Trying to get a house

[lisettelovebug]

well, we were at my parents' house 2 weeks ago and were talking to my sister and her fiance. They mentioned getting a loan through Rural Development for a house. So, I looked into it and got more information. Being a family of five and making $41,000 a year we qualify for the direct loan at the fixed rate. I think we even qualify for the subsidies.

There are a few things we have to do before we can send in the prequalification form. They want to have credit scores above 640, and my husband has 2 that are, but one is at 619. So we are trying to get a couple credit cards paid off so that it will improve. I do not know if they will take my credit score into account or not since I do not have employment.

It was also stated on the paperwork that all your debt and bills have to be less than 41% of your income, including the housing payment. So I figured it up and if our mortgage is $750 a month that right now our percentage is almost 43%. So we just have to improve that a little too.

So we will be waiting until probably May / June before we apply. We had been looking at getting a 3 bedroom apartment but they want a lot of money for these, at least in the towns we're willing to live in. We desperately need more room. Ds9 has his own room and dd is in this room that is about the size of an average bathroom - fits her toddler bed plus a few more feet and a closet. Ds(5mos) is in his crib in our room. We just don't have enough room here.

Has anyone tried to get one of these rural development loans? I think they're program 502? If you have, can you give me advise on how it will go??

I also need advice on how to get our credit scores up as quickly as possible. We can't make much extra money because we need to stay under $45000. So we will need to look for ways to reduce.

[redbug29]

All, I can say is, keep at it. We have A loan through FHA and yes we had to jump through alot of hoops to get it, they are more strict but we have a 4.75% morgage and it helps so much knowing that it will never go up. We had to fix chipping paint on the house, more insulation in the attic, hand rails on all steps, even our basement ones that are closed off almost 100% of the time. And we really lucked out that he didn't say anything about our, very outdated fuse box, but like I said keep at it, it will be worth it in the end....

Tiffany

[Marie78]

I tried to see what my bills came to, I think bills being 41% of your take home income is high. Which bills were they counting? I have bills like: rent, electric, cable, minimum on (2) CC that I put much more towards each month, car insurance, cell phone, and then where would food fit in? Do these people consider food a bill (I hope not)?

If I were trying to do this I would have to lose the monthly cable bill, cell phone bill, and reduce the minimum payment required on the (2) cc debts in order to come in at 41% of my take home pay. It could be done, and if the only thing you can do is reduce (instead of bring in more money) I would reduce the cable and cell phone I have and I would figure out a way to reduce my groceries even less or not eat out ever in order to pay the rest of my income towards the CC debts.

Just thought I would look at it from my perspective to figure out what might hinder my living at 41% of my income (assuming it's take home income).

[FrugalMomof3]

They dont consider food, and regular utilities when justfying the percentage.

They use CC bills since this is shown on your credit report and mortgage/rent payment.

As for the house, just keep paying down the debt and do not use the cards now for anything but DO NOT close any accounts, this MAY hurt your credit score.

Let me just tell you that when I got my first house it was in my name only, I had terrible credit and I got a loan thought the VA for this house, they looked at the fact that I had paid ALL my credit card debt even past ones that were in collections and my credit score was less than 600.

[lisettelovebug]

Unfortunately, I won't be able to talk dh into less cable. We were only getting channels 2-13 for $10 a month and cable internet for $45. But, now that dh is working 7pm-7am on weekends he wanted to be able to watch his Mets this year. So we got the extra channels again. It actually only went up $45. I don't watch it much.. just Suze Orman and stuff, but I love it for dd because it has the preschool on demand. But, dh gave up buying coffee out in order to get the cable back (he was spending probably about $10 a week)

If they do not consider utilities in that percentage we will be fine. They do ask on the application how much we pay for utilities (which is about $175, if you don't include cable and cells - which can always be canceled if need be). We don't have a home phone so we use the cells and the contracts on those are up sometime this year.
I've been very good about buying food and household items up until the other day. We went to Sams's and they are expensive. We spent $100 - but I made sure it was a good price before I bought it and made sure it wasn't something I can usually get on sale / have coupons for. Some of the stuff, like the juiceboxes that we use for dd when we're out and about, pancake mix, will last us months. I also had to go to Target today and get diapers, but I always buy the cheapest per diaper and use coupons.

We were planning on a no spend month this month, but it didn't work. So we will be doing one next month. At the end of april I will get chicken and beef to freeze and use during May. Then we have enough stockpiled so we wouldn't need to buy much food... just bread and milk, etc. We do get WIC which helps tremendously, especially with ds's formula. Dh and I are also taking night classes about 15 minutes away from here 3 nights a week, which will be ending the 2nd week of May. So that will save on gas tremendously. Now that he is working only 3-12 hour nights for work, that also helps on gas. I will have to take out some money for presents for ds9 because his bday is the first week of June and I will want to start looking soon, hoping to get him some cool stuff on clearance or a BOGO sale.

We don't eat out much anyways. But I have points from MyPoints that I will use to get a gift card to Chilis so we can go out at least once next month. We always get waters when we do go out to eat so that helps with the bill.

We do have about $600 saved in our savings accounts (online accts) that we contribut $45 a week to. I am wondering if we should use this $45 and put it towards debt. Or maybe a portion of it? I won't take out any of the savings because we need at least $500 EF. We were hoping to get it to $1000 but it may be better used right now to pay off cc to help credit score. What do you all think??

[jamie79]

They will take your credit score into acct even if you are not working.
They also may require whats called "Ernest Money" It could be $500 and it shows good faith that your interested in the loan and the house. You should find this out