Loan approval with shakey credit

[patty]

I am seriously looking into purchasing a new MH in the very near future. I have some credit problems, however. A sales person at the MH sales center already looked at my credit report....I have several old accounts that were in collections from years ago, but all paid now. I have an old judgement from years ago that is paid. The main problem is that I have an old department store credit account from many years ago that is still unpaid....and it is over $1,200. I made the mistake of making a payment on it a few months ago when they called me, so I guess it is now showing as recent activity. It probably would have reached it's 7 year mark on my credit rating very soon if I hadn't done that!!
Anyway, I have a good job, and have been employed with a very reputable company for 7 years. I have been in the same residence, renting, for about 6 years. My income is adequate. As far as recent credit activity, I got a car loan 6 months ago and have not had any late payments. I have a credit card with no late payments...have had it for about 9 months. Other than those two things,I am debt free.
I want this MH so badly....I will be crushed it I get turned down. The sales person seemed guardedly optomistic that I may qualify for a loan....she said I would have to pay off that old sears account first though. I don't have $1,200....she mentioned that the lender might possibly allow me to pay it as part of the loan. I also have up to $10,000 to put as a down payment if neccessary. I am going to take it from my 401k. But I hope I don't have to pay that much. I am looking to buy from Clayton Homes.
My old bad credit problems stem from a divorce 7 years ago...my credit is definitely on the way up now, but I just don't want to have to wait any longer for a new home! My credit problems have been haunting me long enough. Do lenders take into consideration your job tenure, and residence tenure, as well as downpayment amount and how much debt load you currently have.....despite blemishes on your credit?

[Roy Bonney]

All these factors are taken into consideration. It sounds like the salesperson is giving you the accurate facts, and will be helpful in resolving the situation.

[Bill Fry]

As far as your credit goes take the 1200 from your down and pay it off,it will be cheaper then sticking it in your loan.It sound like it was a R9 ,you reactivated it for another 7 years when you paid something on it.Should have let it go if it had gone 5 to 6 years unpaid.A R9 is a R9,paid or unpaid.Its like a wart on your credit report.

[rmurray]

You might want to check with other dealers...or mortgage companies direct...You should qualify for a mortgage at very good rates...with far less than 10K down...

FHA..if not conventional finance is available to you....Most conventional lenders will ignor collections under $1500....

FHA will only require the Sears bill be paid...but it can come at closing...so it can come from the home...To avoid a 10% withdrawal penalty from the 401K make sure the amount is in the sales price...

Sears will often negotiate the amount you owe on older charge offs...Just had a customer clear one for 1/2 of the amount...call them...

Many lenders would rather you leave as much as you can in the 401K...They know in emergencies you can get the money to pay house payments..

[jane]

My understanding of the penalty on early withdrawl from a 401K is that if you are using the money for purchase of your FIRST home, you may not have to pay the penalty.But if you take money from your 401K remember to prepay income tax on the amount taken so you are not suprised when you file your income taxes. Basically, if you are taking $10,000 out of your 401K and this is not your first home, you will owe a 10% penalty for early withdrawl, plus whatever taxes will be required at years end (most people are in the 27% tax bracket). So, you would want to hold back a minimum of $3700 for penalty and taxes, which leaves you with only $6,300 for down payment and paying off credit debt.

If you are buying a home you plan to stay in for a long time, and placing it on land you own so it will increase in value with the land, you will eventually be able to recoup this lost $3700. But if you plan on living in a land-lease park, you will want to carefully consider what other options you have for a downpayment.

Good luck. Hope you are in your new home soon.....jane

[patty]

Thank you all for your helpful advice...
This will be my first home. I am buying two acres along with it. I live in a county that has rapidly rising propery values, so this will be a good investment. I am very excited, can't wait! I am buying Randy's book as soon as possible so that I can make an educated decision on my first home purchase. Thanks!

[JOANN WATSON]

WHERE ARE THESE OTHER MORTAGAGE CO'S THAT DEAL WITH MOBILES?
ESP SINGLE WIDES W LAND? LET ME KNOW>ASAP?

[JOANN WATSON]

WHAT IS RANDY'S BOOK?

[Beth DuMond]

We had a simular problem with credit, contact CountryWide. They were a lifesaver for us.

[Greg Young]

If you've got $10,000 for a down payment, why not pay the department store for the goods that you accepted from them?