Can I Get A Mortgage Immediately After Credit Card Payoff
Here is my situation:
I am 28 years old & live in the NYC area.
I am looking to purchase a one or two bedroom condo apartment preferably in the Jersey City area.
ANYTHING within the NYC 5 boros is grossly overpriced & I am not taking a $200,000 mortgage for a 600 square foot closet with no parking available.
I can get a 1000 square foot condo in Jersey city for around $280,000 where values are rapidly rising..
My situation: ALOT of credit card debt (about $20,000-$25,000) plus student loan debt.
I currently make $58,000 + expect close to 10% year end bonus.
Everything is current except for a chargeoff in 2000 & a phone bill that went into collection at the same time.
My FICO score is around 610-630.
My plan is to liquidate 3 mutual fund account which will total about $25,000, which will be enough to pay off practically all the credit card debt.
I have heard of 'rapid rescoring models'. I could probably get my FICO score up to about 700, but I can't wait a year when I will be priced out of anything within 100 miles of the city.
After doing this, I will still have student loan payment of $280.
I will have enough cash after all this to put down about 15%-20% (depending on closing costs) assuming the purchase price is less than $280,000..
So, can I qualify for a mortgage on a $280,000 condo given the above??
You should be able to do that. But you may have to pay the collections.
You can definitely do it. I was in a similar situation when I bought my first house. Pay off the collections and your debt right now if you can. It will looks much more favorably for you if you can say you *had* outstanding collections rather than *have*.
You'll be asked to provide an explanation letter as to why you got into collections. Just provide a reasonable explanation (temporary family hardship, etc...) and you'll be fine.
NickL,
I read some of your posts and i am hoping to share with you some of my experiences. i am 27 y/o who lives in brooklyn. I know how hard it is to find a good deal in NYC.
at 24, i looked in journal square, jc. got a contract on a 1 bdrm condo for 85k. was gonna close on it but found a better deal in brooklyn, so i took it, and assigned the contract to my brother. the journal square condo rented for $975 a month and had positive cash flow. after i moved into the brooklyn apt as my primary residence, i was restless and started to look for other deals. i was small time and did not have much cash, but found a studio condo in bed-stuy way underpriced and flipped it in 3 months. took that money and got a place in Jersey city heights rehab. it was hard work and i am now trying to sell it. my goal was to build enough cash to buy a multi in brooklyn. hopefully, i will have enough after the sale.
my suggestion is to look in Journal Square for condos. that area is a good transportation hub and close to manhattan. it's also under revitalization so that's good. you can get positive cash flow from there. i am itching to get some 2br condos for around 160k.. but i am strapped right now.
if you are set on multi's then i would suggest looking for small rehab and flip your way up..
good luck to you.
Quote:
On 2004-08-09 23:08, NickL wrote:
Here is my situation:
I am 28 years old & live in the NYC area.
I am looking to purchase a one or two bedroom condo apartment preferably in the Jersey City area.
ANYTHING within the NYC 5 boros is grossly overpriced & I am not taking a $200,000 mortgage for a 600 square foot closet with no parking available.
I can get a 1000 square foot condo in Jersey city for around $280,000 where values are rapidly rising..
My situation: ALOT of credit card debt (about $20,000-$25,000) plus student loan debt.
I currently make $58,000 + expect close to 10% year end bonus.
Everything is current except for a chargeoff in 2000 & a phone bill that went into collection at the same time.
My FICO score is around 610-630.
My plan is to liquidate 3 mutual fund account which will total about $25,000, which will be enough to pay off practically all the credit card debt.
I have heard of 'rapid rescoring models'. I could probably get my FICO score up to about 700, but I can't wait a year when I will be priced out of anything within 100 miles of the city.
After doing this, I will still have student loan payment of $280.
I will have enough cash after all this to put down about 15%-20% (depending on closing costs) assuming the purchase price is less than $280,000..
So, can I qualify for a mortgage on a $280,000 condo given the above??
Before you use rapid recalculation, you should consider using simulation for what will happen to your credit score. Rapid recalculaiton is not cheap. Credit agency that we use charge about $350, but they offer simulation to what might happen for only $5.
After paying off balances dispute them online.. Mine where updated within a week. Although they say it could take 30 days. And my score went up between 80 and 100 points on all of them!
Good Luck[ Edited by getgoing on Date 11/17/2004 ]
You should have min. of 3months reserves. 6months reserves would be optimal. Im a direct lender. and that is what we look for. frown at scores below 620 which is cut off for Fannie Mae Products. You should be able to go stated with a 80/20 Program or Straigt IO Product.
Don't pay the collection agency. Hit them with Debt Validation first. It is a very successful strategy to getting collections removed from your credit reports.
Also, by paying down your credit card debt, your scores should jump dramatically. Anytime you are maxed out on a card it is a very negative factor. It typically will take a month or two for it to start reporting the new balances to the bureaus. You will be alright. Best of luck.