Mortgage questions

[Anonymous]

We need to sell our house and move to another for proximity to our jobs. We’ve been in our current house for more than 10 years and have a perfect mortgage history with our credit union lender. Unfortunately, due to a long period of unemployment that ended 6 months ago, our credit is not good. Even though we were never late with the mortgage and have caught up on all other debts, including paying off some medical debts we incurred, our credit is not bouncing back very quickly. By selling the house we’re in, we will be able to pay 30-40% of the purchase price for a new home but will need a mortgage to cover the rest. Given our established good history with the credit union that holds our current mortgage, are we likely to be able to get the mortgage we need to buy a new house after selling ours? Secondarily, are we more likely to get the mortgage we need if we sell ours first and then apply for preapproval or can we go ahead and apply for preapproval so we can buy/sell almost simultaneously?

I think it would take a couple of years for our credit scores to creep back up to where they were, and we just can’t stay where we are that long. We each have a nightmare commute and would really like to move at the beginning of summer.

[Anonymous]

No doubt you'll be able to get "a" mortgage. But what do you mean by "the mortgage we need?"

[Anonymous]

What's your current credit score?

[Anonymous]

What is your credit score?

[Anonymous]

From what to what did your credit score go to? Do you have defaults/liens on your credit or just late payments?

[Anonymous]

Anonymous wrote:We need to sell our house and move to another for proximity to our jobs. We’ve been in our current house for more than 10 years and have a perfect mortgage history with our credit union lender. Unfortunately, due to a long period of unemployment that ended 6 months ago, our credit is not good. Even though we were never late with the mortgage and have caught up on all other debts, including paying off some medical debts we incurred, our credit is not bouncing back very quickly. By selling the house we’re in, we will be able to pay 30-40% of the purchase price for a new home but will need a mortgage to cover the rest. Given our established good history with the credit union that holds our current mortgage, are we likely to be able to get the mortgage we need to buy a new house after selling ours? Secondarily, are we more likely to get the mortgage we need if we sell ours first and then apply for preapproval or can we go ahead and apply for preapproval so we can buy/sell almost simultaneously?

I think it would take a couple of years for our credit scores to creep back up to where they were, and we just can’t stay where we are that long. We each have a nightmare commute and would really like to move at the beginning of summer.

If you have a relationship with someone in the credit union, yes, you'll have an easier time of it than just going through underwriting with some bank. HOWEVER, you will probably pay higher interest rates to compensate for risk and things may move more slowly.

Have you considered just renting for the first couple of years? It's a good idea to do that anyway when you move to a new location. You can use the rental period to reestablish credit.

[Anonymous]

OP here. By the time we pay off mortgage and all other debts, we’ll clear around $400k from the sale of our house. We’re looking at homes that range from $875k to just over $1 mil.

One of us has a 710 and the other has a 650. The 650 has the higher income.

[Anonymous]

I think it would be a good idea to rent for a bit, while your credit has time to repair. There's no shame in renting, and it'll get you better commutes now vs. later.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We need to sell our house and move to another for proximity to our jobs. We’ve been in our current house for more than 10 years and have a perfect mortgage history with our credit union lender. Unfortunately, due to a long period of unemployment that ended 6 months ago, our credit is not good. Even though we were never late with the mortgage and have caught up on all other debts, including paying off some medical debts we incurred, our credit is not bouncing back very quickly. By selling the house we’re in, we will be able to pay 30-40% of the purchase price for a new home but will need a mortgage to cover the rest. Given our established good history with the credit union that holds our current mortgage, are we likely to be able to get the mortgage we need to buy a new house after selling ours? Secondarily, are we more likely to get the mortgage we need if we sell ours first and then apply for preapproval or can we go ahead and apply for preapproval so we can buy/sell almost simultaneously?

I think it would take a couple of years for our credit scores to creep back up to where they were, and we just can’t stay where we are that long. We each have a nightmare commute and would really like to move at the beginning of summer.

If you have a relationship with someone in the credit union, yes, you'll have an easier time of it than just going through underwriting with some bank. HOWEVER, you will probably pay higher interest rates to compensate for risk and things may move more slowly.

Have you considered just renting for the first couple of years? It's a good idea to do that anyway when you move to a new location. You can use the rental period to reestablish credit.

Briefly considered renting, but we have kids, and I’m not interested in moving them more than once.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We need to sell our house and move to another for proximity to our jobs. We’ve been in our current house for more than 10 years and have a perfect mortgage history with our credit union lender. Unfortunately, due to a long period of unemployment that ended 6 months ago, our credit is not good. Even though we were never late with the mortgage and have caught up on all other debts, including paying off some medical debts we incurred, our credit is not bouncing back very quickly. By selling the house we’re in, we will be able to pay 30-40% of the purchase price for a new home but will need a mortgage to cover the rest. Given our established good history with the credit union that holds our current mortgage, are we likely to be able to get the mortgage we need to buy a new house after selling ours? Secondarily, are we more likely to get the mortgage we need if we sell ours first and then apply for preapproval or can we go ahead and apply for preapproval so we can buy/sell almost simultaneously?

I think it would take a couple of years for our credit scores to creep back up to where they were, and we just can’t stay where we are that long. We each have a nightmare commute and would really like to move at the beginning of summer.

If you have a relationship with someone in the credit union, yes, you'll have an easier time of it than just going through underwriting with some bank. HOWEVER, you will probably pay higher interest rates to compensate for risk and things may move more slowly.

Have you considered just renting for the first couple of years? It's a good idea to do that anyway when you move to a new location. You can use the rental period to reestablish credit.

Briefly considered renting, but we have kids, and I’m not interested in moving them more than once.

No liens on your report OP (even past)?

[Anonymous]

Anonymous wrote:OP here. By the time we pay off mortgage and all other debts, we’ll clear around $400k from the sale of our house. We’re looking at homes that range from $875k to just over $1 mil.

One of us has a 710 and the other has a 650. The 650 has the higher income.

I believe they use the lower score. I'm sure you can get a loan, especially with that downpayment but it's going to be rough going with the loan terms. You could call a bank now and get them to give you a quick and dirty estimate on a loan and see if it's something you would want now or if it would be better to wait. Just call one of the big banks, they have people waiting for sales calls all the time.

[Anonymous]

As long as you're above a 630 you guys should be fine, fwiw.

[Anonymous]

Anonymous wrote:From what to what did your credit score go to? Do you have defaults/liens on your credit or just late payments?

765 to 710 and 700 to 650. No liens. One of us had a student loan go into default, but it’s out of default now (as of 5 months ago) and payments are current. We also have two credit cards through same credit union. While we maxed those out during the unemployment period, we were never late with a payment and both are now at about 70% credit utilization and we’d pay them off with sale of our house.

[Anonymous]

HHI?

[Anonymous]

Anonymous wrote:

Anonymous wrote:From what to what did your credit score go to? Do you have defaults/liens on your credit or just late payments?

765 to 710 and 700 to 650. No liens. One of us had a student loan go into default, but it’s out of default now (as of 5 months ago) and payments are current. We also have two credit cards through same credit union. While we maxed those out during the unemployment period, we were never late with a payment and both are now at about 70% credit utilization and we’d pay them off with sale of our house.

Credit utilization matters in how your credit score is calculated. The credit card payment matters in how much DTI you're allowed. If you plan on paying off the credit cards with the house sale, it may not help you much with the new loan because it takes a month to hit your credit report (that it's paid off). You might be able to get a letter from the credit cards saying they're now paid off which the loan officers could use to help calculate the new DTI though. Honestly, just call one of the big banks. Tell them you don't want them to run your credit report and you're just trying to figure out if it makes sense for you to buy now or not. They should be able to give you a reasonably accurate loan estimate.