VA Loan: Possibly Too Good to Be True

[Anonymous]

Things are kinda moving quick:

Been browsing homes for a little while waiting for credit to improve. Currently have a 602 middle fico, but reduce my utilization to $0 after paying off $7000 on my credit cards. My co-borrower has excellent credit, but i am the veteran.  We gross $10k a month with $2k in bills (this including 2 car payments) before housing.

We found our dream home, it just needs built.  We met with the builder and got the build down to $285,000.  They do not need a construction loan, just 2.5% in earnest money.  They put us in touch with their preferred mortgage broker.  We were dealing with Veterans United, but are wanting to wait until the score jumps to 620.  

The broker today stated that he can work with those numbers and said he we were looking at possibly a 3.65% rate.  We live right next to an Air Force base, so he said VA loans were their bread and butter, but I am skeptical.  I filled out the app and sent income documents.

Anyone have any experience like this?  He said he could get back to us in a day or two.  Meeting with the builder on Sunday to give him our build changes.  Everything seems a little fast.

[Anonymous]

It's possible. We did a VA loan and my score is 598. The rate seems really low on your quote though. Depending on what is depressing your score, the bank he will need to use will have to have no 620 score overlay and your loan will likely to have to by manually underwritten, which banks usually charge a higher % interest. But maybe you didn't have the issues I had.

[2b2rich]

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@Anonymous wrote:

Things are kinda moving quick:

Been browsing homes for a little while waiting for credit to improve. Currently have a 602 middle fico, but reduce my utilization to $0 after paying off $7000 on my credit cards. My co-borrower has excellent credit, but i am the veteran.  We gross $10k a month with $2k in bills (this including 2 car payments) before housing.

We found our dream home, it just needs built.  We met with the builder and got the build down to $285,000.  They do not need a construction loan, just 2.5% in earnest money.  They put us in touch with their preferred mortgage broker.  We were dealing with Veterans United, but are wanting to wait until the score jumps to 620.  

The broker today stated that he can work with those numbers and said he we were looking at possibly a 3.65% rate.  We live right next to an Air Force base, so he said VA loans were their bread and butter, but I am skeptical.  I filled out the app and sent income documents.

Anyone have any experience like this?  He said he could get back to us in a day or two.  Meeting with the builder on Sunday to give him our build changes.  Everything seems a little fast.

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These are catch all terms used to get your attention.  All 3 of my mortgage scores were over 620 and I still locked in at over 4% a month ago (VA Loan), maybe it's lower today.

I have no doubt there are lenders out there who will approve a middle score of 602, but I believe they're few and far inbetween to offer that rate with it.  I hope yours is one of them.  Good luck

[Anonymous]

Hello.  I just found this posting and wanted to ask what lender you used to finance?  My middle FICO 8 score is 630; however, my middle mortgage score doesn't seem to want to budge past 598.  I really need a loan, if at all possible.  I have great income, 2% util, and no lates in the last two years.  My score is just being pulled down from things that happened when I was out of job a little over 2 years ago.  Any help would be greatly appreciated.  Thanks.!

[2b2rich]

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@Anonymous wrote:

Hello.  I just found this posting and wanted to ask what lender you used to finance?  My middle FICO 8 score is 630; however, my middle mortgage score doesn't seem to want to budge past 598.  I really need a loan, if at all possible.  I have great income, 2% util, and no lates in the last two years.  My score is just being pulled down from things that happened when I was out of job a little over 2 years ago.  Any help would be greatly appreciated.  Thanks.!

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It's going to depend on what those things are?  I believe there are sub prime lenders out there who might work with the 598, but I'm not familiar with any of them.  

[Anonymous]

That rate seems low. I'm over 800 Fico and just locked in at 4%.

I would get everything in writing...but it seems like lenders use those catch phrases with everyone.

[Anonymous]

Make sure you shop around with a few different lenders. It is my understanding that the VA doesn't have a credit score requirement however every lender has their own rules regarding credit scores (lender overlays). Some lenders will give you a rate based on your credit score, typically anything  760 and higher is the best rate. Other lenders don't have tight overlays and one can get a pretty good rate as long as they're above 600. If you shop around ask the lenders what their credit score requirements are and what the rates are for each tier. The last wholesale rate chart I saw with one lender showed that with your credit score your rate would be .5% higher than the best rate. So your rate seems about right. I locked in 19 days ago at 3.25% with a 801 middle score. That was with zero origination, zero application fees, zero fees of any kind. Also included $2600 in lender credits that paid for our closing costs and most of our escrow.