Buying or Selling a Home/Buying vs. Renting
Hello, thanks for taking the time to answer my question.
My husband and I are currently renting. Our current lease is ending July 31. We live in Cook County, IL.
My husband has no credit history since he just got his social this month after DHS approval. I have a credit history spanning about 5 years, and I have a current score of 600. It's bad because of the outstanding balances I have on credit cards. However, I did recently complete a car payment in full after selling my car - I don't know how much of a jump, if any, that would cause since the balance went from 5k to 0.
Anyway, assuming I can't expect a radical jump, I'm curious to know what the pros and cons are for renting vs. buying in my scenario. I won't have much of a down payment, maybe 5K. In our area, anything below 60k is bank owned and would take forever. I would really like to look for a condo around 150-175k. I just don't know how much I could expect to pay monthly, how much of a rate I'd get with that credit score, and whether it's cost effective. Our gross income is about 70-80k together if not more, since I earn a commission. As of right now, the priority has been paying the debt off vs. saving. As of right now I probably have about 5k in outstanding credit card debt and a car loan for 11k. I have a deferred student loan too, 7k. I just don't know if I even have enough time to make a purchase happen if it's a good idea. Of course, association fees are variable. Your insight would be appreciated!!
It doesn't appear you would be acceptable to a lender, Elmo. First of all, you would need a 20% down payment. So that means you would need somewhere around $40,000 to cover your closing costs, too. If you were to buy via FHA (they require 3˝ percent down payment plus closing costs) you'd come close to being able to buy a $140,000 house, but your credit just might shoot you down.
I would recommend you continue to strengthen your credit standing by borrowing small amounts and pay it off the next month or two . . . religiously. That would help you put some oomph into your credit. You do this while you're renting for the next year or two and I am sure a lender AND FHA would be willing to get you a mortgage so you can buy your own home. While doing this you can continue to save for a bigger down payment, too.
You may want to consult with a lender who specializes in FHA loans and see what it would take for you to be able to buy your home. I do wish you well.