CC utility and Mortgage FICO

[Anonymous]

Hello all, thanks for the time taken to read this post and all the responses I hope to get from you all.

 I am a week from a credit pull for a mortgage application pre-approval pull

Current Situation- applying alone

Income- $115,000/year (new position, same industry. 7 1/2 yrs at old job)

Money for dp- $13,000 (savings, money market that closes by closing and 403b withdrawal)

Monthly debt obligations-

Car note- $750/month  (which i'm selling to my brother pending his bank paying my bank) mortgage broker says she won't count this into my DTI as it will off by close

Credit card- (combine monthly minimum payment on cc is $312/month) Citi Diamond Preferred 16,454/18K (this is what i'm afraid of!), Chase slate 6K/8.5K,     Citi Simplicity 0/9.8K,  Amex 0/18K, Chase Saphire Preferred 0/5.7K, Chase Freedom 0/4.5K, discover IT 0/2.2K

Student loan- $195/month

Without the car note that puts me at 507/month

I dont know what my Mortgage FICO is, i'm waiting till the 9th or 13th to pull since 2 of my citi simplicity will reflect the 0 bablance and Diamond will be 1,000 less. 

My Equifax myfico score is 730 now same as my citi cc free monthly FICO score, my TU from discover  is 720. But I have read that is  more often differenct than the mortgage FICO. I am scared out of my mind knowing this now. I was going to wait till the 9th which is when my citi simplicity typically reports to reflect the 0 balance which is $1500 less than last reported balance to pull the triple score from my FICO then ask the LO to go ahead. Will the high utility on one card affect my score significantly, should I pay it down to less than 90% utility to help my score. And advise what to do next?  

I could not take the anxiety anymore bcos knowing me that means a week of sleepless nights, so I bit the bullet and payed for the 3 bureau report on myfico.

So here is what the myfico mortgage reports show. EXP 701 (FICO Score v2), Equifax 711 (FICO score v5), TU 712 (FICO Score v4)
FICO 8 for the 3 are- Exp 736, Equi 730, TU 725.

I am a little bummed since my LO had mentioned a mid score of 740 being the target but relieved that it's above 700. Granted this will be my first pull with her and by the end of construction the car loan will be off and hopefuly one of the 2 ccs with a balance will be paid off and with 6 months to allow all those to reflect and hopefully have a better impact on scores.

Should i go ahead and have her pull my scores now or wait to have my citi simp report a zero balance on the 9th and see if it will boost up the scores when she pulls? I don't know how much points that will generate and if it's worth it.

I plan on going the 97 Conventional route if possible.

Any advice will be appreciated.

[Anonymous]

any one?

[Lemmus]

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@Anonymous wrote:

Credit card- (combine monthly minimum payment on cc is $312/month) Citi Diamond Preferred 16,454/8K (this is what i'm afraid of!), 

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...is this a typo? ...as I read it, you are more than 100% over your cl ...is that correct?

...not criticizing, just need an accurate number before I'd want to recommend anything

[Anonymous]

It most definitely is! The limit on that card is 18k. I edited the original post to reflect that.

[Lemmus]

...I'm actually surprised your scores are that high with your utilization ...fico calcs utilization on both your total cl and your individual cls ...you need to pay the citi dp and slate down as much as you can ...consensus appears to be that there are tiers at 90/50/30/10 utilization with anything above 30 really banging your scores hard ...optimal is one card 3-9% with others at zero ...I'd focus on getting both cards down tier by tier ...utilization is, iirc, 30% of your score so you should see immediate improvement at each tier ...the other approach would be to ask for clis on those cards ...if approved that would effectively reduce the utilization as well ...ymmv

...another thing I see is that you intend to use 97/conventional but have 13k in liquid assets available ...that could work if you are buying at 250k but anything more and you could run into closing costs problems ...you didn't specify the price range you are looking at ...in too many parts of the country, 250k won't buy a lot of house ...in others, you can get a demi-mansion ...again, ymmv ...make sure you have your dp, prepaids, closing costs, and, if required, reserves all covered ...your LO will provide you with a worksheet that quantifies those numbers ...discuss anything you don't fully understand with him ...3% dp is only the tip of the iceberg 

...also note that, especially with mortgage scores, the absence of installment loans will affect your scores negatively ...when you pay off that auto loan your dtirs will improve but you may see a drop in scores as a result ...be prepared for it ...the sooner you get rid of it, the more time you'll have to recover

...hth

[Anonymous]

Thank you for the response Lemmus! 13K is what I need for a 430k home, with a loan limit of 417K. The 97 conventional requires reserves of 0 if cc is 680 with a ltv >75 according to the Fannie Mae guidelines I have read. I may be misinterpreting that of course but the most is 2 months according to that same memo. Closing cost is 4 1/2% of purchase price with the builder cover 1 1/2%. I intend to ask for more help with closing costs. My LO did state I could always keep options and upgrades a little less and ask the builder to absolve the some of the closing costs in the purchase price. I'm not exactly sure how that works. In terms of closing costs as long as I can show a plan at which I'll be saving that'll be ok to start (so far by living on a strict budget that'll put me at 2.5K/month) . Keep in mind that I don't expect to close till end of October preferably. I'll have my student loan reporting as an installment with 2 cards which I'll be paying down but not as aggressively dependent on what I can get from the builder towards closing. She also stated that once I get the car loan off I might see a drop in scores but she expects it to recover by close. To be honest I'm a woman of faith and I'm praying for a lot of grace during this process. The first of grace being the mortgage scores bring what they are even with the high utility on 2 cards

[Peter1142]

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@Anonymous wrote:
So here is what the myfico mortgage reports show. EXP 701 (FICO Score v2), Equifax 711 (FICO score v5), TU 712 (FICO Score v4)

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I don't know about the 97% LTV conventional... the rules for this changed so many times. It was very high scores needed, a 740+ with gift funds, then no gift funds allowed, then the program didn't exist at all, then it is available not strict anymore... I couldn't keep up.

You scores are very good. I would not worry about qualifying for a mortgage, no one is going to single out util if your scores are over 700. However, as I said, idk about the 3% down conventional, but I am sure you will qualify.... you should ask a LO or maybe one of the mortgage professionals here could answer. If you don't qualify for the conventional 3% for whatever reason, you would qualify for a 3.5% down FHA with flying colors with those scores, or a 5% down conventional.

[Anonymous]

Thank you Peter1142 for your response! To my understanding of what I read for the 97conventional a cs of 740 is required of the deposit was from gifted funds and 680 if own funds. I had initially wanted to wait till the 0 balance on my simplicity reported but I doubt that will give me a boost enough to get to 740 mid score so I told her to go ahead and pull which she says she will do on Monday.
I've also heard of a mycommunity mortgage but if I'm not mistaken there's an income cap which I think I'll be higher than considering I'm at 115k salaried.

I want to avoid fha as much as I can especially with the PMI being the life of the loan. I don't want to depend on refinancing to get the PMI off in the future bcos who knows what the rates will be then. So as it stands now dependent on what the LO says on Monday I might be going full speed ahead or waiting to save up to 5% at which point hopefully I won't have to show reserves because that'll also mean my dreams of home ownership will be suspended again.
Any insight on any mortgages I could qualify for helps so please let me know!
Thank you!

[Lemmus]

...iirc your loan rate under FHA will most likely be significantly lower than a conventional with same dp at your current scores? ...have you factored that into your PMI concerns?

[Anonymous]

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@Lemmus wrote:

...iirc your loan rate under FHA will most likely be significantly lower than a conventional with same dp at your current scores? ...have you factored that into your PMI concerns?

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II have not at all. And I havent really thought about it that way but correct me if I'm wrong; I was under the impression that with the FHA loan a lower APR, means a higher APY, with FRM that means for the entirity of the loan period, right? with a loan life PMI tagged on as  well. The way I see it, a slightly higher APR with a average APY and PMI that drops off after LTV <80 (how long will that take anyway if I don't make any extra payments to the principal), cancels out the benefits of going the FHA route.

my numbers are what they are now after cleaning up my credit irresponsible college years. I do have some lates in my credit file with the last one being a 30 day late reported in March 2011, so who knows even if I'll qualify to go the conventional route. But according to my report those are some of the issues holding down my score.  i'm not sure what the LO will say come Monday and i'll definitely update the post to reflect what she says.

In the mean time please educate me more on what is lacking in my thought process. I just want to be well versed enought to sign on any paper that has me commited for 30 years!  thank you!