If you have been reading my previous posts, then you know my husband and I are first time home buyers and that we are trying ever so hard to buy our first home.  This is just an update on our last minute progress and some new information we have learned.

We managed to raise hubby’s credit score just enough to qualify for FHA.  We were told that opting out of marketing and advertising for 5 years can often times boost your credit score.  It actually worked in our case.  We also paid down some of his credit card balance.  His middle score ended up being 654.

We met with a mortgage guy at Fifth Third Mortgage to apply for our preapproval.  He confirmed just about everything that I had expected.  We were suprised to learn that we can actually afford more house then originally thought and still be around our desired monthly mortgage payment.  So we are now looking at a max of $80,000 for our mortgage.  We anticipate it still ending up somewhere closer to $70k based on the homes we have found so far.  If we borrowed the full $80k, our estimated monthly mortgage payment would be around $669.  That is with an FHA loan at 5.25%.  Keep in mind there are a lot of variables that can effect those numbers though. 

The mortgage guy said that everything looked pretty promising at this point.  The income and credit is where we needed it to be.  There is really only one thing that might sway their decision though.  My husband was incarcerated (in prison) from 1999 to 2/2008 for something stupid he did a looooong time ago.  This means that he is about 4 months shy of a 2 year work history and 2 years residing at his current address.  Mortgage guy said that shouldn’t be a problem and that we just need to provide a letter of explanation.  He sounded confident about it.  It’s hard not to think the worst though.  If they decline it because of that, then we will have to go to another lender, or wait until 2/2010 to try again.  At this point, we are just waiting for the underwriter (person who gives final approval) to process it.

We were also told that if there are local grant programs available for your situation as a first time home buyer, it’s best to use those to pay your down payment and closing costs.  That way, you will also still get your first time buyer tax credit in addition to that, but instead of applying to buy your home… you will get a big fat check to pocket when you file your taxes.  So you are getting a lot more out of the system that way.

If we do get our preapproval, then the next hurdle to get over is selling this house.  It’s been up for sale for about a month now.  We have had 5 showings and one scheduled for tomorrow.  We are running out of time and I am starting to feel desparate.  We have to sell this house and close on our new home before the tz credit expires November 30th.  That leaves us only 5 weeks to pull it off.  I do have faith that we can do it if we are able to find a buyer for this house.  Most of the homes we are interested in are already vacant and many of them are HUD or foreclosures.  So, we should be able to take posession quickly. 

There is some concern about the possible delay we might encounter trying to use the local grant programs that offer financial aid to first time home buyers.  The mortgage guy pretty much said that one of the programs is already out of the question because they take over a month to approve people.  That is depressing, but there are still other options. 

We were also told that if we purchase a HUD home, HUD reduces the 3.5% down payment requirement to only $100.  You can then request that the seller pays 3% to you for closing costs.  That money can be used for whatever you want (not necessarily closing costs).  Including repairs and appliances.  So basicly, it appears to be a better situation if we buy a HUD.

After he ran our numbers it appears that we will end up buying our home and pocketing some extra money.  With the grant programs and money provided by the seller, we literally do not have to pay for much of anything to get started.  It’s amazing how this works out.  We were also told that if we closed in November, our first payment wouldn’t be due until January.  So we would get a break on one months payment.

I am just praying that many other people are like us… scrambling at the last minute to buy and that one of them will want our house in time.  XXXX… that’s me crossing my fingers!    I keep joking that I am about to get a costume and large sign and stand on the corner saying… “BUY OUR HOUSE!”  This really is difficult though because we don’t want buyers to know we are desparate or they will try to take advantage of us.  I just wish that we could all be honest about things.  Say “Hey, we need help to get out of this house, you need a house, so let’s be fair with each other.”  If only it were that simple.

Anyway, I will keep you all posted about our progress.  Pray for us that things will work out and we will be able to buy our first home in time.  Good luck to everyone else who is experiencing the same thing.