Applying for a conv/fha loan--First Home/Investment Property

[George Torres]

Hey guys, so here's the deal... I'm itching to buy my first 2 family home/investment property but can't decided if I want to A) take out a conventional loan and cover the downpayment with a loan against my 401k or B) take out an fha loan and cover the downpayment and repairs in cash, and then look for a property that will still cashflow given the higher monthly payment required of me. Please help!

-I have a low credit score (about 600) but may be able to get a guarantor if I need one

-Make decent money (sub six figures but close)

-Have enough to cover 30-40% as a downpayment plus another let's say 10-15k in repairs, but nearly all of it is tied up in my 401k

I hope I gave ya'll enough information to be able to help me. Thanks so much!!

Also, stupid question: HOW do I actually go about applying for these loans? Do I do it online? Go to a bank? A credit union? Mortgage broker? All of the above? Some of the above? Will it cost me money to apply? 

Should I do it ASAP or once I find a property?

Should I make an offer on a property before I get approved or should I wait?

What first time homebuyer programs can I take advantage of (if any) in California?

Thanks again!!

[Russell Brazil]

If you are going to get an on market property...I would get a referral to a local real estate agent. Then from there the agent probably has several different lenders that they could put you in touch with.  Ask him specifically to get you to a lender who works with a credit repair specialist.  Getting your credit score up is literally going to be the difference of hundreds of dollars a month in the kind of rate you get.  If you do not get to a 620 score for your mid score (the middle of your 3 scores) you may not be able to even get a mortgage. But a credit repair specialist will be able to walk you through how to get that score up.