Purchasing a home in 6 months: Have NO credit

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
LittleMaggieMae
Posts: 514
Joined: Mon Aug 12, 2019 9:06 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by LittleMaggieMae »

Gardener wrote: Mon Jan 04, 2021 5:17 pm
I think I am going to just sign up for two NFCU credit cards and call it a day. Use the one at 50% utilization and keep paying it off. The other one, I'll just keep open and not do anything with it.
I find this advice from the bank to be a bit distressing for some reason. that 50% utilization... If each card has a 3K limit - why should you have to charge $1500 a month? Or is NFCU going to give you two cards each with a 1K or less limit? (my cards have limits over 10k. Having to intentionally run up a card to 50% utilization makes me feel faint...) I would keep your total utilization below 10% - so if you have a 5K limit you want to have a balance $500 or less. Charge gas for your car. Or groceries.

If NFCU is going to charge you to have the CC (secured cards with fees to use or with a yearly fee) I would look elsewhere for a card. If you are going to start charging gas for your car and groceries (I assume budget for these things and have the discipline to not over spend so therefore would be good expenses to use with a credit card) you might as well get some rewards. If you will charging $1000 a month - that's $10 in rewards with a 1% cash back card. BoA has a card that offers 2% on groceries and a 3% category you can choose - I choose gas and BoA is my grocery/gas card. If you are going to have to do something you don't want to do (have a credit card) then you should not have to pay for it - the bank should pay you.
Carol88888
Posts: 377
Joined: Wed Jan 24, 2018 2:24 am

Re: Purchasing a home in 6 months: Have NO credit

Post by Carol88888 »

Dave Ramsey is always taking about being able to buy a house without a credit card. Could you contact the mortgage lender he touts? I believe it is Zander mortgage.

If you can prove you made payment on a previous house consistently that might satisfy them you a good risk.
Topic Author
Gardener
Posts: 448
Joined: Sun Nov 18, 2012 3:03 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

Thanks everyone.

Agreed that it would be ideal to have someone manually underwrite my loan. Everything else is strong with my finances.

The only wrinkle is that the home builder is offering an incentive of paying $15k in closing costs if I go with their financing (Lennar). I'm not certain, but I do not believe they are likely to do manual underwriting.
retiredjg
Posts: 42754
Joined: Thu Jan 10, 2008 12:56 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by retiredjg »

That's an interesting wrinkle. However, if you can get a lower rate from somewhere else, that $15k is easily offset by lower interest over the life of the mortgage. Are you short enough on cash that the lower closing is important to you?

For that reason, I'd pursue both avenues at the same time and see where the lower interest rate is found.
Topic Author
Gardener
Posts: 448
Joined: Sun Nov 18, 2012 3:03 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

retiredjg wrote: Wed Jan 13, 2021 8:10 am That's an interesting wrinkle. However, if you can get a lower rate from somewhere else, that $15k is easily offset by lower interest over the life of the mortgage. Are you short enough on cash that the lower closing is important to you?

For that reason, I'd pursue both avenues at the same time and see where the lower interest rate is found.
You might be right. No, not really cash trapped.

I plan to put down about $175k on a $535k townhome if that information helps at all.

I would get a 30 year loan, but probably try to pay off in 15 -20 years.
retiredjg
Posts: 42754
Joined: Thu Jan 10, 2008 12:56 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by retiredjg »

I'm always suspicious of free stuff. Giving you $15k in closing costs has some benefit for them or they would not do it. I would definitely be doing some comparison shopping.
kaudrey
Posts: 1061
Joined: Fri Nov 22, 2013 2:40 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by kaudrey »

Just keep the one card, IMO. Use it, pay it off after you get the statement, and go from there.
exodusNH
Posts: 82
Joined: Wed Jan 06, 2021 8:21 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by exodusNH »

Gardener wrote: Tue Jan 12, 2021 7:48 pm Did one credit card through NFCU for $7,900 credit limit.

When I went to sign up for another credit card, I got denied.
With the denial, you're entitled to get the full copy of your credit report that they used. You should get a letter about it and how to request it. This may be different from what you're seeing through the free sites.
Gardener wrote: Tue Jan 12, 2021 7:48 pm Should I do this or sign up for another company credit card with another company?
Citi, Chase, and Bank of America all offer a service to show you a credit score. Maybe one of those
Gardener wrote: Tue Jan 12, 2021 7:48 pm Would credit cards help credit scores or does it not really matter?
The process is opaque on purpose. All the information that's out there is based on people's guesses and anecdotal information. You can find correlation in anything if you look hard enough.

Nearly all credit cards have a "grace period" where the interest doesn't accrue. It's usually 25-31 days. When people say "pay it off monthly", this is what they're talking about. If your billing period ends, e.g. on Jan 16, you'll have until the middle of Feb to pay whatever the balance was before Jan 17.
Topic Author
Gardener
Posts: 448
Joined: Sun Nov 18, 2012 3:03 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

retiredjg wrote: Wed Jan 13, 2021 11:39 am I'm always suspicious of free stuff. Giving you $15k in closing costs has some benefit for them or they would not do it. I would definitely be doing some comparison shopping.
You know what. I feel the same way. I pressed the Lennar representative only one time about the $15k closing assistance. I should have asked him how does that $15k exactly come off in the closing costs.

I think I should apply for two loans and hopefully get some competition from each when it comes to closing.
exodusNH
Posts: 82
Joined: Wed Jan 06, 2021 8:21 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by exodusNH »

Gardener wrote: Wed Jan 13, 2021 6:31 pm You know what. I feel the same way. I pressed the Lennar representative only one time about the $15k closing assistance. I should have asked him how does that $15k exactly come off in the closing costs.
That's a lot of money in closing costs. You definitely want a break down there. If the closing costs are only $3K, it sounds like the "up to $15K" is just a marketing scam.
Topic Author
Gardener
Posts: 448
Joined: Sun Nov 18, 2012 3:03 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

exodusNH wrote: Wed Jan 13, 2021 6:36 pm
Gardener wrote: Wed Jan 13, 2021 6:31 pm You know what. I feel the same way. I pressed the Lennar representative only one time about the $15k closing assistance. I should have asked him how does that $15k exactly come off in the closing costs.
That's a lot of money in closing costs. You definitely want a break down there. If the closing costs are only $3K, it sounds like the "up to $15K" is just a marketing scam.
Yeah it is a lot. I'll need to politely press them more on how that works.

I just did some very rough research. It looks like in Maryland where I live, closing costs average 3.5%.

The home that I am planning on purchasing is $535k. So closing costs would be $18,725. If they legitimately took care of $15k of that, that would be significant savings.
Last edited by Gardener on Wed Jan 13, 2021 8:26 pm, edited 1 time in total.
exodusNH
Posts: 82
Joined: Wed Jan 06, 2021 8:21 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by exodusNH »

Gardener wrote: Wed Jan 13, 2021 6:47 pm Yeah it is a lot. I'll need to politely press them more on how that works.

I just did some very rough research. It looks like in Maryland where I live, closing costs average 3.5%.

The home that I am planning on purchasing is $535k. So closing costs would be $18,725. If they legitimately took care of $15k of that, that would be significant savings.
That's a lot of money. It might include "tax stamps" or the equivalent -- if so, that is probably the bulk of it. Yeah, that looks like a big part of it, depending on exactly where it is.

https://www.federaltitle.com/closing-co ... -maryland/
Post Reply