My wife and I are planning on buying a house in 1.5 years from now. We are going to be applying for a home loan in the month of May, 2019. We have a few things we know for a fact we need to take care of. But I'd like some advice on anything else I could do to improve my chances.
Our plan is, we are getting two decently big tax refund checks. We are thinking of paying our car off this February and putting the rest of it in a savings account of some sort and save it for the down payment in our house.
Points to note:
- My credit score is in the low 600's and my wife's is in the mid 500's.
- I have 2 credit card balance in collection, amounting to $3000.
- My wife has 1, for $3500.
Our current plan:
- We are going to pay the car off, which is a $2500 balance when we get our tax refund check.
- We are going to call the debt collectors and make payment plans with them when we get our tax refund check.
- My wife doesn't have an income, so we are planning on just going for the home loan with my name on the application. Lenders don't seem to care about my wife being in the application since she doesn't have an income.
Our savings ideas:
We were thinking of opening a normal Certificate of Deposit (CD) account for this tax refund check so we are not tempted to spend it.
Is there a smarter way of putting this money to good use for the next year before we need to spend it?
We've already looked into several different savings options. My question is not directly concerning the pros/cons of savings options. It is more so about increasing my chances of approval for the mortgage loan when I apply.
My question is directly connected to banks maybe offering some kind of accounts or benefits that will make us look good in our home loan application.
Maybe if I were to open a savings account with the bank I hope to get my home loan from, when we apply for our loan, would they look at our savings and go "Oh you've been good about not spending all your money, I trust you"? Or are there accounts specifically targeted to people trying to prove their trustworthiness?
We are based in the US. I can provide more specific information regarding our location if needed.