I want to buy my house, but disappointed!

Anonymous · ‎04-20-2015

I just ordered my FICO scores and was very disappointed at how much lower it is from Credit Karma. (FICO 638; CK 662) both from Transunion. I went to a homebuyer's workshop and thought I was well on my way to home ownership. I've saved about 15% for downpayment, but don't want to get screwed with high interest rates. How long will it take for my scores to increase with FICO since I've been paying down (not off) from my credit? CK updates every month and says, "Congratulations, your scores have increased!" A big disappointment for me I don't want to keep using my savings to pay down more debt when I need it for my downpayment.

DallasLoanGuy · ‎04-20-2015

what is your score target?

those are good enough for fha

Retired Lender

Lemmus · ‎04-20-2015

...I'm assuming that 638 is your fico mortgage mid score ...ignore the FAKO scores, as you've seen they are "educational" only ...as Dallas noted you're well above the FHA score minimums ...not into best rate territory as yet but with the possibility of Fed rate increases, it may be time to buy sooner than later ...its a gamble either way imnsho ...hth

Anonymous · ‎04-21-2015

To echo what Dallas and Lemmus said, an FHA may be your best bet. Credit score has very little impact on the interest rate of an FHA loan, and most lenders would be able to work with you with the score that you have. I would work with an LO and have him run some numbers for you to compare different loan types (since you do have a sizeable down payment). Where are you looking to buy?

Anonymous · ‎04-21-2015

I would encourage you to talk to a mortgage professional and looking at your options. As stated, your score is good enough for FHA, but with your size downpayment, conventional could help you avoid some mortgage insurance costs. If I were doing your loan, I would look at your scores and do a simple "What-If Simulator" on your credit report and see if there is anything you could simply pay down to significantly increase the score right away. Then price out a conventional loan and FHA and give you options. If you are doing a 15 year loan, the score would no matter much, so that is an option. Best of luck, but you certainly have some options and a good professional could help you know them all.

Anonymous · ‎04-21-2015

@Anonymous wrote:
I would encourage you to talk to a mortgage professional and looking at your options. As stated, your score is good enough for FHA, but with your size downpayment, conventional could help you avoid some mortgage insurance costs. If I were doing your loan, I would look at your scores and do a simple "What-If Simulator" on your credit report and see if there is anything you could simply pay down to significantly increase the score right away. Then price out a conventional loan and FHA and give you options. If you are doing a 15 year loan, the score would no matter much, so that is an option. Best of luck, but you certainly have some options and a good professional could help you know them all.

Exactly this, when putting down less than 20% its really important to focus on APR not Interest Rate. If your putting down 15% despite a lower credit score also look into some Single Premium MI options as well, maybe even LPMI. It might not make sense but at least look into the costs to evaluate your options.

Lemmus · ‎04-21-2015

@Anonymous wrote:
Exactly this, when putting down less than 20% its really important to focus on APR not Interest Rate. If your putting down 15% despite a lower credit score also look into some Single Premium MI options as well, maybe even LPMI. It might not make sense but at least look into the costs to evaluate your options.

...sorry, you lost me ...can you clarify that in layman's terms ...I thought they were just 2 different ways of expressing the same thing.

Anonymous · ‎04-21-2015

APR is the annual cost of the loan, and includes things such as fees and mortgage insurance. This is why you'll often see an FHA loan with a lower interest rate, but a higher APR.

ezdriver · ‎04-21-2015

@Lemmus wrote:
@Anonymous wrote:
Exactly this, when putting down less than 20% its really important to focus on APR not Interest Rate. If your putting down 15% despite a lower credit score also look into some Single Premium MI options as well, maybe even LPMI. It might not make sense but at least look into the costs to evaluate your options.
...sorry, you lost me ...can you clarify that in layman's terms ...I thought they were just 2 different ways of expressing the same thing.

APR reflects all fees in addition to the interest on the mortgage [eg: origination fee]. Mortgage payments are not calculated on APRs. The APR metric is an attempt by the government to help borrowers to make "meaningful" comparisions of mortgage products/terms that are in fact different. That is why the poster recommends that one pay close attention to the APR number ... the larger the spread, the more fees are being paid.