I’m finally sharing with you all part 1 of a 4 part series on becoming homeowners and i’m so excited to share everything with you all! Home buying can definitely be stressful.. there is no doubt about it, but at the same time it can be very exciting! So, before I go about and share all the juicy details of when we found our home, went into contract, and watch it be built; I want to share with you all how we even got to the point of even being qualified to buy a home… because HONEYYY….. we were not ones that gave a shit about our credit score (LOL).
Last month, I shared 5 steps on things we did before buying a home, and I fully believe 100% in those tips that I shared! If you haven’t had the chance to read it, you can read it here. I talked about how we prepped ourselves to be in the situation to even purchase a home… because let me tell you; when we first started looking at homes we had a credit score of 540 and no savings. But, not losing hope and doing the 5 steps that we did, got us in the position to be able to qualify for a home and to finally be homeowners!
So let’s backtrack to 2017… this was the year when Bobby and I decided that becoming homeowners was now the next step in our lives that we wanted. Honestly, prior to this year (even with 2 kids) it wasn’t a priority. We were living a really comfortable life and being fortunate enough to travel a lot. It wasn’t until my sister wanted to start looking at homes, and that’s when we both felt like this was our next goal in life.
Since we both new that this was something we really wanted, we started making a priority of what needed to be done first. Of course there are a lot of emotions when it comes to buying a home…you question so much. “Can we afford a new home”? “Our credit is horrible.. we’ll never be able to get a home”. “How on earth are we going to be able to save so much money”? “I don’t know if we’ll be able to do it”! Every feeling and question will come up. So, we were in a position that we lived in a 2 story 950 square ft. townhome paying at that time $1,000 a month. Our girls were only getting bigger and older and eventually they will want/need their own space. So, we new that we needed to put those emotions and doubt aside and do it not only for them, but for us too!
It wasn’t until 2018 where we finally started to get serious about this whole ‘home buying thing’. We first hand new that our credit score was absolute shit! Again, we are talking about a 540 credit score (BAAAD). Many things were in collections, and not to mention we had no savings at that time! Yeah… we’ll just blame that on not giving a crap in our younger years (LOL)! So, we first started off with sitting down and pulling our credit scores ourselves…YIKES! I honestly don’t remember the site, but there are so many out there for you to view your score. We wrote down on paper of who and how much we owed and then decided on the ones we wanted to work on paying off first. Honestly, we worked from the least amount to the highest (LOL). When it came to the bigger debts, we called the collection agency and asked for a payment settlement (which in MOST cases are much lower than what you actually owe). Once paid they will email or mail you a settlement letter, which will then show on your credit report that your debt has been paid. This WILL NOT remove it from your report, however it does look better showing paid than in still in collections. We worked on this for I would say about 2 months, and as Bobby and I continued to work on our savings and getting our credit higher, we still continued to look at new model homes. This step I believe is very important. Why? Because it keeps your mind focused on your end goal. I kid you not, we looked at every possible new development there was to offer in Las Vegas, North Las Vegas, and Henderson. Even if we weren’t quite ready and new there was no way possible we’d qualify for a home, we still looked. This also helped us to see what type of layout we liked, what builder we liked, and the needs and wants of what we wanted in our home.
After paying a few of our collections off, we decided to see where we actually stood when it comes to qualifying for a home. What’s our next step? So, we found and worked with a realtor, who then suggested a loan agency, which then ran our credit to see what we would pre-qualify at. Keep in mind at that time we still didn’t have a great score and we still did have a few more things on our credit report that we still needed to pay off. Surprisingly though we got qualified. Can you believe that!? Apparently, all you have to have in Las Vegas, NV (not sure if this applied to any other state/city) is a credit score of 540. Of course, most loan agencies may not want to work with you because of how low your score is, but it’s still high enough to be qualified. But we don’t want a “low” credit score because we want a good interest rate, right?! Yes! So anyways, we first got qualified for a home of $240k or less. Now, it may have not been what we wanted to qualify for, but at least we were on the right track. We were then advised to work with a creditor through the loan agency that pre-qualified us (who was completely free) and honestly, it was amazing! The creditor lady that we worked with (which unfortunately we can’t remember her name) gave us so much advice on what we needed to do, and told us that within 6-8 months of doing so, not only would our score go up but we’d be able to qualify for a more higher home. Now just to be clear, we could have stopped here and tried to find a home for $240k or less, BUT we knew that it would be a older/already lived in home and the possibility of our interest rate being high was very likely. I don’t have any issues with buying a older/already lived in home, but I didn’t want to just settle for that. We both wanted more options, and if we eventually found a home for $240k or less and we both loved and in the areas that we both wanted, that would be awesome! Hopefully that all made sense (LOL). My point is… don’t just settle until you know you’re happy with it, and a home for $240k or less (from what we were seeing at that time) was not something we were both happy with. Plus we both still new that we had work to do on our credit score.
So with working with the creditor, she advised of us to pay off one of our other large debt collectors and then wait 2-3 months to see how much our credit went up. We also only had 1 line of credit opened at that time, which was our car. When purchasing a home, banks want to see at least 2-3 lines of credit opened. So she recommended that we open a credit card. We decided to start with a secure credit card from our credit union bank. If you’re not sure what a secure credit card is, it’s pretty much using your own money as your ‘credit limit’ but then paying yourself back and at the same time raising your credit score. So, we first started off with $500 of our own money, which turned into a $500 credit limit and you will do the same as a regular credit card. You will make a monthly payment and so on.After a few months, the creditor did a soft pull on our credit to see where we would stood. Our score definitely went up, which we were so happy with.
So from the time we started paying off our debt and working with a creditor to raise our credit score, it took about 8-9 months for us to finally be in a position where we were ready and able to be pre-qualified for a home higher than $240k. Again, while working on all this we were still looking at homes! We looked online at older homes and new built homes. We were open to everything. However, I personally wanted a new built because the older homes that we were looking at and somewhat liking were almost damn near the price as a new built home. For instance, there was this home that we both liked (it needed a few renovations) and it was selling at $290k. Brand new built homes are starting at $290k+ for the area we wanted. So for me it wasn’t really making sense to lean more towards an older home and having to do some renovations (which lord knows when that will even happen), when we can find a new build for around the same price or perhaps just a little more.
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