Advice on our situation, please

[EarthGirl517]

Here's our current situation.

- 11k in student loans. They defaulted, but I am now on a payment plan.
- About 4k in various other debts (non CC). Mostly medical bills & a cell phone that we forgot about
- 87k mortgage, never ever late
- Our regular bills are usually late

So one of the reasons that we have had such a hard time paying bills on time, is that we have a mortgage payment on the house we used to live in. We also rent an apartment in the town we live in now (had to move for spouse's job). We have accepted a cash offer on our house, and will be closing in 3 weeks. After paying mortgage, realtor and such, I believe we will clear about 30k. We want to buy a new house in the city we live in. I am trying to convince my hubby that an older character home is the way to go. I'd like something under 75k (which is easy to find here). We make about 75k a year, so I feel that this is a good price for a house for us. I am worried that we will not get a loan, because we do have bad credit (which we are working on). So here is where I need advice.

Hubby says we should put all 30k as a down payment on a house, and that will help us to get the loan.

I feel that we should first pay off everything that we owe, except the student loan. Get letters of payment in full from all collection agencies, and keep making student loan payments. I think we should put about 15k down and maybe another 5k into repairs and fixing the place up.

Of course I want all debts paid off (that's why I'm here). However, I want to know if anyone out there knows which way would make it easier to get a loan. I will be talking to a loan officer. I just wanted to know if anyone has had an experience like this, or works as a loan officer. I appreciate any feedback at all.

[FrugalMomof3]

First and foremost, apply atleast half to the down payment of the new house, THEN pay off the 4K in various other debts.

That leaves you with 11K left, put 1K into your Emergency Fund and stash away atleast 3 months of living expenses.

I dont know how much left you will have but if the new home needs repairs, you will need some for that as well.

Here is what I did to get myself out of a hole and I also had 1 defaulted student loan and I was on a payment plan:

Pay off all debts except the student loan, just make sure the student loan is paid on time every month and once income tax money comes apply that money towards the student loans.

YES, YES, YES, once all items are paid off, get a letter from them stating PAID IN FULL!

YOU MUST pay your regular bills on time, I thought back then that "Oh they are just the phone, gas and electric, they can wait and they wont go on my credit report" I WAS WRONG! so pay all past due balances and continue to pay your bills ontime, no matter what.

Personally I would wait to purchase a home till I cleaned up my credit but dont touch the money your making from the cash sale of your home, you will need this. If your credit score is atleast 600, I dont see why you would have a hard time getting a loan BUT they will ask for a substantial down payment (that is why I said put half 15K down - thats a 20% down payment).

I wish you the best of luck but continue to pay all your bills ontime, if you dont this can hurt you in the long run.

[ladykemma2]

[QUOTE=EarthGirl517;881198]Here's our current situation.

- 11k in student loans. They defaulted, but I am now on a payment plan.
- About 4k in various other debts (non CC). Mostly medical bills & a cell phone that we forgot about
- 87k mortgage, never ever late
- Our regular bills are usually late

i would pay off all debt. then put aside three months of expenses, then use the rest for new mortgage. you can get into a $75,000 house for 5000.

[larabelle]

Here's our current situation.
I feel that we should first pay off everything that we owe, except the student loan. Get letters of payment in full from all collection agencies, and keep making student loan payments. I think we should put about 15k down and maybe another 5k into repairs and fixing the place up.

My sister works in the real estate field. She says agrees that you should do the above. Just be sure that you get a good house inspection. You do not want to be in a money pit of a house due to costly repairs.

[Loganberry]

My advice is to follow Dave's plan. Pay off all your debt. Put aside 3-6 months away for your emergency fund. Stay in the apartment until you get your 20% down payment which is 15k on 75k house. And get a manually written mortgage, they will look beyond your credit score and see that you have paid off all your bills and see your financial stability with your EF and down payment. Good luck.