First timer questions

[Anonymous]

My husband and I our currently in the house  "wanting" situation,  We found an agent,  and he told us that  that we we should repair a few things on our credit before  we do anything,"husbands 577," hes the one applying for the loan also using a VA loan,  not sure if we got apprved for that egither, but this next week he wants us to go look at several houses that we like. Should we go ahead and look or should we wait until we know about our approval status and loan amounts before we get to excited. Our agent told us that with all the necessary steps that we are taking to fix my husbands credit we should be above 580 in about 30- 40 days we started this Jan 26th. He also 580 is the min to be approved..So now I am baffled as to what to do, or maybe im just getting First Time Homebuyer jitters trying to find the neg things.. Any suggestions...

[ShanetheMortgageMan]

Without a doubt get pre-approved before you start seriously looking.  The horse needs to go before the cart.  Get mortgage advice from a mortgage professional and real estate advice from a real estate professional, not vice versa.

First let's start by discussing what is bringing the credit scores down to the 577 range... are there collections, charge-offs, BK's, foreclosures, judgments, tax liens, or late payments?  If so, what are the details of each?

Message Edited by ShanetheMortgageMan on 02-06-2009 12:25 PM

[Anonymous]

Well he has 5 accounts that are good standing and that are old and closed +3yrs...then he has 2 med bill that are in collections. We just paid off one for $400 last week (paid and closed). He also has a cell phone bill that is on the report, we contacted the credit co and they have no record of him on file so we have to send a letter to validate it, and hope it gets off. He has 3 active credit account that are open all 3 have late payment marks +60 only, and we just paid one of them down under 30%. We were planing to get all of the credit things resolved before we took another step, but he reasured us everything should be fine if we take those steps and in the meantime look at houses. He said we could get approved at 577 but the intrest rate is to high and if we raise the credit above 580 intrest would be better. We havent been givin any numbers or anything yet, but it all seems promising.I hope.

[Anonymous]

---

@Anonymous wrote:
Well he has 5 accounts that are good standing and that are old and closed +3yrs...then he has 2 med bill that are in collections. We just paid off one for $400 last week (paid and closed).

Get your patootie over to the Rebuilding Your Credit forum and start posting there about your baddies.

The first, glaring item I see is the medical bills -- get them OFF your CRs with the HIPAA process. HIPAA are medical privacy laws that state that once a medical bill is paid, a CA reporting that bill to the CRAs is ILLEGAL. But you HAVE to follow the HIPAA process to get them off. Go there NOW and get them GONE!

Since those medical collections are over 3 years, you won't see a HUGE jump in your FICOs once you get them deleted, but every little bit helps.

He also has a cell phone bill that is on the report, we contacted the credit co and they have no record of him on file so we have to send a letter to validate it, and hope it gets off. He has 3 active credit account that are open all 3 have late payment marks +60 only,

Send them ... no, paper their office, with GW letters begging them to remove the late notations. How old are these, BTW? And do you have any current, good-standing accounts with these creditors?

 I ask because we had an old Cap One credit card charge-off. We paid it immediately. Then, several years later, we opened up another account with them, kept IT in good standing and then asked for, and *received* a GW for a few lates on that account. If it can happen for us, it CAN happen for YOU!

and we just paid one of them down under 30%.

If you can pay them down to less than 10%, you'll see a HUGE jump in your scores. How high was your utilization before you paid them down to 30%?

If you **just** paid them down to 30% and were much higher (like 70-90%), expect a REALLY nice increase in your scores. Somewhere like 20-30 points. If you took it all the way down to >10%, you'd probably see 50-60 points.

*** And PLEASE bear in mind that soon, very soon, the newest version of FICO 08 will be the industry standard (so's to speak) with lenders. FICO 08 really, really, really, REALLY spanks you for having high utilization -- much more than it ever did. The good news with that is that it won't count old delinquencies and collections against you as strongly as previous editions did.

 Still, it's a VERY, VERY good idea to get those credit card balances DOWN quickity-quick!!

We were planing to get all of the credit things resolved before we took another step, but he reasured us everything should be fine if we take those steps and in the meantime look at houses. He said we could get approved at 577 but the intrest rate is to high and if we raise the credit above 580 intrest would be better. We havent been givin any numbers or anything yet, but it all seems promising.I hope.

---

Personally, I'd limit house-hunting at this stage to eye-balling homes on the internet (when you're taking a few minutes break from working on your credit) or while out on your way to the Post Office to send off GWs and DVs.

AKA, worry and work more about your scores and credit than house-hunting. We did. You betchabippy we did. And we closed on our first home last month! Credit (no pun intended) goes to my FICO Family for helping us make that happen!

Check out my DH's scores in my siggie. If *I* can bring them up nearly 200 points in less than 6 months, so can YOU!!!

[ShanetheMortgageMan]

Yup, with FHA, VA & USDA rates for scores under 580 are horrific, between 580-599 aren't bad but aren't the best, 600-619 they are almost the best, and 620+ are the best.  Sometimes with VA loans some lenders have the same rates for 580 and above scores, but most do the tiered system above.

When were the 60 day late payments on the 3 credit accounts?  Are they within the last 12 months?

Looking at homes before you are pre-approved is like going shopping without any money.  It's a personal decision, but I hate going to the mall without my wallet.  Now the flipside is that if you think it'll take you awhile to find a home, you might want to take him up on the offer and check out some homes now.  But don't get emotionally invested in any of them before you are pre-approved, actually I say never get emotionally invested into a home but definitely not before you buy it - then your ability to think objectively gets all messed up.