We are doing a VA loan. Our scenario is that my credit scores are poor (wish I would've found this site 6 months ago!), but we have good income and all our debt is paid down or off so we have good DTI. I don't have anything more I can do with my credit than just wait out the seasoning of past dues.
But we are in contract for a new build. My mid score isn't 620 so the preferred lender couldn't qualify us and I ended up going with a mortgage broker. Which is fine, he said he had banks that could get us manually underwritten. So, we started the process with him. I liked him enough and researched him online (good reviews on zillow). But right from the start I had a gut instinct that he was not being very communicative with me. I obviously couldn't get an approve on AU because of my score, so it referred us to manual. He had to wait for someone to issue an official pre-approval so that he had the thumbs up to proceed with our loan. Right from the start I told him the interest rate we had been quoted IF my mid score was 620 (it's 593) and I knew we wouldn't get great rates. Well, it took a week to get escrow opened up, which I know has to do with the builder not him. But escrow was open on Monday and he sent me the GFE on Friday last week. Interest rate was 4.5%, which is HIGH. He said not to worry about that - we will pull my credit again when some things I did this month post and raise my score. I told him I was uncomfortable with the rate and if it came in that high I would rather walk away than do a bad deal. He said let's just wait. Well, something in me didn't believe him. So I started shopping around. I've had no credit, good credit, and bad credit in my life and NOTHING makes you feel more of a loser than having bad credit and like you have no options. But thanks to a user on this site, I got the number of someone who specializes in VA loans. I left a VM and he called me back on a Saturday! We went over my scenario and I sent him the GFE to look over. He said the reason for the high rate is the other lender uses Carrington bank (terrible reviews when you look them up btw). Carrington bank is a bank that will "get you to the closing" table as he put it but they charge a high rate to do so. He pulled the rate sheet from Carrington bank and with the % they tack on for a manual underwrite, they would absolutely come in at 4.5%. He has a bank that will do the same but only charges .125% of an interest hike on the mortgage for doing manual underwrite. He is presenting me today with a GFE for 4% and he said that is even a little high because if he locked the rate today (even for us) it would be 3.9%. Thats a HUGE difference. So, I emailed the other lender and told him we were going elsewhere and we are now proceeding with gentlemen, who has given me SO much more information than the other lender just in two phone calls! I feel so much better with him. He looked over my file and said he saw nothing in it that would prevent us from closing. I was honest and upfront about everything (like I have been with the other lender as well).
Anyway, I really really appreciate this site and all that I've learned so far! Like, I said, wish I would've found it 6 months ago - I would've rehabbed my credit in a different way and would be sitting on better credit score right now if I had. Now, I feel more confident that we will be able to close on our house that's being built! I just hope changing lenders isn't going have a negative effect on the escrow. House isn't done until 9/25.
