FHA mortgage and mortgage score questions

Anonymous · ‎07-09-2015

I am hoping to buy a house within the next year. I've got a few "baddies" on my credit -- worst of all being a state tax lien and a judgment (paid). I'm working on things, became an AU on my mom's card, paid off a couple of old closed accounts and things are starting to look up. But I checked my mortgage credit scores and they're WAY lower than my Fico 8 (mid-score 567). I'm wondering if there's anything specific I can do to improve those mortgage scores. And if it's possible to get them above 640 within a year! (Sounds impossible as I type this. Depressing!)

Also, I'm looking at an FHA loan -- do they also use the Fico 2 scores for FHA loans? Are there any mortgage lenders who use Fico 8?

Anonymous · ‎07-09-2015

Impossible to say whats possible and whats not possible. Post your entire credit profile and we'll help you procedd.

Anonymous · ‎07-09-2015

Okay, not sure what all is relevant here, but here are the details.

judgment -- paid, hoping to get vacated, doesn't look promising, on until 2020

State tax lien -- not paid yet, still hoping for removal, not promising

2 small collections, due to come off early 2016

2 open credit cards -- $800 limit and $300 limit, both paid off each month

1 AU card with $25,000 limit, paid off each month, usage never above 10%

car lease with $4000 balance

student loans -- $14,000 haven't started paying yet

Just finished paying off two closed accounts from Chase. Been making faithful payments for 2 years not realizing that every month those payments were late! Tried to get that removed without luck. No late payments starting now!

I know it's hard to say what is or isn't possible, but if anyone knows details about which scores FHA loans use or what I can do to improve my mortgage scores, that would be super-helpful!

Anonymous · ‎07-09-2015

Oh, forgot to mention my short sale that is due to come off in 2016.

StartingOver10 · ‎07-10-2015

@Anonymous wrote:
Okay, not sure what all is relevant here, but here are the details.

judgment -- paid, hoping to get vacated, doesn't look promising, on until 2020
State tax lien -- not paid yet, still hoping for removal, not promising
2 small collections, due to come off early 2016

2 open credit cards -- $800 limit and $300 limit, both paid off each month
1 AU card with $25,000 limit, paid off each month, usage never above 10%
car lease with $4000 balance
student loans -- $14,000 haven't started paying yet

Just finished paying off two closed accounts from Chase. Been making faithful payments for 2 years not realizing that every month those payments were late! Tried to get that removed without luck. No late payments starting now!

I know it's hard to say what is or isn't possible, but if anyone knows details about which scores FHA loans use or what I can do to improve my mortgage scores, that would be super-helpful!

Mortgage lenders use mortgage scores.

For a loan that is insured by FHA, your mid score needs to be 620 or higher. Some lenders require a mid-score of 640.

FHA will insure loans down to a mid score of 580 but in general when you get below 600, the lender then wants you to put down more money (larger down payment). Not all lenders will go below 620 mid-score.

Stay away from the big box banks like Chase or Wells Fargo. Their criteria is very conservative right now - so they want higher scores. Go to a mortgage banker or correspondent lender and you will have more choices of programs. Mortgage bankers do only mortgages - there are no teller, no checking accounts no credit card offers. Just mortgages where they originate and underwrtie and fund their own loans (then they sell the loan to be service by one of the big box banks), so it is the best of both worlds.

Anonymous · ‎07-10-2015

@Anonymous wrote:
Okay, not sure what all is relevant here, but here are the details.

judgment -- paid, hoping to get vacated, doesn't look promising, on until 2020
State tax lien -- not paid yet, still hoping for removal, not promising
2 small collections, due to come off early 2016 These are probably whats pushing the mortgage scores down - FICO 8 puts less emphasis on small collections under $100, but the mortgage version treats all collections the same. Once those are gone your mortgage score will probably come up more than your FICO 8 score do.

2 open credit cards -- $800 limit and $300 limit, both paid off each month Leave a small balance on one card, and open one more bank card account.
1 AU card with $25,000 limit, paid off each month, usage never above 10% I don't advise AU accounts once you have your own accounts established.
car lease with $4000 balance
student loans -- $14,000 haven't started paying yet

Just finished paying off two closed accounts from Chase. Been making faithful payments for 2 years not realizing that every month those payments were late! Tried to get that removed without luck. No late payments starting now! Those rolling lates are killing your scores. Mortgage lenders are going to want to see at least 12 months of perfect payment history.

I know it's hard to say what is or isn't possible, but if anyone knows details about which scores FHA loans use or what I can do to improve my mortgage scores, that would be super-helpful!

Anonymous · ‎07-12-2015

I realize those rolling lates are doing me in. Any suggestions on what to do about them? I already sent a goodwill letter and was denied. Suggestions?

damnedanddetermined · ‎07-12-2015

Where do you begin to look for a mortgage banker?