Likelihood of approval

chevysspower · Joined: 15 Jan 2010 Posts: 2

Looking for a house in the 175k-225k range. Currently myself and my wife make around 100-105k combined and credit scores are low 700's due to having a large amount of credit card debt. Approximately $30k (82% utilization) from getting married and other things that we didn't have cash for at the time. We also have one car payment of $470 a month. Other than the debt, our credit history is perfect and we have the money for a FHA down payment and closing costs for that price range of house. Just wondering if that amount of debt or utilization ratio will keep us from getting a loan.

EricJ · Joined: 09 Jan 2009 Posts: 321 Location: New Jersey

You should be in good shape based upon the numbers you shared with me. What state are you in?

David · Joined: 19 May 2004 Posts: 754 Location: Atlanta, GA

Agreed. Sounds like you are in great shape. Also note that rents are dropping fast too. If you wanted to rent a $300,000 house for $2000 or less per month, that is probably possible too. Not sure if you are only looking at it as a long term investment or not, but there are some fabulous leasing deals right now too.

tfaulhaber · Joined: 11 Dec 2009 Posts: 11 Location: NYC

You shouldn't have any issues.

JPowell · Joined: 20 Jan 2010 Posts: 103 Location: PA

Does utl not play into the matter at all? I would think that 82% being as high as it is would be a problem since you generally want to stay under 30% and some say under 10% for prime scoring.

If you have the money for closing and a DP why not decrease the debt and raise your scores with it instead?

If that's the only thing holding your scores down around 700 you might see a significant jump in score after paying down the debt which could put you in a whole new interest bracket when buying a home.

Celestew84 · Joined: 20 Jan 2010 Posts: 15

I would have to agree also that number wise it looks good but. What state do you live in just out of curiosity

chevysspower · Joined: 15 Jan 2010 Posts: 2

Thanks for the replies, as JPowell asked though, does utilization on credit cards not play that large a factor? Even though balances are very high having the income and money to put down out weighs the credit card debt?

tfaulhaber · Joined: 11 Dec 2009 Posts: 11 Location: NYC

High balances on credit cards effect your credit score. You should be ok as long as your Debt to Income ratio doesn't exceed 50%. tfaulhaber@mlcfunding.com