I am in the process of trying to get pre-approved, and it appears the only obstacle to overcome will be my previous 2 year income history which is very sub-par. I’m only 22 and haven’t found a career yet as I’m still learning to become certified in computer repair/networking. Like most young people, I bounced from job to job, mostly retail and it didn’t help that my family has a beach house and I was required to live there in the summer which limited my chances of having a steady job even more. I have also matured more and have learned how important jobs are now that I’m out on my own. I have a trust fund and mutual funds which total around $40k-50k, own a car I purchased for 20k a couple years ago, no student loans, virtually no debt, and a credit score around 630. Cosigning isn’t an option for me and I would really like to get a house in the near future. Does anyone have any advice for me or can anyone tell me if they think I will get pre-approved? I can give more information if needed.
Hello Nic,
In general they want 2 years of income but the main issue I see with you is the credit score. They usually want at least 680 and really around 700. I would work on that.
If you want you want to buy soon I would try a private lender that is not credit driven. They look at the whole picture. I have the contact info for the lender in my email. I will dig it out and send to you. If you have money and someone will co signs for you that is a start.
Your credit score is not an insurmountable problem. I believe FHA first time homebuyer loans are available to borrowers with a credit scores as low as 550.
Your immediate problem is lack of income. Until you have a stable job with a reasonable expectation of a steady income, you can’t offer a lender any assurance that you have the capacity to repay a loan.
I suggest you concentrate on finishing your training, then get a full time job. You don’t need to be in a hurry to buy a house, they will be around for years to come. Prices are not really going to go up that soon either. I bet you can buy the house you want one year from now for the same price you might be willing to pay today.
Also, don’t get to fixated on home ownership right now. The modern work force does not look for a career employer. The average white collar worker will have four or five different employers in their career. A job change, relocation, move to a new employer, is most likely to occur in the beginning years of your career.
The reason this is important to you is you don’t want to lose money when you buy a home. Buy today, sell in a year or two and you will lose money. Even if you sell for the same price you paid or a small profit, the closing costs and sales commissions will still cost you more than you will make. When you are at a point in your career where you expect to stay in one place for five to seven years, then you might consider buying a house.
Until then, there is no harm in being a renter. You will most likely find that your rent is much less than the cost of home ownership. lf you save the difference, you will have a healthy downpayment in hand when you are ready to purchase a home.
In my mind I’m thinking that you’re asking this particular question on this particular forum because you want to figure out how to own a home with little or no money down and below market rates, easy financing, no qualifying loans, etc.
Yes this is all possible, and within reach. You’ve come to the right place. I don’t know if you have a specific house in mind or want to live in a specific area, but if these are not really huge factors, depend on where you are you could own a house with less money than the 40k you have saved.
If however you want to go the traditional route of using your downpayment, credit and income as leverage to get you into your first home, then the suggestions above are pretty much right on point. All the best
Thank you all for your replies, I do have a particular area in mind (Phoenix) and I know what I’m looking for in a home, but as far as a particular home, no. I don’t really care about going the traditional route, I just figured that was the easiest. There are many homes in the area available in my price range (up to 120k) and I have the 20% to put down. What other avenues do I have other than traditional?
Other avenues would be Lease Option and Land Contracts(contract for deed). If you deside to pursue one of these then come back and ask some questions, they all have pros and cons. You can learn more about these on this forum. Herbster