I would like to start the process of buying my first home...

[BEELZEBOB]

But as a 29 year old manchild, I dont know where to start.

My current credit score is a 698. I would like to build it to at least 720 in the next 6 months while saving up for a wedding and down payment.

My plan to build credit would be to open up an American Express card, and just use it as I do with cash and debit cards, and just pay in full every month. (Is that a sound plan?)

Once I have built up another 20 - 30 points, I was going to try and get pre approved for a $250-$300K fixed loan. Where would be the best place to start?

I am hoping I can get a good 15 or 20 year fixed mortgage.

Can I ask for the kindness of one of you "adults" to kick me in the right direction?

[newracer]

Using a CC and paying off the entire amount each month does not build your credit.

[BEELZEBOB]

This is why I ask.

What would be the most effective way to build my credit up another 20-30 points?

My family is not the most money wise... My lady and I have little experience with finances beyond living costs and basic savings.

[Scogin]

One of the biggest factors for credit score is average length of credit. If you open a new card or two it is going to shorten the average and bring down your credit score.

Another major factor is your percentage of credit utilization. What is the percent of money you owe versus your total credit limit?

Do you have any collection accounts or negatives on your credit report?

I just learned all about this as I was cleaning up my credit score.

[BushMasterBoy]

I'd buy something less than $200K. Lots of foreclosures the banks are trying to get off their books. If you are a veteran, it is easy to get a VA backed mortgage. Alot of houses require a 20% down now. I paid $130K for my house in 2006. Brand new house on a acre. Last month a house on the same block, same size and age was listed for $89K. If I lived in the metro area, I'd buy a house west in the mountains, with a little land. Do you bank with a bank or a credit union? Ask them about any foreclosures they have on their books. $150K house with 20% down is $30k.
I'd buy a house where you can easily meet the payment. Being foreclosed upon can wreck your credit. As for building credit rating, make sure any defaulted credit cards and other bills outstanding get paid off.

[al_g]

First off, a pre-approval is pretty much worthless, you need to get pre-qualified for a loan. My fiancée and I close on our new house next week so this is all fresh in my mind, though it isn't the first house for either of us.

Couple things on your credit score, first if you don't know there are three consumer reporting agencies and for a mortgage the middle score of the three will be used. So make sure to check all three. Next, you mention saving up for a wedding, if you plan to use your fiancée’s income when buying the house her credit scores also matter. In this case, the loan company uses the lower of the two middle scores. If you posted your middle score, you are already in good shape and another 20-30 points may not even get you a lower interest rate. You really need to talk to a loan officer, we are working with Mitch Friedman at Citywide, and he has been great.

I didn't see any mention of a down payment and those are a huge deal these days. I bought my first house in 2005 before the crash and as a new build only put down 1k plus about another 5k in various first time buyer credits. If you don't put down at least 20% you will have to pay PMI, which is insurance to the lender. That can add anywhere from $100 to $200 and maybe more depending on all the factors to your monthly payment. Bigger down payment also means easier approval.

The last big issue that lenders look at is your debt to income ratio. Our loan had an absolute max of 45% debt to income including the new mortage payment. In our case we have turned the house I bought into a rental and are selling her house that we live at now. With the two mortgages we had to go through some hoops in order to have the rental income counted, didn't even take 1/3 of it to drop us below the 45%. If you have car payments, this can be a big hit.

In addition, when looking for a house don't forget to find out if there is a HOA and if so how much they charge a month.

Feel free to PM me or post questions here and I can answer from my recent personal experience.

[ChunkyMonkey]

But as a 29 year old manchild, I dont know where to start.

My current credit score is a 698. I would like to build it to at least 720 in the next 6 months while saving up for a wedding and down payment.

My plan to build credit would be to open up an American Express card, and just use it as I do with cash and debit cards, and just pay in full every month. (Is that a sound plan?)

Once I have built up another 20 - 30 points, I was going to try and get pre approved for a $250-$300K fixed loan. Where would be the best place to start?

I am hoping I can get a good 15 or 20 year fixed mortgage.

Can I ask for the kindness of one of you "adults" to kick me in the right direction?

Opening another unsecured trade line will only drop your credit score.

There are 3 kind of trade line... mortgage, installment and revolving.
Mortgage typically is against an appreciating asset and will increase your credit worthiness within months
Installment may not be against an appreciating asset but at least there is collateral and on a fixed term. This also will increase your credit worthiness.
Revolving however is unsecured with adjustable rate.. .this will only hurt your credit unless it shows 2 years or longer low balance and payment history.

The rule of thumb to qualify for a home loan is...
1. 2 years of steady job (conventional), or real good reason why you only have been in the current job for 1 month and make tons of money (FHA). <-- I had a lottery winner w/ annuity payment purchasing a home couple months after the 'instant' income increase.
2. Well sourced and seasoned reserve fund, or in FHA, sourced family gift.
3. Descent credit (FHA relies on many factors, I have seen very low credit score borrower got approved due to compensating asset/job over bad credit). Min score for FHA is right around 640 mid, Conventional is 680. At this scores you will get 3.25% rate/ 3.5% APR on today's 20 or 30 year fixed. 2.75% on 15 years.

FHA is rising its PMI to 1.35 on April 1. LPMI conventional is looking better and better.

Good luck with your first home, pm me with any question. I have been doing loan for over a decade - and loving it.

[jhood001]

I'd buy something less than $200K. Lots of foreclosures the banks are trying to get off their books. If you are a veteran, it is easy to get a VA backed mortgage. Alot of houses require a 20% down now. I paid $130K for my house in 2006. Brand new house on a acre. Last month a house on the same block, same size and age was listed for $89K. If I lived in the metro area, I'd buy a house west in the mountains, with a little land. Do you bank with a bank or a credit union? Ask them about any foreclosures they have on their books. $150K house with 20% down is $30k.
I'd buy a house where you can easily meet the payment. Being foreclosed upon can wreck your credit. As for building credit rating, make sure any defaulted credit cards and other bills outstanding get paid off.

A good point here. While most people out there are taking loans that are difficult to pay for two earners, I would recommend the exact opposite and only take on a mortgage that just one of you would be fine paying for your first home. Shit happens and it happens often. You can always jump up to a better house after a few years. Take your second income and save it for a down payment on your dream home.

[BEELZEBOB]

One of the biggest factors for credit score is average length of credit. If you open a new card or two it is going to shorten the average and bring down your credit score.

Another major factor is your percentage of credit utilization. What is the percent of money you owe versus your total credit limit?

Do you have any collection accounts or negatives on your credit report?

I just learned all about this as I was cleaning up my credit score.

No collections or outstanding negatives. Just went from having absolutley no credit whatsoever 5 years ago, to now.

I think I currently owe just over 50% of my total credit limit. Just did a 50/50 cash vs finance on an engagement ring. I will have that paid off in full by June/July

I'd buy something less than $200K. Lots of foreclosures the banks are trying to get off their books. If you are a veteran, it is easy to get a VA backed mortgage. Alot of houses require a 20% down now. I paid $130K for my house in 2006. Brand new house on a acre. Last month a house on the same block, same size and age was listed for $89K. If I lived in the metro area, I'd buy a house west in the mountains, with a little land. Do you bank with a bank or a credit union? Ask them about any foreclosures they have on their books. $150K house with 20% down is $30k.
I'd buy a house where you can easily meet the payment. Being foreclosed upon can wreck your credit. As for building credit rating, make sure any defaulted credit cards and other bills outstanding get paid off.

I want that 90K house! LOL where do you live? I bank with Chase.

We found a really decent pace in Golden for $190 with a decent amount of land.

[ChunkyMonkey]

A good point here. While most people out there are taking loans that are difficult to pay for two earners, I would recommend the exact opposite and only take on a mortgage that just one of you would be fine paying for your first home. Shit happens and it happens often. You can always jump up to a better house after a few years. Take your second income and save it for a down payment on your dream home.

^ yep. And if you push it even further...if you keep buying at 20% under and assuming at right around the same price, your 5th home should be free and clear.

Furthermore, work with realtor with bank hookup!!! If you think you see the best deal in the open market, you are naive. I don't give up my pre market foreclosure list to just about anyone. In most cases, the ones are in the open market are the left over from the carnage.