USDA Rural Housing Steps

[Anonymous]

My mid score is at 607. I know that USDA will make me justify my debts and verify income. Where does that step come in during the process of purchasing a house. I know my ratios and I have an idea of what my max home price could be. Do I have to go through the USDA process prior to putting an offer on a house? Or am I basically taking my chances having a credit score under 620 that I could end up with an accepted offer and get denied for the loan?

[Anonymous]

In our area a realtor won't submit an offer unless you have preapproval.

[WannaHouse]

Personally, I think it is a very bad idea to make an offer without knowing IF or how much you can qualify for.

[Anonymous]

Ok, that came out wrong. I suppose the easier question I meant was:

What does the pre approval process entail for a credit score below 620?

[WannaHouse]

Credit scores below 620 require a full analysis of the applicant’s credit issues. This is still an acceptable range. Additional risk layering should not be permitted without strong compensating factors. The lender’s underwriter can approve waivers of recent adverse credit with proper documentation, especially if the exception can be offset with compensating factors.
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Applicants with a credit score of 619 or less would statistically have a high likelihood of default on their loan. The loan can be considered by underwriters, however, any layered risk associated with the application should be avoided without very strong compensating factors.

[WannaHouse]

To answer on a more personal level, It took about 2 weeks for us to be pre-approved. Our lender asked for all our docs upfront, so when we find/found a home, it would be a snap to finish it off. We sent in 2 years taxes, bank statements for each account, a letter from our current landlord, and whatever else they required. It was back in Oct 08, so I can't remember everything.

ADDED: We are both over the 620 mid score. Basically, with under 620, you will have to explain any lates in the past 12 mos, any collections, etc.

Message Edited by WannaHouse on 03-19-2009 01:37 PM

[moondog7324]

How is your credit card utilization? If you can get it <10% you may be able to get those 13 needed points. That is the safest and easiest way for a quick increase.