Preparing for a Mortgage

[Anonymous]

Hello All,

I am VERY close to qualifying for an FHA loan and would love some guidance on how to get my middle score up as quickly as possible.

My current FICO 8 scores are:

EQ: 593 TU: 608 EXP: 612 

Current mortgate scores are (match perfectly to what my lender pulled):

EQ: 599 (FICO 5)

TU: 593 (FICO 4)

EXP: 648 (FICO 2)

In order for me to qualify, I have to get either my EQ or my TU score up to 620. I only have one credit card and one consolidated student loan. The problem is my credit file is thin. I am in the process of rebuiling my credit so my credit card is only a few months old and my current student loan is probably about 5 months old. It would seem that it wouldn't be that difficult to get my scores up 21-27 points but, although my FICO 8 score moves, the mortgage scores don't.

I have been working with a company to get a couple of charge-offs removed and am hopin to get a bump from there. My TU file is showing 1 charge off and 1 collection and my EQ file is showing the same with one additional charge-off. all of which I will happily PFD, although the lender isn't requiring me to do so.  However, I feel like this would be the fastest way to get my scores up along with carrying a small balance on my CC versus paying it down to $0.

Any advice for this credit newbie would be much appreciated!

[Anonymous]

1st piece of advice would be to head over the credit rebuilding forum. Did wonders for me and raised my score from low 600s to mid 700s after about 3 months of work. As for your situation, you should look to have at least 3 open tradelines of revolving credit and have only 1 card report a small balance equal to 1%-9% of the total balance. The mortgage score only moves when you purchase a new 3B report from myFICO.

[onstar]

Great advice by SouthEast80.

You should also look at different lenders. To get a conventional loan, you will need a FICO of 620, but to qualify for an FHA loan with 3.5% down, you only need a FICO of 580. Lenders can set their own (higher) requirements, but it is not mandated by the FHA.

Even so, you should try to get it above 620. The higher your FICO, the better rates that you will qualify for in your mortgage.

[Anonymous]

You guys are AWESOME!! I thought the mortgage scores updated when the FICO 8 updates. However, since recieiving your responses, I went ahead and ordered a new report since it has been over 30 days since the last and my mortgage scores are now:

EQ: 605 (FICO 5)

TU: 653 (FICO 4)

EXP: 664 (FICO 2)

I still plan to hop over to the Rebuilding Credit section because, with another 6 points on my middle score, I'll qualify for state grants that would be available to me as a teacher.

Thank you guys so much!

[Anonymous]

So, after noticing the increase in my mortgage score, I went ahead and had my LO re-run the automated underwriter and came back with an Accept/Approve on August 11th. I found a really nice house and signed a contract on September 19th. Thanks to my LO, I had already regulary submitted update paystubs and bank statements and she'd had tax returns and W2s since I had first applied in June. The appraisal was completed on October 6th and the file immediately sent to underwriting.

So, now, my question is...how long should underwriting take with an Accept/Approve and appraisal already done? Closing is scheduled for October 21st (seller is an investor who's had 2 contracts fall through already so they're anxious to unload the property). LO is waiting to hear back from underwriter on turnaround time. Since the company my LO works for will also service the loan, I'm not expecting a huge gap in time, however, I've heard horror stories. I don't have a complicated file at all. Just my regular pay ,and I have already provided letters of explanation for a few items on my credit report.

Any ideas? Just trying to ease my nerves! Thanks guys!

[echoecho]

Bottom line is it will always be waaaay too long for you. Good thing is you said you have a simple file with most LOE and conditions already met. Already approved and appraised. All on UW if they want to move sooner or wait on scheduled closing and them working on more complicated files. My case they waited😳 Hang tough you're almost there. Stay put until closed.

[Anonymous]

Underwriter time is typically 48 hours 

[Anonymous]

Wellll, after 2 rounds of underwriting, I am FINALLY approved with just 2 conditions left, both of which, are on the title company and underwriter.

Ultimately, since I am using two down-payment assitance grants, I have to wait for those checks to be cut as well, which will take about 3-4 days. So, I should be clear to close by Thursday or Friday at the latest!

[StartingOver10]

Yea! Congrats on  your new home...what a great feeling to make such big improvements in your scores over a pretty short time.

[surferchris]

Congrats on the approval.