I know there is a component of "won't know till you apply" to both these questions but hoping to get some insight from folks who have seen a lot of mortgage applications. Looking to purchase either a house hack MFR or live-in rehab SFR around spring 2018 as my first investment. I work in maple syrup production so will be in a much better cash position after an early spring of seven day work weeks.. on to the questions
My credit union offers these "credit builder loans" where they hold a small amount of money either $500 or $1000 in a protected account and don't release any of it till you have paid the full balance off. My situation is a little unique in that I already have 750+ credit so I would only be using this to expand the amount of history I have. My entire credit history consists of one card I've held for nine years and a second I just opened earlier this month to increase my open lines and decrease my overall utilization percentage hopefully kicking that score closer to 800 once a few payments are reported. The only car I've ever purchased was from my parents so of course those timely payments were not reported. It's been suggested in the past that I will have a hard time getting approved with only credit cards on my history, but given that my score is already so high will having installment credit on such a small loan really make a difference in my application? Will a lender see this for what it is, basically a pretend loan with major guardrails in place? I don't want to pay one cent of interest on such a product if it won't really help my situation.
My second question is probably tougher to answer until it's time to apply but I'm curious how holding high reserves relative to the purchase price may overcome spotty employment history. Long story short I've spent a significant chunk of the last several years on long distance hiking trips getting mid 20's wanderlust out of my system, and that has created a paper trail that does not reflect my current desire to get serious about investing. I've taken a big boy job that I will be at least six months into at the time of applying, annual income probably in the 36-42K range but a full year of that will not show up on a tax return until 2019. The average of my 2016 and 2017 returns will probably be around poverty line. Here is where the reserves come in. Between a large chunk of savings bonds from my late grandparents and personal reserves I will be able to show at least $30,000 in reserves above and beyond my down payment. Considering that I'm looking at a price range of roughly $60-130K on houses might these reserves coupled with a solid reference letter from my employer and my excellent credit score have a fighting chance of overcoming the low income numbers from recent past?
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