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no bailout = no mortgage?

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Anonymous
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no bailout = no mortgage?

With all the dire financial news lately and the failure of the bailout package, I'm just wondering what the actual effects are in the mortgage market, particularly for folks at the lower end of the credit score spectrum. By early next year, will it even be possible for folks to qualify for a mortgage with a score under 700?

We're current homeowners working to bring our credit scores up so we can qualify for a larger mortgage. In meeting with a broker in late spring, we were told that FHA mortgages were still easy to obtain, with a minimum credit score of 560. Anyone know if this is still the case?

Also, I know that downpayment requirements had tightened up already - any further tightening on this or other requirements? Or is it just too early to tell? Please share any experiences or insights!

Thanks!
Message 1 of 5
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ShanetheMortgageMan
Super Contributor

Re: no bailout = no mortgage?

Many lenders are still offering FHA loans with lower scores, even down to 500 still (although many lenders are now requiring a 580 minumum score).  It's too early to say exactly what the fallout will be regarding anything happening today.  The financial world moves very quickly on speculation, but when it comes to actually rolling out new policies that result from financial news/happenings, it can take many months to over a year.  I'd just keep your eye on the prize, continue to work on improving credit & your credit scores, and when you are ready to buy, see what the requirements are at that time.  Trying to guess ahead of time on what will happen just adds stress.  However I can tell you if things do change in the next 6-12 months, I don't expect them to ease up on lending guidelines.
Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 2 of 5
Anonymous
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Re: no bailout = no mortgage?

thanks - I was just wondering if you were seeing any changes "on the ground".

We will keep working on improving scores because it's the right thing to do financially, as well as to help us qualify for a better interest rate. But I'm curious - I've heard that FHA will go as low as 500, but I don't know how you find a lender or broker willing to work with you under 560.

Last spring, my mid-score was 555 and my husband's was over 580, and we were told by two brokers that they couldn't do anything under 560. For a while, we thought we might have to move for change of job and I was really worried about our prospects, even with 20-25% down, low DTI, and good retirement savings. Should I just have called around some more?
Message 3 of 5
ShanetheMortgageMan
Super Contributor

Re: no bailout = no mortgage?


@Anonymous wrote:
Last spring, my mid-score was 555 and my husband's was over 580, and we were told by two brokers that they couldn't do anything under 560. For a while, we thought we might have to move for change of job and I was really worried about our prospects, even with 20-25% down, low DTI, and good retirement savings. Should I just have called around some more?

Those brokers were probably trying to fit you into a sub-prime loan program, thus the reason they said you needed a particular score last spring.  If your situation is particular, you'd want to check around with 3-4 different loan officers/brokers to find out what your options are.

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 4 of 5
Anonymous
Not applicable

Re: no bailout = no mortgage?

based on my recent experience, I woudl shoot for a 620 midscore if you could.  That seems to be the point at which it eases up a bit on approval.  We were at 583 midscore and although moving forward, it was a battle.  After getting a few things taken care of, we were up above 620 midscore and all of a sudden we breazed through the UW

Message 5 of 5
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