Well the long wait is over. We found out yesterday afternoon that our loan request with the USDA has been turned down.
It was a big disappointment to learn that we would not be able to move forward with our plans to buy our first home. We'll be able to try again next spring, but that means spending another winter in this cramped little house.
And it all comes down to a discrepancy on Keith's credit--a company we'd never heard of or ever did business with suddenly popped up on his credit report in the middle of the loan process and brought his credit score down 50 points. That, and we don't have much credit history since we have no credit cards.
Waiting until the spring to try again for our home-loan gives us time to establish more credit history, deal with that problem with Keith's credit, work on establishing credit for me (as I apparently have no credit), and I can take the first-time home buyer's class so that Keith and I can pool the funding from that to give us $6000 toward closing costs. So those are all things to work on.
Some other benefits of not moving just yet are:
- We will be near our families for the holidays.
- We won't have to stress about coming up with fees for home-buying at holiday time.
- I don't have to start packing...yet.
- I can continue on at Somerset Beekeeper's as President.
- I don't have to move my beehives during the winter.
There are a few more positive reasons not to get down and out, but basically these are the big ones.
This may be a set back, but we're not giving up. When we suddenly decided last February that we weren't going to wait for the inheritance of the family farm, but instead forge our own way and buy our own home, we really just plunged in without any planning or foresight. After a year of learning curves and trial and error, we understand the process a lot better, and we know now what we need to do in order to make our dream of home-ownership a reality.
Here are some of the things we've learned about credit and the road to home-ownership:
Pay your monthly bills on-time.
When you go to apply for a home-loan they will check your bills and utilities for the last twelve months' payment history . A lack of payment history, or poor payment history is a big strike against you. If you can't pay the whole balance, break it up and pay part of it with each paycheck, that way you're at least paying something, and it won't look like a bunch of glaring red ink on your reports. Also, paying a little at a time keeps the balance from doubling due to missed payments, which can be even more difficult to pay.
The fact of the matter is credit cards are the best way to build revolving credit. With revolving credit the bank allows you to continuously borrow money up to a certain limit. When you buy something using your credit card, the amount is subtracted from your total credit limit, when you pay off your balance the available credit goes back up. But you have to be careful of interest rates--if you miss a payment, or don't pay the balance in full, the fees pile up fast and this will be bad for your credit. Also, credit cards are more valuable than department store cards--but you gotta start somewhere, right?
Long-term financial planning is a key part of family-planning.
Granted our long-term plans changed, but if we had been planning our finances better in the first place, buying a home would have gone smoother for us now. Budgeting your money, and saving for a rainy day are important concepts to remember. As is keeping track of what you have coming and going, whether you choose to use a notebook, binder, or computer--what matters is that you can see the numbers at work. Plan out your finances six months in advance so you have an idea of where you're going, and try to stick to it as best you can. Sure, there may be unexpected expenses--automotive repairs for example--but you'll be better equipped to deal with those sorts of events if you're budgeting and saving.
Discuss your goals, then write them down and work toward achieving them.
Communication between partners isn't always easy, but discussing your dreams, your goals and aspirations with each other can help you to figure out where you want to be in the future. Decide what path will work to meet the needs of each person, or member of your family, and remember that sometimes compromise may be necessary to ensure each person's happiness. Write down your goals, and brainstorm together as a couple or as a family, about how you can attain those goals. Save this plan in your budget book or your household notebook, or post it on a wall where everyone can see it and remember what you're all working toward.
Do you have any suggestions or tips to add?