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HELP!!! Do we even have a chance at obtaining a home mortgage?

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inspired2010
Established Member

HELP!!! Do we even have a chance at obtaining a home mortgage?

Okay so Im new to the home buying world! Long story short...My fiance and I are wanting to purchase a home. I'm flipping out because do I even face the embarrassment of meeting with a LO with my dilema! I score a low 548 and my fiance is in the mid 700's. We both have great jobs and make a healthy living individually. I have been at my job for 10 years and he's been with the same company for over 7. I also get a healthy child support from a previous marriage. All the bad debt that's on my report is from over 5 years old and I've been working on removing dated neg info as well. He has 0 negative info on his report. He is also about to put his house that he owns now on the market. His mortgage that he pays now is less than I pay in rent every month.  I owe less than $800 in medical collections from 4 years ago that I know can easily be cleaned up. Other than that I have no balances on my report. just negative info that I've been working on for about 6 months. With that my monthly debt is minimal ($165). I feel financially that I am ready to purchase a home with my fiance, but will my low score haunt me FOREVER!! I'm so fixated on the score I forget all the positive things that I have going for me. Am I over reacting ? Should I even take the risk of meeting with a LO? What are our chances of getting a joint prequalification??  Any help  would be greatly appreciatedSmiley Happy

Message 1 of 6
5 REPLIES 5
Anonymous
Not applicable

Re: HELP!!! Do we even have a chance at obtaining a home mortgage?

i am sure shane or one of the other mortgage experts on this board will chime in to help you. but you will have to provide them with more specific information. First of all do you have any revolving accounts on your credit reports? What is the time frame you and your fiance are looking to purchase? What is the price range you are looking to qualify for and what are your combined salaries? From what you have described thus far, it appears that the easiest solution would be for your fiance to soley go on the loan, but that will reduce the amount of loan you will be able to qualify for. I can tell you that if you can at least get your score up to 580-600, you may qualify for an fha loan, but fha has a max on the loan limits that vary depending on the area you are purchasing in.

 

If you can give us some more specific information regarding the positive tradelines on your credit report, perhaps we can give you some suggestions on how to increase your score. You can also check out the rebuilding your credit section on this site. But as I said, if you are looking to purchase quickly and there is not enough time to get your score up to the minimum for fha, it may be easier to let your fiance just apply on his own. Keep in mind that even if you do increase your score to the minimum requirement for lenders, they may punish you with higher interest rates (I believe with joint loan applicants, they use the lowest credit score of the two middle ficos to base their interest rates, but one of the experts may have to correct me if I'm wrong on this).

Message 2 of 6
inspired2010
Established Member

Re: HELP!!! Do we even have a chance at obtaining a home mortgage?

Thank you so much for your reply...I'm at my wits end. I have 3 revolving credit lines on my credit report. one has a $265 balance the other 2 each have $300 balance reporting. I pay these off to zero every month. my plan was to pay them off this month and leave them that way for a while. 

I've had one of the accounts since 2000 and have never been late and the other 2 are credit rebuilders with a fairly low limit that I've never been late on as well. Collection accounts:I have a utilities collection in the amount of  $485 from 6 years ago. $661 in Medical debt from 4 years ago. Many of the negative accounts are reaching their 7 year mark. most of them being bad student loans and retail cards but all with 0 balance. I've been able to get alot of junk debt from unauthorized collection agencies deleted here in the last 4 months.  I can pay the collections off in one lump sum, will that help my score or will my report with a 0 balance and several negative marks continue to haunt me. My fiance is wanting  to close in November. We have a $137,000 combined income excluding bonuses and expense accounts that we both have with our jobs. For his 1st home purchase 2 years ago he was approved for 256,000 by himself.  My savings account is minimal due to my credit repair craziness. He has a substancial savings to help. I have a pretty decent 401k to use if only necessary but id like to stay out of it.  how much will my renter's history and utilities help. My parents bought me my car for graduation and is paid off. so the only large monthly payment that I have is my rent. Im running out of time and beginning to freak out a bit.

Message 3 of 6
Anonymous
Not applicable

Re: HELP!!! Do we even have a chance at obtaining a home mortgage?

How much home are you guys looking to buy?  It is likely your husband will have to purchase on his own if you need to buy soon.  It sounds like you do not have any large credit balances you could pay down for a quick score increase, so unless some major items drop off (and this does not alwasy help your score) then it would be tough to raise your score the 80 points you need to qualify for most loans (most lenders hold a 620 minimum and even if they go under 620, there is a higher expense and alot higher denial rate at the underwriter.)

 

One thing is that your husband will probably have to qualify with the old mortgage factored into DTI unless you can sell the house and close prior to bidding on a new home, or at least make your offer on any home contingent on selling your old one.  That said, alot of people will not accept contingency offers right now because of the market.

 

Paying off the collections will hurt your score alot.  They are very old collections and will likely have the date of last activity updated to show the payment made.  As far as FICO is concerned, a paid collectin is just as bad as an unpaid one.  They use the date of last activity tro guage how much to count them in your file, so paying a n older collection changes the date of last activity and therefore that item is counted heavier into your scoring profile.

 

Also, if you have been doing alot of credit repair, you will want to check and make sure that any dispute remarks on your credit files are removed (this can take awhile to get done) as most banks will not underwrite a loan with disputes on the credit file.

Message 4 of 6
Anonymous
Not applicable

Re: HELP!!! Do we even have a chance at obtaining a home mortgage?

My scores were even lower than yours 7 months ago.  Like you, I disputed old, incorrect items from CA's.  I wasn't very successful with PFD's.  I did manage to get one OC to accept my payment through a HIPAA dispute.  I was added as an AU to one of my father's accounts (high limit, low balance, old card).  This alone gave me a boost of over 80 points. 

 

Good Luck!! 

Message 5 of 6
inspired2010
Established Member

Re: HELP!!! Do we even have a chance at obtaining a home mortgage?

Thank you so much for the positive thoughts and advise...this forum has kept me hopeful and even more determined than ever!

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