TIME FRAME-HOW MANY CREDIT PULLS ALLOWED FOR MORTGAGE

[Anonymous]

Hello,

Im new to the board and need help with a finance question. I am a first time homebuyer looking to purchase a condo where FHA is not accepted. Therefore, I am trying to quality for a conventional with scores of ; EXP-643, TRANS-648 and EQUIFAX-661 respectively.

I shopped around and had 4 pulls (my credit union, mortgage broker, quicken and mortgage match) done within a 2 week period. The first pull took place on May 24th. The problem here is the only lender with a conventional product I am close to qualifying for is mortgage match. They advised they could offer a conventional on a 660 mid-score. But in order for me to qualify I will need to pay down one credit card. Once paid down they could rewash the score and I would be in good shape.

Within the past week I have found 2 lenders who offer a conventional with a 620 credit score. The problem is im afraid to let them actually run my credit for fear of being rejected and lowering my score further. I also dont want to hurt my score and make it appear as if im getting denied so I keep trying to get approved, which is not the case.

Its been almost 2 months since my initial pull, so im wondering if I will be ok to have another pull done? If not I will have no choice but to work with mortgage match and get my score up to the 660 to qualify for there conventional product?

Any input would be greatly appreciated, thanks in advance.

[Booner72]

Hi there - I am feeling your pain.  We first did a mortgage pull in April and found out didn't qualify.  A month later we found a house and fell in love and had a good realtor who referred us to a good LO.  She then had to pull (I had showed her my reports from April) so she could use her score simulator (a lot of good that did).  Now as soon as our offer is accepted she will do the "final pull"-- the results of which will deem which mortgage we qualify for. 

It's so frustrating!  I lost 7 points and 9 points that I can decipher between April and May for inquiries.  However, since I've been monitoring my scores here at MYFICO I didn't seen any losses for the May pull - maybe it happened between SW alerts or whatever.

What does "rewash the score" mean? 

[Anonymous]

Thanks for the response booner72.

A rewash is when you pay down debt and then have your score recalculated. In my case it was a Orchard credit card with a $600 limit and a balance of $510. The LO said I needed to pay it down to 200 or below so that it could show as me only using a third of the credit line. Once the card is paid you have to have your cc company submit a letter to the lo with your new balance. The LO will use this new balance to recalculate your score. In most cases your score is raised. However, you still may not qualify and need more points and they could come back and tell you that something else needs to be paid down or off completely, it depends......

At this point I do qualify for an FHA however, not many condos in the price range I am looking accept FHA for financing. I wish I would have known all of this when I did my initial pulls. Had I known I would have sought a lender who did conventional financing at my score level.....

[Booner72]

Yah, no kidding.  I'd give anything to have known this stuff before I started applying.  So as I said my LO ran a simulator and told me to do some stuff, but she messed up and told me different than what the sim told her to do (amounts/accounts messed up)  We haven't ran my credit again so I don't know who will be right or wrong.  I have a gut feeling, though, that the steps I've taken based on fico-forum advice will outweigh what she told me to do.   I'm thinking you should pay that card well below 200 dollars, have it report 1-9% of the 600 dollar balance.  Good Luck!  Keep us updated!

[ShanetheMortgageMan]

Fannie Mae & Freddie Mac loan programs just require a 620 credit score, and that is what people usually mean when they say conventional.  However when  you are putting less than 20% down you have to get a private mortgage insurance (PMI) policy, and depending on the amount of down payment you may need anywhere from a 620 up to a 740 credit score.

http://www.myfico.com/crediteducation/creditinquiries.aspx says:

Does the formula treat all credit inquiries the same?

No. Research has indicated that the FICO score is more predictive when it treats loans that commonly involve rate-shopping, such as mortgage, auto and student loans, in a different way. For these types of loans, the FICO score ignores inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for rate-shopping inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

What to know about "rate shopping."

Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

[Anonymous]

@shanethemortgageman

Thanks for the info and yes I do plan on putting less than 20% down. However, im still confused,......being as though I had my first inquiry for the mortgage done on 5/25 making my 30 day window 6/25. During this time I got the preapprovals/prequal but didnt accept any of the loans. So does this mean that on 7/25 I would be ok to have another pull done without dinging my score, since the original 30day period has passed?

The way I am reading the info you provided is your score wont be impacted IF you accept one of the loans found within the 30 day period. However, if you do not and have more pulls done afterwards, it could give the impression your are being denied and trying desperatly to get approved. In no way do I want to give this impression, this is why I am afraid to have another pull completed.

If I am correct in that I will harm my score with another pull, how long do I have to wait before I can have new pulls done for a mortgage?

[ShanetheMortgageMan]

The way I understand it is it goes by the date of the 1st inquiry of the same type - it doesn't factor in if you get approved or not.  Probably a better question for the Understanding FICO® Scoring section though.

[Anonymous]

@shane, thanks

Just spoke with the LO yesterday and it looks like I may have to wait to purchase with conv finan based on my credit scores. LO originally told me I would need to bump my mid score up to a 660 for conventional approval. When he ran the numbers yesterday he stated that a 700 credit score is needed in order to get conv financing for a condo. Says he has been seeing this alot lately with the banks asking for higher credit scores on condo financing. Never heard of this and not sure if I believe what he is saying.

So if anyone out there has any info/expereience with condo financing I would greatly appreciate it. thanks

[ShanetheMortgageMan]

It all has to do the PMI company they are using, some PMI companies require a higher score for condominium financing, and/or if your debt ratio is over 41%, if it's an attached condo in Florida, etc.

If you really want to use FHA financing then ask if your lender will help assist the condominium association get their FHA condo approval, it's about a 3-4 week process and will cost some money to get certain documents, but it'd potentially allow you to buy in it and then if it's FHA approved that means so many more buyers could buy too... increasing demand there potentially the value.  Here is the entire FHA condo approval & processing guide: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/11-22mlguide.pdf

[Anonymous]

@shane

You are correct, he stated the company they use is asking for higher credit scores to get the PMI.  He also mentioned that my debt ratio was high as well based on what he got back after plugging the numbers in. I am trying to buy in Pennsylvania however, he mentioned he has seen this in other states as well.

I do realize product offerings differ depending on who you get your financing with as mentioned in my original post. This is what bought me to this board. I found another LO who stated he could get conventional with PMI on a 620 credit score. However, I was leery about having my credit pulled yet again......

As far as FHA financing for this buidling, I have spoken with my realtor as well as 2 other realtors who have sold units in this building. They all say the same thing, the HOA will not consider FHA financing. So I am assuming they know they do not meet the criteria OR it will take alot of cash for them to meet the requirements. So sad to say that wouldnt be an option for me  at this point. Not with this building anyway.....