I know nothing about homeownership...Impart your knowledge, please.

Maroon92 wrote: Thanks for all of the good advice. I should add some to this explanation in order to better give you an idea of what I am looking at. I had GREAT credit until I went unemployed during my final semester of college and for the following few months. It is amazing how much debt a stupid unemployed kid can rack up in 10 months without a job, living on his own. Since I have become gainfully employed I have not had a late payment. I also did not renew the card when it came time to do so, so I have not had a credit card for almost 2 years. I have been paying more than double the minimum for the last 5 months. As far as the marriage thing goes, I view it that I can either give my girlfriend the wedding she deserves, OR we can get a house, it is not financially viable to do both. If it really comes down to it though, we could do the "courthouse special" for the paperwork.

Wasn't trying to get into your personal affairs.

Again, having debt doesn't hurt your credit score. Paying late does. Having debt actually helps your credit score (if you make timely payments).

And $13K of debt, with only $6K being consumer debt is really not much.

Are you sure your credit score is 600? Your description above doesn't sound like it should be.

Ignorant wrote:

kazoospec wrote: Personal Opinion Warning: I would NEVER buy a house with a SO. If you're going to be together long term, get married. If you aren't, or aren't 100% sure you are, you aren't ready to buy a house. If you guys separate, jointly owning a home will give you all the joy of a divorce without ever getting married.

I agree with this.

Me too.

Maroon:

In your original post, you said you were looking for a $70K house, that her parents would help with the down payment, and that you were saving a lot. But you also said you hoped you could get a 10% down payment together.

That's $7K. It's not a huge amount.

Or, were you saying YOU would save $7K, and the 'rents would help beyond that?

Don't get me wrong, $7K is fine, but when you consider closing costs, maintaining payments on current debt, and having a little safety cushion (as other people have noted, home ownership can have surprises), $7K is a little snug.

You can buy a house with an SO, just buy it in your in name, unless your credit score/income won't allow just one person on the note.

That's what I did. We are married now, but OK doesn't have communal property laws or whatever, so the house is mine if anything were to ever happen.

With all due respect, that's not buying house with a SO. It's buying a house by yourself, and letting her live there.

I'm just saying...

In the last year I have sold 2 houses, bought one, and I have a townhouse that I rent that I'm trying to sell to the renters.

First things first, carguys post is spot on. I would only like to add a few things to that in a practical sense. You really, really, really need to have additional money set aside for repairs, because you will need them with any repo or hud house. I don't care what anyone tells you, home maintenance can make racing look cheap in many cases. On my current house, we ended up having an underground spring that was causing problems. It wasn't detected in the original inspection, and homeowner's is not responsible. So, long story short, $20k later and it's no longer an issue. With a house, you never know what will happen, in a renting situation, you can walk away. Keep in mind I'd much rather own than rent, but you have to weight the realities.

One more word on appraisals. THEY SUCK! The government has now pretty much taken control of home appraisals. I have a friend that is an appraiser, and he can no longer get a call from a bank or broker to do an inspection. His name now goes into a pool and gets handed out by a regulatory agency, and it may or may not be even in the same city. They also no longer do a proper appraisal. Our son recently bought a brand new house, in a new subdivision, and it was appraised $100k below asking price. Why? Because instead of using comparisons in the same subdivision, they used houses from a couple of miles away that had far fewer square feet and were 50 years old. They had no recourse and the builder ended up sueing the appraiser. i've haven't heard the outcome, but it was a mess.

Our house had a similar problem, and it was appraised $50k under market value. Since we got it really cheap and paid cash, it wasn't a big deal, but I'm sure our neighbors hate us. Appraisal issues are huge. Your fine government at work!

Lots of really good information here, I dont have much to add other then,

Closing cost were much higher then i ever thought they would be before i started looking, be prepared for that one!

I had a coworkers wife for my mortgage broker. have someone i really trusted around for the process, really saved my sanity! I am an engineer deal with numbers all day long and had a billion questions, i was glad to have someone around who could answer them for me!

DONT ASSUME ANYTHING ALWAYS ASK IF YOU ARE CONFUSED!

I made a few assumptions based on how things were going and planned money wise according to that, yeah i was wrong... and shocked about. I should have just asked.

Good luck!!!

Lots of good info here.

Honestly, I don't think you're ready to buy. I went into my first home purchase of $140k with zero credit card debt, only $6k in student loans, married, good credit, several grand in the bank, and combined salaries of $75k give or take, in the housing market of the early 2000's, and it still kicked my ass. Surprises happen. I swear that for 6 months I couldn't step into home depot without spending $100, and I'd have several trips a week, sometimes several a day. The savings cushion went away when the septic tank needed to be repaired and the county told me that an outbuilding had to come down, within a couple of weeks of each other, and within 6 months of buying the place.

My advice - rent a house. I agree that apartments suck and houses are better. Renting a house will get you out of the apartment without the purchase. With as bad as the selling market is, there should be an abundance of rental houses out there. I also agree with several that you shouldn't buy a house with an unmarried SO. So rent for a few years, get your credit better, get married, get $10k in savings built up, and then start shopping.

I too advise agains buying WITH the SO but here was my story.
At 27yrs old I was still renting a house with a roommate. It was cheap and helped me to save. My plan was to move in with my girlfriend with movement toward marry.
I bought a house (I, not We) and she became the roommate (now with accent on "mate".) All purchase and money was in my name (she had none anyway.) Our deal was I paid the mortgage and she paid the untilities which were in her name (like a renter.) 5 years later we split (it had been pretty rough for about 3 years.) The breakup was really pretty friendly and clean. No fight over the house for which I made all the investments and she paid all the consumables. Much of the furnature, she bought and as expected it went with her.
So, back on track with you...
My advise to you would be to rent (preferably a house.)
Keep cleaning up and building your financial world.

I may have missed it but talking to a reputable real estate agent can answer a lot of your questions and they have listings of houses you are looking for. Keep in mind that they are trying to make a sale. You might even find something in a repo.

SVreX wrote: You are talking about COLLECTIONS, not BALANCES, right? Is that specifically items that have been turned over to a collection agency, or does it include slow payments? A credit score can be dinged pretty hard without anything being turned over to a collection agency. But what about balances that were formally slow, now being caught up? Are you suggesting they should not be paid off (for the purpose of building a credit score)?

Yes I was talking specifically about a bill that had gone to a collection agency. In general you find that the original creditor reports the debt as CHARGED OFF and a collection agency has been hired to collect the debt and they report it as a collection.

Keep in mind that the collection agency doesn't really have the right to report you to the credit bureau since you don't owe them the debt. The right way is for the original creditor to report the debt as being in collection. But since the collection agencies get away with reporting it, unless you want to hire an attorney and fight it, you'll need to deal with it.

Older collections have been bought for pennies on the dollar from the creditor and are now owned by the collection agency. You need to be very clear on this distinction because it determines how you deal with the debt.

I won't argue whether you owe the debt or not - YOU DO and it's only right you pay it, but the laws and the collection agencies have conspired to hurt you if you do the right thing so therefore you can't.

Let me tell you how to deal with and possibly pay a collection off if you aren't trying to buy a home and you aren't under the time gun of a loan application. When you are buying a home you don't have time to deal with these things plus you want to let sleeping dogs lie. If you stir up the collection agencies they will begin reporting the collection several times under slightly different names or numbers to put enough pressure on you that you pay them. They'll gleefully ruin your chances of getting a home so if you discover a collection during the home buying process just totally ignore it unless the lender tells you that you need to deal with it, which is rare.

If you have a collection and the debt is still owned by the creditor and you want to pay it or make a deal, then bypass the collection agency and go directly to the creditor. Initially they may tell you that you must deal with the collection agency but tell them in no uncertain terms that if they want their money they'll need to deal with you. Tell them you'll never deal with those scum sucking fleabags as they are being abusive, calling you all hours and even at work when they've been instructed not to. The real creditor will believe you cause that's what they do. You might have to go up the ladder to a supervisor, but it will be worth the effort.

You'll need to understand how a collection agency works to know best how to work with the creditor. The collection agency gets to keep anywhere from 1/2 to 2/3 of all the monies you pay them which means the creditor only receives 1/3 - 1/2 of any money you pay. This gives you the opportunity to offer the real creditor 1/2 of the balance and get a fully released & deleted collection.

Not only does the real creditor only receive a portion of what you pay them, but also it could be years before they get that money. Sometimes the collection agencies us the "color" of the debt as the basis for collecting and never pay the creditor. They make a lot of free money that way. So by dealing with you directly the real creditor knows they will actually be receiving money. Tell them you will pay them 1/2 of the balance if they will instruct the collection agency to delete the account. They'll say they didn't report you to the credit bureau and therefore they can't remove it, but they hired the collection agency so they can instruct them to completely remove all evidence of the collection. Once you get that letter then you pay them the money. Send a copy to the collection agency. Send a copy to the credit bureau and send a copy to you state's Office of the Attorney General and tell them the collection agency is refusing to remove the debt. That collection will disappear as if it never happened.

Ignore those debts that have been bought by the collection agencies. They add processing fees, interest or whatever they can think of to drive the $30 real balance (that they paid $3 or less for) up to $3,000 to get your attention and try to get you to settle for $1,500 and they'll never remove it regardless of what they tell you on the phone. The collection on your credit is advertising for their firm.

SVreX as you said, late payments can ding your score pretty hard. Those are those "balances that were previously slow but have been caught up" that you mentioned. Paying off those debts that have slow pays does nothing to help your credit score and can actually hurt you. How does it hurt? When you pay it off you are left with the slow pays, if you continue to pay you are replacing the old bad pay history with a new good pay history. It demonstrates your WILLINGNESS to pay. It also gives you the opportunity to go back to the creditor after you've developed a good relationship with them again and try to get them to rate your credit for a shorter period of time which makes some or all of the late pays disappear.

carguy123 wrote: Don't cut up and close your zero balance credit cards. One of the criteria for a good credit score is the more available credit the higher your score. If you close those accounts you have just put a serious dent in your available credit. Fight any credit limit decreases See above. New credit card laws say if you don't use it, you lose it. That means that your $1,000 credit limit will drop unless you use all or most of it sometime. The law requires the CCs to lower your credit limits to reflect your usage. So sometime when you have the money to pay cash for a larger purchase - DON'T. Charge it, give it time to hit their books and immediately pay it off. That gives you an activity unit and keeps your credit limits high which helps raise your credit scores.

Interesting, I've been told that having a lot of open, high-limit cards can be bad for your credit as it could be considered 'potential debt'.

That said, the second paragraph may explain why I get inundated with balance transfer offers. I have three cards I use regularly for different things but pay off every month. I probably get 2 balance transfer offers from Discover and Citibank every week, plus other various c-card offers. My shredder gets a good work-out once a week...

I sort of fell into my mortgage, so I don't have much to add other than don't under estimate how much time and money maintaining a house eats up. And if ignored, it just builds up and gets worse. You definitely want to have cash reserves so as to take care of problems within a reasonable time.

I'm not sure if it helps my credit, but I take advantage of 0% financing whenever I can.

Maroon92 wrote: I still owe about 7 grand on student loans and another 6 on CC Debt.

Ha Ha Ha that is so cute! I remember the days when my debt Gorilla was just a little debt monkey.

jrw1621 wrote: I too advise agains buying WITH the SO but here was my story. At 27yrs old I was still renting a house with a roommate. It was cheap and helped me to save. My plan was to move in with my girlfriend with movement toward marry. I bought a house (I, not We) and she became the roommate (now with accent on "mate".) All purchase and money was in my name (she had none anyway.) Our deal was I paid the mortgage and she paid the untilities which were in her name (like a renter.) 5 years later we split (it had been pretty rough for about 3 years.) The breakup was really pretty friendly and clean.

Not to sound like a wide eyed kid fresh out in the world, but She is truly everything to me. We have been dating since Sophomore year of High School, and we have lived together for two years, spending nearly every waking moment of every day with her. (If she hasn't killed me by now, she must be serious!)

Maybe renting a house wouldn't be too bad, I just don't think the apartment is worth 650 a month for only 750 square feet. It's pretty tiny for the area.

Ian F wrote:

carguy123 wrote: Don't cut up and close your zero balance credit cards. One of the criteria for a good credit score is the more available credit the higher your score. If you close those accounts you have just put a serious dent in your available credit. Fight any credit limit decreases See above. New credit card laws say if you don't use it, you lose it. That means that your $1,000 credit limit will drop unless you use all or most of it sometime. The law requires the CCs to lower your credit limits to reflect your usage. So sometime when you have the money to pay cash for a larger purchase - DON'T. Charge it, give it time to hit their books and immediately pay it off. That gives you an activity unit and keeps your credit limits high which helps raise your credit scores.

Interesting, I've been told that having a lot of open, high-limit cards can be bad for your credit as it could be considered 'potential debt'. That said, the second paragraph may explain why I get inundated with balance transfer offers. I have three cards I use regularly for different things but pay off every month. I probably get 2 balance transfer offers from Discover and Citibank every week, plus other various c-card offers. My shredder gets a good work-out once a week... I sort of fell into my mortgage, so I don't have much to add other than don't under estimate how much time and money maintaining a house eats up. And if ignored, it just builds up and gets worse. You definitely want to have cash reserves so as to take care of problems within a reasonable time. I'm not sure if it helps my credit, but I take advantage of 0% financing whenever I can.

Actually, it depends...

Under one model, if others are offering you a lot of credit, it must be because you are a good credit risk, so so will this guy. Under the other model, if others are offering you a lot of credit, it means you have less ability to pay the new guy, so he will fold. And that is a dynamic situation. FICO is changing the way that they treat zero-balance accounts.

FWIW, in college me and 3 other guys rented a 4 BR house in Powder Springs for $800 / month. That was 10+ years ago, but it was also during a good economy, so I bet you can get into a house for the same or similar money as you are looking at.

Also, FWIW, When I was first married we lived in an apartment. First year was $550. Got a notice that the renewal would be $600. I went to the office and said that I would sign another lease for $550, or I would move. They dropped the price.

http://atlanta.craigslist.org/nat/apa/2245400320.html http://atlanta.craigslist.org/nat/apa/2245137371.html http://atlanta.craigslist.org/nat/apa/2243935770.html http://atlanta.craigslist.org/nat/apa/2243443879.html

interesting - http://atlanta.craigslist.org/nat/apa/2244601943.html

In reply to Maroon92:

That being said, I think you should concentrate on procuring this wonderful woman as a wife and worry about a house later.

What DILSI Dave said about the open accounts and the wife!

At times in the past you wanted to close those open accounts because lenders thought you MIGHT go charge some more and that would affect your ability to repay the loan to them -- and then along came FICO scoring where available credit affects your score.

But times they are a changing and we're told that someday in the future it will go back to you needing to close those accounts, but today if you want to get your scores up don't close them.

Ideally every CC or loan you have will have a balance of 50% or less of your credit limit or high credit balance. The really best number is to have your balance be 25-30% (depending upon who you believe) of the high credit. BUT I've found from helping people manage money to raise scores that paying a debt down below 50% doesn't give much impact at all.

Going from a 75% balance to 50% is a large increase in score, but paying a balance down below 50% isn't worth the money. Instead use that money to pay an additional loan balance down and get benefit from 2 different accounts. That will usually give a better score than just paying one loan way down.

The one thing to take from all of this is that things change. What worked in the past won't necessarily work now or tomorrow.

It is absolutely crucial that you have a knowledgeable LO working on your side.

Ideally that person would also be compensated by a commission. An hourly employee doesn't get rewarded if he does a good job nor penalized if he does a bad job for you. If they are commissioned based they don't get paid if they don't get you a loan so they work harder and take shorter lunch breaks.

There are flim flam artists in all professions and you can find them here too. You can find what I call fast talkers everywhere so don't just work with the first person you talk to, find someone you're comfortable with. Find someone who will explain things to you and who will educate you so that you can feel comfortable. Make them explain WHY you need to do something or WHY this loan type is better for you.

I bought my first home with the help of a slightly "ethically challenged" realtor. My credit and work history was all good, could meet the payments and insurances fine, but lacked a down payment. I ended up with one of his listings, they inflated the price, so the amount I needed to borrow was actually the sale price. The appraisal came in higher than what was borrowed, so that cleared. He effectively made it look like I was putting a good downpayment on it, when we actually financed the whole amount. He was happy, the bank was happy, I was happy and the seller was happy. Two years later, he went to jail(for a scam with the city) and I sold at a profit.

Maroon92 wrote: Not to sound like a wide eyed kid fresh out in the world, but She is truly everything to me. We have been dating since Sophomore year of High School, and we have lived together for two years, spending nearly every waking moment of every day with her. (If she hasn't killed me by now, she must be serious!) Maybe renting a house wouldn't be too bad, I just don't think the apartment is worth 650 a month for only 750 square feet. It's pretty tiny for the area.

Then quit fooling around and get married. Believe me when I tell you there's no moral judgment here. As mentioned previously by SVreX et al, banks like commitment. They want to know they'll be paid. A break-up puts their loan in jeopardy.

As a married couple, you file your income tax returns jointly and enjoy many tax incentives that free up some money for things like houses and debt retirement.

So forget the big stupid wedding that will cause more strife and more debt than a guy could possibly imagine. Have a nice ceremony with family and friends, join yourselves in Holy Mortal Wedlock and reap the tax benefits.

Revisit this house buying idea one year after you are wed. By the way, if your SO's family is willing to help with the down payment, they really like you dude. They'll bend over backwards to help you if you marry.

That 750 square foot apartment will cost you at least $1200 in my neck of the woods so consider yourselves lucky. Live as cheaply as possible and save your dough.

Lots of fine ideas expressed so far. Take heed, young sir.

1. I have to agree on the get married part... Even with church, hall, 250 guests, we got by with $7k. A wedding doesn't have to be fancy to be fun.
2. Once you're married, owning a house helps a bit come tax time. Ask me how I know.

My wife and I bought a house for our daughter to live in last year with our grandchild. We had a difficult time even thopugh we have good credit, and had a large downpayment. We went through a mortgage broker and I wouldn't kick him in the ass if he bent over and spread his cheeks. Listening to Carguy, maybe he wasn't so bad after all. This guy was an ex-marine who had been in combat in the sand box. He said it was easier over there than doing loans over here. Only thing I can add is many banks don't want to loan less than 100k. That appears to have been our problem.

Keith wrote: I wouldn't just go to the credit union. I've been through mortgage brokers, credit unions and banks - and the bank has proven to be the most affordable and hassle-free option. I actually walked out of my first closing with the mortgage broker because he was screwing with me. But regardless, they're used to dealing with newbies so just walk in looking like a reasonable human being, lay your cards on the table and ask your questions.

I would suggest talking to both your bank/credit union AND a mortgage broker (especially if you can get a referral from someone). It pays to shop around a bit and talk to several people regarding loan programs, rates. fees etc.

Disclosure: I am a mortgage broker and have done many loans over time for people that were either turned down by their credit union or fed up by how slowly things were going and how they could never get hold of anyone to talk to about things. Lesson is to shop around and find someone you like who will be there to help you through the complete loan process, not just take the application and pass you off on the office help.

I've used a credit union, bank, and mortgage broker. It all depends on the broker, the bank or the credit union you go to. A good one is worth his weight in Miatas. They'll work for you and guide you every step of the way. The trick is to find one with your interests at heart. They may be hard to find, but ask around and see what names come up. A mortgage broker can also "shop" you around to get you the best deal. These days it does take a fair amount down unless you go FHA, which has been mentioned already.

One quick note. Our renters have been trying to buy for a year now, with not much luck. The wife has a credit rating of 780, the husband 590. They cannot get a loan at all right now with his rating. It's tough right now, so save up and get your score up. Your score is VERY important. I even had them go to our broker, who is a friend, and she wan't able to help them either.