Mortgage Loans

[basballguy]

I'm not new but i do have questions. 

I have an income of 95k.  I'm looking to get max FHA loan for my area which is about 270k.  My current scores are below par but I fully expect them to be in the neighborhood of 630-670 (all 3) in the next two months. 

What are the biggest factors considered on the FHA loans (aside from what's generally out there)?  I've read about the disputes.  ( I have a dispute comment on a REALLY old collections account which i don't really have any intentions of paying). 

I've also heard for the higher FHA loans you need a higher credit score so 650ish may not cut it, is that true?  What's the experience there? 

A bit more background, I have no lates in at least last 2 years, 2 autos, 1 cc, no bankruptcy.  1 eviction judgement unpaid for like 500 bucks which i'm debating on paying but its so old i believe it has little impact on my score.  (and stops reporting in 3/13).

I have it in my mind I should be approved based upon credit score and income alone but i guess i'm kinda expecting a reality check here. 

Thanks in advance!

[StartingOver10]

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basballguy wrote:

I'm not new but i do have questions. 

I have an income of 95k.  I'm looking to get max FHA loan for my area which is about 270k.  My current scores are below par but I fully expect them to be in the neighborhood of 630-670 (all 3) in the next two months. 

What are the biggest factors considered on the FHA loans (aside from what's generally out there)?  I've read about the disputes.  ( I have a dispute comment on a REALLY old collections account which i don't really have any intentions of paying). 

I've also heard for the higher FHA loans you need a higher credit score so 650ish may not cut it, is that true?  What's the experience there? 

A bit more background, I have no lates in at least last 2 years, 2 autos, 1 cc, no bankruptcy.  1 eviction judgement unpaid for like 500 bucks which i'm debating on paying but its so old i believe it has little impact on my score.  (and stops reporting in 3/13).

I have it in my mind I should be approved based upon credit score and income alone but i guess i'm kinda expecting a reality check here. 

Thanks in advance!

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The eviction judgment will put a crimp in your approval.

The fact that it is a judgment is one thing - but the fact it is an eviction judgment is a big thing for qualifying. See if you can settle with the judgment holder - check your state's statutes to see if you can get the judgment holder to vacate the judgment (with payment). I mentioned checking statutes because you might not have a valid reason to get it vacated. if you can't get it vacated then naturally get a satisfaction of judgment and make sure its recorded.

[basballguy]

forgive me for sounding rude, but if FHA is ok with bankruptcies if they're 2 years old, why wouldn't they be ok with a mind blowing 500.00 eviction that is 7 years old?  I imagine i'd get a question about it but I don't see why that would really be a problem.  But again, i'm not the expert and that's why i'm here asking questions.

and of course one could say "well if it's only 500 then just pay it" sure why not, but i don't understand the impacts of that to my score either...versus just letting it fall off. 

[Sunshine85]

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basballguy wrote:

forgive me for sounding rude, but if FHA is ok with bankruptcies if they're 2 years old, why wouldn't they be ok with a mind blowing 500.00 eviction that is 7 years old?  I imagine i'd get a question about it but I don't see why that would really be a problem.  But again, i'm not the expert and that's why i'm here asking questions.

and of course one could say "well if it's only 500 then just pay it" sure why not, but i don't understand the impacts of that to my score either...versus just letting it fall off. 

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Because it's related to housing. Any unpaid housing related debts are a red flag for lenders. Doesn't matter that it's old or only for $500-mortgage lenders don't want to see an collections or judgments related to unpaid rent.

[webhopper]

From my reading of this thread http://m.trulia.com/voices/Financing/Would_an_eviction_judgement_effect_the_financing_t-332774# I understand that only the last 24 months of rental history are important.... could be wrong but it seems unlikely that a 6 year old eviction would stop this purchase. I had a unpaid Charge Off vehicle loan for 14k in 2006 and I still closed on a new home in 2008. Times have changed but hopefully not by that much.

seems like from this thread the judgment needs to be satisfied.

[StartingOver10]

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basballguy wrote:

forgive me for sounding rude, but if FHA is ok with bankruptcies if they're 2 years old, why wouldn't they be ok with a mind blowing 500.00 eviction that is 7 years old?  I imagine i'd get a question about it but I don't see why that would really be a problem.  But again, i'm not the expert and that's why i'm here asking questions.

and of course one could say "well if it's only 500 then just pay it" sure why not, but i don't understand the impacts of that to my score either...versus just letting it fall off. 

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The judgment is a separate public record. Even if it were off of your report today, it still remains in the public records and the lender will have the title co/attorney run your public record info before issuing you a loan. Once the judgment is paid you shouldn't have an issue getting a loan based on your post.

But to answer you question about why FHA would insure a loan two years out from a BK and not one with an outstanding judgment: BK clears debt. However, an active judgment is a debt that can attach to the property and come in front of the mortgage. In other words, if you had to sell the property the judgment would have to be paid prior to the mortgage pay off and in a high LTV loan the risk is there that the proceeds would then be short. So the judgment directly affects the loan payoff. The way to make sure it doesn't affect the loan payoff is to pay the judgment before closing.

BTW, you would be in a better position to negotiate the judgment with the lien holder prior to making mortgage application. Once they see you have made a mortgage application, many judgment holders become much less negotiable because they know you need it paid in order to close.  It's probably much higher now than $500 due to the interest that has accrued since it was issued. Check the statutory interest that is applicable in your state so they don't try to hit you with more than what is allowed.

[basballguy]

ok the last two replies make more sense, thanks and understood.

Does anyone know about higher FICO requirements for the higher $$ FHA loans?  Is there any truth to that?

[Sunshine85]

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basballguy wrote:

ok the last two replies make more sense, thanks and understood.

Does anyone know about higher FICO requirements for the higher $$ FHA loans?  Is there any truth to that?

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My response came from my experience working in mortgage lending, and I didn't work for only one lender. No lender I worked with was ok granting a mortgage to someone with unpaid housing debts.

Not sure what part of that "doesn't make sense".

[basballguy]

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Sunshine85 wrote:

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basballguy wrote:

ok the last two replies make more sense, thanks and understood.

Does anyone know about higher FICO requirements for the higher $$ FHA loans?  Is there any truth to that?

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My response came from my experience working in mortgage lending, and I didn't work for only one lender. No lender I worked with was ok granting a mortgage to someone with unpaid housing debts.

Not sure what part of that "doesn't make sense".

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Please don't derail thread.  I've received satisfactory responses and am now looking for a response for my remaining outstanding question. 

[Sunshine85]

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basballguy wrote:

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Sunshine85 wrote:

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basballguy wrote:

ok the last two replies make more sense, thanks and understood.

Does anyone know about higher FICO requirements for the higher $$ FHA loans?  Is there any truth to that?

---

My response came from my experience working in mortgage lending, and I didn't work for only one lender. No lender I worked with was ok granting a mortgage to someone with unpaid housing debts.

Not sure what part of that "doesn't make sense".

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Please don't derail thread.  I've received satisfactory responses and am now looking for a response for my remaining outstanding question. 

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I was hardly derailing the thread- you posted a question on a public message board looking for help, people took the time to reply and share experience from a lender's perspective, and you were dismissive and borderline rude. And you're now posing another question- for your sake, it would be behoove you to be a little more gracious and receptive to people who take the time to respond to you, especially if you're going to continue asking for public input.