Buying a House! - Lubbock,TX

Call CJ Winchester with Service First Mortgage. She counsels people on mortgages as well as helping with financing and I HIGHLY recommend her!

http://www.cjwinchester.com/loanofficers.asp

D. Alford

There are loans out there that are special for first time buyers. Look into FHA loans. My husband is a builder and I know that they loaned money to a couple of first time home buyers.

Because I have attempted to be a first time home buyer more than once (maybe one day), I recommend, having about 3 months of mortgage pmts sitting in the bank, a low debt:income ratio, and get preapproved before you step foot into a house. I am not aware of how owner finance works, but that is something you should look into because of the lack of credit. Good luck to you.

Do yourself a huge favor and look into Dave Ramsay's financila advice on everything--including home ownership.
Credit is largely an American myth and it's a GOOD thing that you don't have debt!
As long as you have paid rent on time or early for a period of time and have utilities in your name, and a job you can get a mortgage.
That said, a few things to keep in mind:
•Just because a bank says you can afford X amt per month as a mortgage--beware! You know what you can afford.
When I was single and bought my first house, my mortgage was half of what I was approved for and often thought that I would be eating Alpo had my mortgage been double what it was.
Also, consider socking away money until you are married. I wouldn't advise buying the largest item of your life until that knot is tied! Good luck!

I'm not sure where to start.

As far as establishing credit... what type of loan did you apply for (car, personal) and what type of credit cards are you applying for (stores, visa)? Where are your currently living? Do you have utilities, cell phones, etc in your name? There are a lot more factors that determine your credit score other than actually having credit, like how long you've lived at your current residence and how long you've worked with your current employer. I suggest you get your credit report, go to www.annualcreditreport.com. There is no charge for the report, however, there is a charge for the "score". Just get the report. Review it for accuracy and report any discrepancies.

As far as establishing credit, department stores with their own cards such as Target and Kohl's are the ones most likely to approve you. You can also get a secured credit card. Another way is to have your parent open a joint account with you. Keep in mind the more cards you apply for the more your credit score goes down. I've found some great articles on www.msn.com in the money section.

The first step in buying a home is getting pre-appoved for a mortgage. Unless you have a long term relationship with a bank, your best source would probably be a mortgage broker. Before you meet with a broker, do some homework. Sit down and make up a budget and determine how much you think you can afford to pay per month for a house. Include in your budget, food, transportation (car payments, car insurance, gas, public transportation), clothing, gas/electric (a house will be more than an apartment), water/sewer, garbage, phone, internet service, medical expenses, life insurance, property insurance and repairs/maint. There's also PMI (private mortgage insurance) which you'll need to pay unless you put down a 20% down payment (I don't know the current rates). After meeting with the mortgage broker, you'll have an idea of what price range house you should be looking for. Also, keep in mind you'll need a minimum of $5,000 for closing costs (appraisal, house inspection, attorney fees, title search, etc.)

I highly recommend staying away from owner financing. Unless you have knowledge and experience you could wind up in some serious trouble.

Then you'll want to find a real estate agent. When you get to this point, let us mamas know and we can give you more insight.

Good luck.

Updated: I read your update. A few more things...
I think it's great your thinking of your future and want a better life. Since you're lucky to be in a situation where you aren't paying rent, start paying rent to yourself. If you start putting away $750 a month (yes, your mortgage payment will be more) into a savings account. Do this for a minimum of 6 months. Why? You'll prove to yourself that you can afford a mortgage. You'll prove to a lender your capable of saving. You'll establish a relationship with a bank. You'll have enough saved for closing cost and a down payment.

I see 2 big red flags. First, that you have a child, and are not married to the father. This indicates to others that you are not committed to each other. You should get married before buying a house togehter.

Second, why haven't you seen his credit report? Yes, if you applied for credit, you probably were denied credit because you have no income. You should have been given the reason as to why you were denied. However, did you apply with him as a co-signer? Did he apply with you as a co-signer? Why was he denied?

I'm surprised you can't find SOME company to give you a credit card. You have to start using the credit cards, and then pay them off in a timely manner. It will take a while to establish credit.

I agree with everything Denise P. said. And you seem to be in a bit of a rush, so make sure you can really afford a home, though it sounds like lenders are finally being more careful. There are taxes and insurance on a home, so it will cost more than just the mortgage. (Not to mention repairs, etc.)

I don't think you'll like my answer, but you may find that it's sound advice.

Just from the tone and topic of your question, you sound young, maybe under 25.....here's my advice...don't buy a house with someone until you're married....AND make sure you can afford not just the house payment, but the insurance, the utilities, the upkeep, unexpected repairs. A home is a huge responsibility and it's a many-years-long committment.

Why not try leasing a home or condo first, give yourselves time to establish good credit history, get married....THEN move on to a house purchase.

Sorry if I'm Debbie-downer, but you're asking about a GIANT responsibility.

I don't know if this will work for you. But my sister was having a hard time getting approved for credit. She stayed away from credit cards for so long that at 30 no one would approve her for one. So we added her to one of our credit accounts. They sent us a card, but we shred it. We didn't give her access to our account in any way. we even had a note added to the account that she could not make any changes or have any input into our account, simply added her name to help establish credit. ( I trust my sister 100 percent, but I wanted to protect us both from anything causing a strain on our relationship). After four months or so, the bank finally approved her and we had her removed from our account.

Instead of credit cards have you tried store cards, like JC Penny, Target or Walmart? The way I established my credit was by getting school loans.
I would never go for owner financed. Always, always, always get the inspections done on the house, know now that "short sales" are no where near short in time (usually), look into the FHA houses (first time home buyers), also check with cities in your area that may offer money grants for buying a house in that city, and be prepared for some of your offers to get rejected, and for the possibilities of deals to fall through even if you have started escrow.
I suggest going through a realtor. We had a tight budget, but a great realtor, and it still took us a year with active looking (as in every day, and we also put down multiple offers), but we also live in southern california, and couldn't completely gut the house and repair it...so it made our situation difficult. Start educating yourself, its the best way to go into it! Good Luck with your house!

Hi, My name is N. Langston and I'm a Realtor with Keller Williams. Please DO NOT go the owner finance direction. I just spoke to a lender I work with. Their suggestion, go to your bank and get a secured credit card.
This means you would put $500.00 or so into your credit card account. Then use the card. When the balance gets low make another deposit to your card. It will take 6 months to a year but you will have established credit and will be able to buy a house. Owner Finance is always in favor of the owner and is typically not good for the buyer. Be patient and you will have your own home. Please feel free to give me a call or direct email. N. Langston, ###-###-####. ____@____.com Feel free to pass my name to others who would like to sell or buy. Hope to talk with you soon.
N.

STAY AWAY FROM CREDIT CARDS!!! Please, take it from someone who has been there. Check out daveramsey.com and what he has to say about getting a mortgage without an "I LOVE DEBT" (FICO) score. If you really think about it logically, why would you want to go into debt before you take on a mortgage? Why would the mortgage company want you to? There are companies out there that will run a manual check on you and skip the credit score all together (Churchill Mortgage is one of them). Really, please check out Dave Ramsey's website before you do anything and save yourselves years of hassle trying to get out of debt!!!

looks like people have already responded about credit cards so I won't repeat that.
Do you know what your credit score is? You are allowed a free credit report per year from one of the 3 national credit companies: Experian is one.
Do either of you have any big purchases in your name. A car loan? Making pymts on time on that is a good way to build credit.

But do not go with an owner financed loan -- they can charge you whatever interest rate they want -- i wouldn't trust that. FHA loan for first time homebuyers is best. Go to a reputable mortgage company to get pre-qualified status and go to different ones (call/fill out apps online) -- PNC Mortgage, Prime Lending, your bank prob offers mortgage loans... ask them all what they would offer you for your interest rate. Rates are really low right now (record low!) but it depends on how good your credit score is on how low your interest rate will be.
Some cities are offering grants to first time homebuyers. (fyi: grant is free $, not a loan that you have to pay back!)

Once you have prequal status, you can start working with a real estate agent to look at target home in your price range that you qualified for.

You can get a "credit" card in which you pay ahead of time. It's called a secure credit card. I've seen them advertised. You can put as much money on the card as you want. Make purchases up to the amount you've already paid. Do this for several months and the card gives you an excellent rating. My daughter had one thru the credit union. She was able to get a regular credit card in just a few months. This is the way she started out to get a credit rating. Check with your bank or credit union..

And there is an organization here that helps first time home buyers. I don't remember it's name but you might find such an organization by looking in the yellow pages under housing. Also googly housing, first time home buyers, getting credit, anything that sounds similar to what you want to know.

Newspapers have articles about this subject too. Look up articles on their web sites.

There are also books available on the subject. You can check them out at your local library.

Hi Alyssa,

I am a Realtor in the DFW Area, and saw your post. The worst thing you do is start applying for anything and everything credit related.

A lender may be able to build your credit using alternative sources such as insurance, utilities, etc. Your first step is going to be finding a lender to work with and get pre-approved. Owner finance deals are out there, but normally require more money down. Also, I highly suggest having a Realtor that is familiar with owner financed deals to help you. You can soooo easily get taken advantage of if you aren't familiar with the process. Remember too, that a Realtor's commission is paid for by the seller, so it only makes sense to make sure your interests are first priority - NOT the seller!

My husband is a loan officer with Nationstar bank. They lend all over the US, so he would be more than happy to discuss with you your options and point you in the right direction. If you would like to contact him, his name is Matt B. and he can be reached at ###-###-####.

The best thing you can do is to educate yourself on the process from credit to purchase. BUT, be careful who you get your advice from. Everyone has an opinion, but the real estate industry has changed soooo much in the past year alone. So do your homework. Here is a link to a credit repair company that I use. You may not need credit repair, but you can learn a lot about credit and how it works. https://ncf.infusionsoft.com/go/ncfcu/lbates

Best of luck to you!

Alyssa,
Try going to your bank and seeing if they have a 'secured credit card'. This is a credit card, that is basically like a savings account. You deposit a set amounts of funds, and use the card as a credit card, and make payments on it. (My suggestion would be to make more than the minimum payment, but do NOT pay if off. This is how you build your credit. Give yourself a couple of months of payments before you pay it off...and keep using it like that for a little while and thish ould help build your credit). You could also go get a cell phone and sign a contract. This will also help to build your credit. When looking for a house, make sure that you and your fiance sit down and list out all of your monthly bills. Subtract your monthly bills from your out going income and look at how many funds are left. This will help you figure out how much of a monthly payment you can work with. (You have to be careful because there are times where lenders will offer you WAY more credit then you could actually afford, so you have to keep a level head and make sure what ever the amount you and your fiance agree on for a house payment is ok) Since you have not established credit, you may want to rent a home or apartment for a year so that you are able to establish that stable payment history.

If you have 20% cash down, you should have less problems with not having credit. I wouldn't apply for credit cards. I'm assuming your credit is not "bad" in the since that you have credit card debt. You may have been denied b/c of your financial situation (not maing enough money maybe?) I would talk to a good mortgage broker - We use Brad Scott with Lending Edge Mortgage and he's a great guy. Ask what you can do in order to be approved, but I'm telling you, if you've got the 20% cash to put down on your house, you should not have a problem being approved. If you are looking for 100% financing, it will be harder.

Apply for a secured credit card. You can usually get this from your bank. Where you open an account with $500 and they give you a credit card with a limit of $500.

Jobs - you will need to show a steady income of being employed consistantly for at least 2 years.

Store cards: Kohls, Target, etc. are usually not too strict about who can apply. Charge a little, pay it off.

You will probably need to have an open line of credit for at least 6m before a bank will give you a mortgage.

I'm surprised you aren't getting any credit type offers, seems strange. Could you get a credit card from Target or something? They seem to offer to anyone! Credit unions are also good places to start for mortgages.

As for finding a house and what type of financing to use just my opinion: we are selling our house and I can tell you right now I would never offer any buyer owner financing. That is an incredible risk for a homeowner. I think it will be hard to come by to be honest.

Good luck, I hope things work out for you!

Start small with credit. Department stores will approve you for $250 and once you start paying on that one responsibly you will be able to get additional credit... Both lender financing and owner finance have their advantages. Lenders look at many other things beside traditional credit. Do you have utilities or a cellphone account in your name? A bank account? How long have you had your current job? Do you have savings? Do you have money to put down and to pay closing costs? There's many information available online to help first time homebuyers as well as seminars... hope this is helpful! L. Mida

Without credit you can save as much of your OWN money as possible for a good downpayment. This eliminates the need for a loan. Usually utility bills and rent payment helps to show good credit in paying bills on time, etc. Try using those. IMHO, getting "credit" is just the "systems" way of proving you can pay off a loan or your bills on time. So find something that does that and build the "trust" these creditors are looking for. Until then, just save as much of your own money as you can for the house.

Once your credit is approved and your in the process of obtaining your home loan, I recommend using this home loan planning calculator http://on.fb.me/fZiUzg. This bank's Facebook page has some really helpful information on it!

I will tell you lkike somebody told me when i was looking also... buy a lamp.
go to the mall, and get a card somewhere or at rooms to go, or anywhere, and buy something... like a lamp. and start there. And get a cell phone with sprint or verizon, somewhere that reports to credit. I was denied alot before i was finally aproved for my house. I was 19 when I purchased. and i went through hell and hot water, it took me 6 months to close, but I did, so stick in there. And I know a good realator, she works at ebby. I can give her your info, she helped us out alot, when we were first starting, she hooked us up with the lender who approved us, you can inbox me if you want her info.. Good luck..

Have you tried going to your bank and asking them for a small loan? Explain to them that you're trying to build good credit and want the loan to do just that. Borrow what they will agree to and pay back the loan and interest before it is due.

ck into the USDA direct loan. Their website is USDA.gov

Have you explored the implications of having a parent co-sign the loan for you?
I agree with so many who have alreday cautioned against credit cards to build credit.
My brother, who is a realtor, also has told tales of woe when a person is pre-qualified puts in an offer and then starts opening up new lines of credit to furnish, decorate, renovate, etc. before the closing and the family ends up getting the financing revoked (for lack of a technical term I wouldn't know). SO when you are fortunate enough to get your home, continue to proceed with caution as it relates to your credit and open lines, etc.
Good luck!

Kohl gave a credit card when no one else would.

Hi Alyssa!

Congratulations on living without credit! It may not seem like it right now, but what you are doing is excellent and best for you and your financial health. Unfortunately, you are experiencing the negative effects of a very broken system right now. Know that the problem is NOT with you!

First thing to say, please for your own sake, do not every do owner financing. Always go through a reputable lender to protect yourself from fraud, scams and being taken advantage of.

Now, as for finding a reputable lender. What is not advertised is that there are traditional mortgage lenders that lend based on much more thoughtfulness than a credit score. They evaluate your income to debt ratio as well as some other factors, and you can get a mortgage loan without having a credit card.

An earlier poster recommended listening to Dave Ramsey and his financial advice. I wholeheartedly agree as he will teach you what is best for you and your financial health. He is an honest man and gives honest advice. I know the traditional mortgage lender he endorses is called Churchill Mortgage. That is a good place to start. That might be a good fit or it may lead you to some other lender options as well.

I hope this helps you tremendously!

God's Grace to you,

Lisa :)