Real estate is not a good investment . .

This statement is way too broad to be a truth.

If you had a property for 11 years that NETS $1200 p/month would you be interested in selling it because it's a not good investment? Just curious.

Must depend on what the definition of "good" is. I'm always looking for more.

Dodgezilla

You need to call the creditor that had issues with you and remind them that your balance has been paid in full and to please remove the negative remarks from the report. Most of the time they will do this with no problem...

TallTom

I read last week that there is a bill going through the senate to allow 1st time home buyers a big tax credit if you purchase a repo home. Trying to help the economy by getting more people in debt.

TallTom

RickG

You're right . It was too broad of a statement . Some purchases made 10 -15 years ago will give a good return . I have heard recently a real estate investment made now will give a good return in 4 or 5 years . There are a lot of variables though .

D2 Cat

RickG, as I came back to this thread and read what I wrote it came across a tad critical. I apologize.

I received this just today from a friend. It shows us how important it is to make good/sound decisions.

A modern day prodigal son story. A wealthy business man and rancher gave his oldest son $1,000,000 dollars. In a matter of one year he had spent all but $250,000 on wine, women, and song. (to use an old phrase). His father seeing that he did not use the money wisely by starting a business -- took it away. The son resented his father for it. The son went back to school, worked very hard, and latter became an engineer and raised two wonderful children.

Upon his father's passing he attended the funeral, and the reading of the will. His father had left him $1.9 million dollars -- an investment from the remaining $250,000. The last letter he recieved from his father read:

You once were a rancher with no cattle and a big hat .. now I hope you have cattle, and a small hat.

Love
Your father