topic Re: Home Loan Question in General Credit Topics

Home Loan Question

Anonymous — Thu, 03 May 2007 20:06:47 GMT

Has anyone on this board successfully obtained a new home loan with a credit score under 600? Guidelines for qualifying for bad credit mortgages have recently changed, so I'm looking for someone who has experience with this in the last couple months. We're under contract with a seller, but can't find financing. Most of the items on our credit reports are paid off, but enough time hasn't passed for our scores to really increase. TIA

Re: Home Loan Question

Anonymous — Thu, 03 May 2007 20:39:47 GMT

You say "we" so I presume that's you and your spouse. Are all 6 scores under 600?

Mortgage broker is your best bet. You'll almost certainly be in subprime territory. Unless the payment is absolutely not possible, you could always take the subprime today, work on your credit over the next year, and then check into whether you can get prime in a refi.

If you aren't already working with a broker, feel free to PM me. I can point you to one you might be able to help you.

Re: Home Loan Question

Anonymous — Thu, 03 May 2007 20:41:08 GMT

What are you scores? What is your DTI. What is showing on the CB? Any open collections or charge offs? What are your reserves [how much money do you have in the bank, 401 K, etc]. How much are you financing? There are so many factors that go into a home loan. It is not solely based upon credit scores. Depending on the other factors, you may be able to get financing. I doubt you'll qualify for fannie mae or any type of prime lending with scores below 600, but not necessarily. My scores are just below 600 and we qualified for fannie mae on a refi recently. We do have excellent DTI and LTVR [loan to value ratio]. We also make a decent amount of money, so you see, scores are not the only factor in a mortgage. New home loan may be a different story, but these factors still come into play...

Re: Home Loan Question

Anonymous — Fri, 04 May 2007 02:20:58 GMT

Yes loans for people with a FICO below 600 are still being done, but the guidelines are much more prohibitive than a couple of months ago. The questions you need to answer are:

How much money do you have for a down payment? (Very important in today's subprime market)
How much income are you reporting on the 1003?
Can you document that income?
Are you a first time home buyer?

If you can document your income you have a much better chance to get financing. If you cannot document your income, then you will need a minimum of 5% as a down payment. (5% may not be enough)

It can be done if the everything lines up correctly, but it will be difficult.

Re: Home Loan Question

Anonymous — Fri, 04 May 2007 03:16:08 GMT

It will be close to impossible to get a 100% loan with a score less than 600. You also will not qualify for First Time Buyer programs or HUD loans if any of your bad credit or collections are less than 2 years old. You need to find a mortgage broker as they have many lenders with different programs to chose from. I am a licensed mortgage officer in Texas and the subprime lending has really changed a lot over the last few months. Good luck. Sandi

Re: Home Loan Question

Anonymous — Fri, 04 May 2007 04:35:17 GMT

FHA, VA and naca.com are at least 3 of the sources for a mortgage that do NOT look at your FICO scores. FHA and VA will look at DTI, intently. I believe naca does as well. FHA and I believe VA are very strict about no lates in the past year. naca probably is as well.

Under 600 does NOT mean you cannot get a mortgage.

Re: Home Loan Question

Anonymous — Fri, 04 May 2007 07:56:25 GMT

you said you are already under contract and can't get lending. I didn't realize you could do that unless you had a pre approval and the underwriters came back and said they didn't want to take the chance. I know you may want the house you are under contract for, but see if you can get to prime, I heard that s/p mortgages could be very ugly. I don't know what your scores look like you state under 600 you only need a middle score of 620. you said you paid some accounts and they haven't shown. You don't have anyone offering to do a rescore for you? Did you show the lender your proof letters if you have them?? Try to find a lender that can rescore you some charge a fee (seems unfair if you have proof letters) but from my understanding the turn around time is 72 hours. I just don't want to see you stuck in an ugly s/p mortgage when you maybe close to a prime situation. You also state most items are paid off what were the type of items collections? cc? charge offs? cc will get you the quickest boost where other pay offs may temp cause your score to drop short term.

Re: Home Loan Question

Anonymous — Sat, 05 May 2007 18:42:15 GMT

Wow! You guys all gave me such great and well thought out advice! In response to LadyFico's question, we received a pre-qual based on our income and were able to make an offer on the house. We are using a mortgage broker and I asked him, after reading these posts, about re-scoring. Apparently my husband's score needs to go up 2 points before we can get 100% financing and so we're going to pay a couple of things, re-score and see what happens. Right now we're at 95% with an 8% (ouch) interest rate.The loan will only be in my husband's name because my credit is much worse and we haven't started working on it yet. Thank you all for the encouragement and advice!

Re: Home Loan Question

Anonymous — Sat, 05 May 2007 23:49:55 GMT

jennmarie93,

What's your CC util? For a 2 point bump, that's probably the fastest way to get there, and then some.

Re: Home Loan Question

Anonymous — Sun, 06 May 2007 12:26:32 GMT

By CC util you mean the amount owed on credit cards right? The big one is Chevron...we only owe $170 but they won't update the balance until it's paid in full. I've paid it down from $422 and it still shows $422 on our credit report. I called them and offered to pay it in full if they could fax me a letter showing it was paid so the score could be recalculated by our mortage broker, but they say they can't fax anything. By the time they mail it we will have closed on our house. We have a $0 balance on a visa card and another that is in good standing with a $50 balance.

Re: Home Loan Question

Anonymous — Sun, 06 May 2007 15:55:32 GMT

Utilization is your balances in comparison to your credit limits.

Example: If you had a card with a $4000 credit limit and a $1000 balance, you would be utilizing 25% of your available credit.

Message Edited by HouseHunter on 05-06-2007 11:55 AM

Re: Home Loan Question

Anonymous — Sun, 06 May 2007 19:45:15 GMT

Then I guess our utilization if very low....0% on one card, 25% on the other, and approx. 50% on Chevron (although it still shows we're over balance and owe $400 when we actually owe 1/2 of that).

Re: Home Loan Question

Howsep2005 — Sun, 06 May 2007 22:09:59 GMT

Try this website

http://www.realcities.com/mld/kansascity/business/personal_finance/debt_management/mortgages/ask_expert_front.html

Re: Home Loan Question

Anonymous — Mon, 07 May 2007 04:25:51 GMT

Getting the Chevron down from 50% to 30% util should give you a bump.

Re: Home Loan Question

Tuscani — Mon, 07 May 2007 11:42:50 GMT

Noah_Bodie wrote:
Getting the Chevron down from 50% to 30% util should give you a bump.

Under 30% would even be better!

Re: Home Loan Question

Anonymous — Tue, 05 Jun 2007 21:46:14 GMT

jenn, I just got approved for the Fannie Mae Flex 100. My scores are mid 600's, but they looked more at my DTI according to my broker. They also like to see some assets, so if you have some funds sitting around in a supplemental retirement or anything similar it will help a lot. I actually had to come up with the closing costs, only around 3%.

Re: Home Loan Question

Anonymous — Tue, 26 Jun 2007 03:15:54 GMT

With a 600 fico with no mortgage lates or no lates on the rent you can do a 100% subprime loan with full doc (no pmi). Stated is 90% max (no pmi).

DR must be at 50% or less.

The only assets you will need is to cover closing cost but you maybe able to roll that in after the appraisal comes back.

Re: Home Loan Question

Anonymous — Tue, 26 Jun 2007 03:19:08 GMT

Not true... You can still go 100% LTV at 50%DR w/ no assets, no down payment going full doc. just not all lenders.

You guys know anyone please send them my way!!! =)

Re: Home Loan Question

Anonymous — Tue, 26 Jun 2007 03:28:43 GMT

The good thing about building a new home is they will start with little money down. TIP number 1... New home sales are down. As long as you get a preapproved letter from a lender you are all good. Key work PRE! The builder will ask for earnest money and most want 2,500 plus but they will take 500 bucks. Lots will do zero. Your goal should be zero.

Now all contracts have a way out but you may not get your cash back. Most contracts will state that if you get turned downed by the lender you will get your money back but the lender will need to provide a turn down letter.

I have a friend just started building with ZERO down and got a free TV.