DO FICO SCORES MAKE OR BREAK THE DEAL ?

[Anonymous]

Everything else is perfect....

[StartingOver10]

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@Anonymous wrote:

Everything else is perfect....

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Low scores below the required underwriting minimums break the deal.

I have a client of mine right now that has excellent income, some savings (enough to purchase using an FHA loan), excellent job and so the DTI is very, very low.

The scores are 500.

The client can't get a loan because the scores fall way below the minimum allowed by FHA. There are actually two solutions to this situation: 1) raise the score OR 2) put down enough money that another lender in another type of loan will allow it.  Option 2 is not feasible for many reasons, not the least of which is that the interest rate would be huge (12% interest only) and the terms terrible ( a 3 yr balloon and a 65% LTV). Its actually better to just take the time and energy to raise the scores.

Having said the above, each individual lender sets their own score requirements. So if FHA has a minimum of 580 an individual lender may say the min is 620 or 640 etc.

Is the score you have below the individual lender's minimum or below FHA's (or fannie or freddie's) min?

[CS800]

Although some lenders get as low as 580. You then have to buy points to get your interest down and even then you might be in the 7% range.

Preferable to get scores in the 640 range (middle score at least)

[pizzadude]

Yep, with mortgage financing your success will depend on your middle score from a tri~bureau credit pull.

[boomhower]

FICO scores break the deal a lot more than make it.  Basically once you break 640 your OK.  For more options in types of loans higher is better.  Down to 580 is doable with some work but under that your chances are slim and even if you find something the terms will be terrible.

[mamahearts]

+1

In my experience it definitely breaks the deal if your scores are too low.   I had applied for and been approved by a mortgage broker a few years ago before my credit was fixed.  My rate would've been astronomical and my payment more than what I'm paying now (like $150/mo more) for a house $30k less than the one I bought.  We didn't walk away from that, we ran.  We put alot of hard work into improving our scores and it was absolutely worth it.   Be patient, work on your score.  You have plenty of other factors that are working in your favor which means that you'll save alot in terms of interest if you improve your score.  Good luck!

[mamahearts]

Sorry I just saw that other post you had.