topic Re: Credit score 540 need home loan. in Mortgage Loans

Credit score 540 need home loan.

Anonymous — Sun, 07 Jun 2015 23:35:23 GMT

My story the short version.

Credit is not so great, living in a moblie home and the new owner wants to hit me with almost 150$ in new fines every month, unless I agree to this new contract. If i sign the contract i'm stuck here for a year, if I end the contract early I can be sued for the months I would not be living here. My current payments are right at 650$ a month, Been here 2 years I'm current on all payments. I need to move out asap!! I have found a home sale price is 67,000$ I have 10,000$ cash to put down on this home, my payments would need to be around 700$. My credit history is all medical, I have 4 years of credit history 1 late payment in the last 3 years. Current on my auto 2nd auto loan(9k owed), CC is current. Wife is in the same boat as I with her credit history but her score is alittle better then mine. So my question, is there a snow balls chance in hell we can find a mortage loan?

Re: Credit score 540 need home loan.

sports1965 — Mon, 08 Jun 2015 00:15:23 GMT

+with a score that low probably not

Re: Credit score 540 need home loan.

youdontkillmoney — Mon, 08 Jun 2015 00:50:38 GMT

It'll be helpful to answer these questions, especially income level despite your $10,000 downpayment available:

http://ficoforums.myfico.com/t5/Mortgage-Loans/Do-I-qualify-for-a-mortgage-Info-that-is-needed/td-p/381846

The 540 credit score and assuming the mortgage FICO reflects similar levels is a cause for concern. You may want to work on improving it and relocate to somewhere else if you really do not want to be locked into where you are at addtiional fees. Most likely you'd not qualify for a loan, so your next best option is to move to someplace else, and work on bringing up the FICO score by making your accounts current, etc. This is a marathon, not a sprint. It'll take time, but doable if you make the right moves to bring the score up and present a stable income stream to warrant a loan that is repayable.

Re: Credit score 540 need home loan.

Anonymous — Mon, 08 Jun 2015 02:21:06 GMT

Credit. What are your credit scores and if you have any, what negatives (collections, charge-offs, late payments, BK's, judgments, tax liens, back owed child support, etc.) are on are credit and if they are owing or not. When were the negatives, this is important, month/year is preferred, such as 3/07. For BK's the Ch, filing & discharge date. Even if credit isn't less than perfect, if you only have credit for a short period of time (<24 months), authorized user accounts (which aren't considered by underwriting), accounts from your father with the same exact name because you are a Jr., etc. that is important information to know too.

MEDICAL

$2,818

2 accounts reported on Jun 04, 2015

Open

Account #1

$596

Balance

$596

High Balance

Feb 08, 2013

Opened Date

Feb 22, 2015

Last Reported

Individual

Responsibility

Dispute resolved; customer disagrees

Remarks

MEDICAL

Open

Account #2

$2,222

Balance

Original Creditor

$2,222

High Balance

Feb 08, 2013

Opened Date

Feb 22, 2015

Last Reported

Individual

Responsibility

Dispute resolved; customer disagrees

Remarks

MEDICAL

$1,024

1 account reported on Jun 04, 2015

MEDICAL

Open

Account #1

$1,024

Balance

Original Creditor

$1,024

High Balance

Jan 09, 2014

Opened Date

Mar 03, 2015

Last Reported

Individual

Responsibility

Account information disputed by consumer, meets FCRA requirements

Remarks

MEDICAL

$804

1 account reported on Jun 04, 2015

Open

Account #1

$804

Balance

Original Creditor

$804

High Balance

Mar 02, 2012

Opened Date

Apr 01, 2015

Last Reported

Individual

Responsibility

Placed for collection

Remarks

OLD PHONE BILL

$748

1 account reported on Jun 04, 2015

Open

Account #1

$748

Balance

Original Creditor

$748

High Balance

Sep 17, 2013

Opened Date

Feb 04, 2015

Last Reported

Individual

Responsibility

Placed for collection

Remarks

APPARTMENT <--- This is from an appartment the wife and I had been renting. These charges are for *damages/cleaning* they have pictures to prove we owe. But we have pictures to prove we do not owe anything the appartment was spotless before we moved out.

$542

1 account reported on Jun 04, 2015

Open

Account #1

$542

Balance

Original Creditor

$5,827

High Balance

Sep 08, 2010

Opened Date

Feb 06, 2015

Last Reported

Joint

Responsibility

Placed for collection

Remarks

MEDICAL

$512

1 account reported on Jun 04, 2015

Open

Account #1

$512

Balance

Original Creditor

$512

High Balance

May 05, 2014

Opened Date

May 18, 2015

Last Reported

Individual

Responsibility

Account information disputed by consumer, meets FCRA requirements

Remarks

MEDICAL <--- Was unaware of this, and will be taking care of Friday 6/12/2015

$124

1 account reported on Jun 04, 2015

Open

Account #1

$124

Balance

Original Creditor

$99

High Balance

Mar 27, 2015

Opened Date

Jun 01, 2015

Last Reported

Individual

Responsibility

Placed for collection

Remarks

Learn more about how to dispute items on your credit report.

Income. Gross income is what is important when qualifying, not net income. For self-employed/1099'd people it's your gross income minus expenses/write-offs, adding back in depreciation/depletion. I know this is pretty sensitive for some people to list their income, but remember this board is anonymous (for those of you who want to remain that way). If you don't want to list your income, and just want to receive advice without addressing that part of qualifying (which is very major), just say you have enough income, no one will pass judgment, but realize the advice given might not be able to be complete.

Both my wife and I working, 1 year on job for me, 2 years on job for her

Source of income. Where is the income coming from? Employment, pension, social security, disability, foster care, VA benefits, rental income, lottery income, etc. If it's from employment, is it salary, hourly, overtime, bonus, commission, etc.

She gets child support

Monthly debt payments. This goes hand in hand with income and the new mortgage payment to determine your debt to income (DTI) ratio. Only items on credit is the general rule, but also items such as alimony, child support, union dues and some other work related expenses are included too. Only the minimum required payment amount is what underwriters are concerned with. Items such as utilities, cell phone, insurance, etc. are not included in the DTI. If you have a question if something is included just ask.

Credit card payment is 49$ a month. Has been on time and is up to date. Truck payment is 355$ a month on time and up to date.

Employment (for those who are employed). What type of employment such as self-employed, S-corp, W-2'd, 1099'd, part-time, full time, 2nd job, etc. How long have you been on the job & how long have you been in the industry. A 2 year employment history is what most loan programs require. For those who have been self-employed less than 2 years, what did you do before your venture? For those of you who have less than 2 years employment history, did you graduate from a higher education school before you started working?

Been working as an auto mechanic for 7 years on and off. Wife has been working in health care for 5+ years.

Assets/Reserves. This is to determine how much you could potentially have as a down payment and also as reserves to help qualify (for example if your debt to income ratio is high this could help qualify you anyway). Savings, checking, 401k, IRA, stocks, bonds, CD's, mutual funds, money market accounts, gift, etc. all can qualify. If it is a pension or retirement account that does not permit you to withdraw or take a loan against (other than for hardship), and is only able to be used after you quit or retire, then it cannot be used as reserves.

10,000$ cash down

Location. What state & county. City or zip if you want but usually that is not needed. This is to determine FHA loan limits, what special programs might be available for you, how much property taxes & homeowners insurance will likely be, amongst other items.

Home that we are looking to purchess is in Jefferson county, mo.

Property. Is it a single family house, condo, townhome, 2-4 units, 5+ units, manufactured home, a co-op, condotel, the penthouse of a 45 story apartment building, suburban, rural, a lot of acres, a working farm, a gas station, etc. Also the condition of the property is helpful, as lenders have certain minimum requirements properties must meet (working utilities, etc.).

Single family

Value. For a purchase transaction, what is the home price range you are looking in, narrowed it down to, or are under contract for... and for a refinance transaction what is the appraised value of the home and when did you purchase your home.

asking price is around 70,000$ it is valued at 130,000

Occupancy. Primary residence, vacation/2nd home, non-owner/rental property.

Primary Residence

Transaction Type. Is it a purchase, refinance just for better terms, refinance to take cash out, looking for a 2nd mortgage, a reverse mortgage, etc.

Purchase.

Re: Credit score 540 need home loan.

Anonymous — Mon, 08 Jun 2015 02:55:19 GMT

Hope that is not to much of my personal info, I pulled the names and collection agents. dates and balances is all I left really.

Re: Credit score 540 need home loan.

Anonymous — Mon, 08 Jun 2015 03:03:22 GMT

I know this is kinda out there, but if it's just you two & you don't have much stuff, you could build a tiny house for less than $10K.

Re: Credit score 540 need home loan.

Anonymous — Mon, 08 Jun 2015 03:11:15 GMT

My wife and I have 3 kids, a tiny house would be fine if it was just me alone still, I would stay in my pickup and leave this place.

Re: Credit score 540 need home loan.

youdontkillmoney — Mon, 08 Jun 2015 13:53:28 GMT

The negatives on the report is what is bringing the score down, it is a serious issue that prevents a bank from wanting to loan to you. Step #1, clean up the record and build up the record. Given this, it doesn't matter your income level, but I just thought I'd say, you did not mention income level, it is ok to state income level as you are anonymous, we don't know you plus people here will need it to calculate various ratios for you such as debt to income level (DTI) etc so it helps to put all your detailed info down. Anyway, the FICO issue is more important, focus on clearing your report and raising those scores.

Re: Credit score 540 need home loan.

Anonymous — Mon, 08 Jun 2015 16:45:27 GMT

I ment to put my income, between the wife and I we make about 2200$ after taxes, total of 36,000$ last year. She also gets right at 400$ a month in child support.

Re: Credit score 540 need home loan.

youdontkillmoney — Mon, 08 Jun 2015 17:23:56 GMT

By the way for future reference what counts is BEFORE taxes or gross income NOT after taxes since that is what is used in bank underwriting for mortgages and your debt to income ratios, etc.

Re: Credit score 540 need home loan.

coterotie — Tue, 09 Jun 2015 15:26:23 GMT

First the good news is that credit scores have no memory. Meaning if you get it cleaned up today, your score jumps tomorrow.

If you haven't visited the rebuilding forum you should.

If you go FHA on the house you will only need about $4K in cash and a 640 to close so you have a little flexibility.

A couple of things jump out at me:

Medical, these can be cleaned up by following specific steps which you will discover on the rebuilding forum.
The smaller collection accounts. Do a PFD on the phone bill, they are usually the easiest to negotiate with.
The former apartment - you need this one completely gone as it will hinder your ability to even rent something decent in the future. Write them a letter offering to settle for $100 or you will be foreced to pursue the matter further, include the photos. Give them 5 days to respond. If they don't then go down to small claims court and file a small claims suit against the apartment building owner, management company (if one) and the collection agency. Sue them for the entire amount plus your expenses plus if your jurisdiction allows mental distress and the damages to your good name and reputation. If you have the evidence and any independent witnesses include this with the filing. Then write the collection agency and the apartment building stating your intent to depose every one who you can name and also other John Doe's as you may discover through deposition and discovery. My gut tells me this goes away quickly. (Lots of web sites will walk you through this process)

Once you get to about a 640, you are in the game for FHA. But if your file is like you represented, you could easily top 700 in 30 days.

FInally, I am assuming you are current on your fed and state taxes and have the appropriate copies to prove your income for pre-qualifying purposes.

Re: Credit score 540 need home loan.

Anonymous — Tue, 09 Jun 2015 15:28:29 GMT

@coterotie wrote:
First the good news is that credit scores have no memory. Meaning if you get it cleaned up today, your score jumps tomorrow.
If you haven't visited the rebuilding forum you should.
If you go FHA on the house you will only need about $4K in cash and a 640 to close so you have a little flexibility.
A couple of things jump out at me:
Medical, these can be cleaned up by following specific steps which you will discover on the rebuilding forum.
The smaller collection accounts. Do a PFD on the phone bill, they are usually the easiest to negotiate with.
The former apartment - you need this one completely gone as it will hinder your ability to even rent something decent in the future. Write them a letter offering to settle for $100 or you will be foreced to pursue the matter further, include the photos. Give them 5 days to respond. If they don't then go down to small claims court and file a small claims suit against the apartment building owner, management company (if one) and the collection agency. Sue them for the entire amount plus your expenses plus if your jurisdiction allows mental distress and the damages to your good name and reputation. If you have the evidence and any independent witnesses include this with the filing. Then write the collection agency and the apartment building stating your intent to depose every one who you can name and also other John Doe's as you may discover through deposition and discovery. My gut tells me this goes away quickly. (Lots of web sites will walk you through this process)
Once you get to about a 640, you are in the game for FHA. But if your file is like you represented, you could easily top 700 in 30 days.
FInally, I am assuming you are current on your fed and state taxes and have the appropriate copies to prove your income for pre-qualifying purposes.

Great points, but I want to clarify the minimum credit score requirement for FHA.

500-579 you can finance up to 90% LTV

580+ you can finance 96.5% LTV

Now many lenders have overlays which require higher minimum credit scores, but there are plenty of lenders who will go below 640.

Re: Credit score 540 need home loan.

coterotie — Tue, 09 Jun 2015 20:24:28 GMT

Thanks for correcting the numbers for me. I knew I was safe with the 640 as a pretty universal minimum.

@Anonymous wrote:
@coterotie wrote:
First the good news is that credit scores have no memory. Meaning if you get it cleaned up today, your score jumps tomorrow.
If you haven't visited the rebuilding forum you should.
If you go FHA on the house you will only need about $4K in cash and a 640 to close so you have a little flexibility.
A couple of things jump out at me:
Medical, these can be cleaned up by following specific steps which you will discover on the rebuilding forum.
The smaller collection accounts. Do a PFD on the phone bill, they are usually the easiest to negotiate with.
The former apartment - you need this one completely gone as it will hinder your ability to even rent something decent in the future. Write them a letter offering to settle for $100 or you will be foreced to pursue the matter further, include the photos. Give them 5 days to respond. If they don't then go down to small claims court and file a small claims suit against the apartment building owner, management company (if one) and the collection agency. Sue them for the entire amount plus your expenses plus if your jurisdiction allows mental distress and the damages to your good name and reputation. If you have the evidence and any independent witnesses include this with the filing. Then write the collection agency and the apartment building stating your intent to depose every one who you can name and also other John Doe's as you may discover through deposition and discovery. My gut tells me this goes away quickly. (Lots of web sites will walk you through this process)
Once you get to about a 640, you are in the game for FHA. But if your file is like you represented, you could easily top 700 in 30 days.
FInally, I am assuming you are current on your fed and state taxes and have the appropriate copies to prove your income for pre-qualifying purposes.
Great points, but I want to clarify the minimum credit score requirement for FHA.

500-579 you can finance up to 90% LTV
580+ you can finance 96.5% LTV

Now many lenders have overlays which require higher minimum credit scores, but there are plenty of lenders who will go below 640.

Re: Credit score 540 need home loan.

Anonymous — Wed, 10 Jun 2015 05:45:42 GMT

Would love to talk to someone about gettin finance with a 500. I will start tryin to work on the other stuff but I'm kinda in a bind, and need to move asap. I do not beleive what my landlord is trying to do is legal but I cant fight him. Sitting down with my wife, we came up with about 160$ in extra fees he is goin to charge us. If I can find someone to finance us with a 540 I'll be all over it. The asking price for the home is 67,000$ I have 10,000$ as a down payment that would be under 90% finance. I have all the paper work I need to show that taxes have been paid for the last 5 years. I can prove my wifes, and my income at any given time. I have talked to 3-4 differnt lenders and everyone says based off of the info I have given them I would not qualify for a FHA loan.

Re: Credit score 540 need home loan.

coterotie — Wed, 10 Jun 2015 13:20:51 GMT

Like I said, you could be 60 pts higher by the end of the month.

Likely even if a lender approves you some of the conditions may require you to start a payment plan on the collection stuff. If you apply for a mortgage you will lose all negotiating leverage.

If you jump on the stuff and get rid of it you will be money ahead and you forestall these guys getting a judgement which would really put a whammy on you.

It might be better to suck it up and pay the $160 to be out of there in a month. If your contract allows him to charge the fees then there isn't much you can do about it except move.

One other suggestion would be to see if the seller will give you a lease purchase option. Give hime $1,000 which will be used as the down payment and sign an agreement that you will pursue aggressively the financing of the home.

I think you will see through the rebuilding forum that you can get the issues holding you back cleared up very quickly.

@Anonymous wrote:
Would love to talk to someone about gettin finance with a 500. I will start tryin to work on the other stuff but I'm kinda in a bind, and need to move asap. I do not beleive what my landlord is trying to do is legal but I cant fight him. Sitting down with my wife, we came up with about 160$ in extra fees he is goin to charge us. If I can find someone to finance us with a 540 I'll be all over it. The asking price for the home is 67,000$ I have 10,000$ as a down payment that would be under 90% finance. I have all the paper work I need to show that taxes have been paid for the last 5 years. I can prove my wifes, and my income at any given time. I have talked to 3-4 differnt lenders and everyone says based off of the info I have given them I would not qualify for a FHA loan.

Re: Credit score 540 need home loan.

Anonymous — Sun, 04 Oct 2015 01:01:01 GMT

God I hope someone is still reading this. After I started this topic we found a home. It is owner finaced at this time. But my family and I are in a safe place the owner was understanding and im sure 10k in his pocket helped push this along. We moved out of our hell hole the last weekend of June. Now here is my problem. The new owner of the trailer park I was living at told me my old contract was void and he no longer had to honnor it. With that being said that the contract was void I took it as it was void for both parties. I guess I was wrong..... less then 30 days after we moved he hit me with this... Now the if we go back to the orignal contract it was a month to month contract as long as I paid on time i could move with a 30 day notice. Seeing my old contract was void I seen no reason to give the 30 day notice and we left asap. What do I do to get this taken care of. I do have the orignal contrat and have had it looked at. I was told this is not legal but I dont know how to fight it. I have contacted the credit bureau's and its been almost 30 days I have got nothing from the collection agent or the credit bureau that I reported this to as wrong info. HELP PLEASE! I'm Still tryin to work on my credit score alone and its up not where I need it to get a home loan yet but I've got time to do everything right and not in a rush. So im taken my time, been doing alot of reading on here.

Open

Account #2

$17,790

Balance

09 APARTMENT MH EQUITIES TIMBER R

Original Creditor

$17,790

High Balance

Jul 21, 2015

Opened Date

Sep 08, 2015

Last Reported

Joint

Responsibility

Placed for collection

Remarks

Re: Credit score 540 need home loan.

Anonymous — Sun, 04 Oct 2015 13:19:41 GMT

You need to have a lawyer look at this, explain your rights, and maybe even send the owner a letter. If it's not legal, then the lawyer can threaten lawsuit and likely the owner will respond by canceling the debt. But you need some solid legal advice. Call a real estate attorney.

Re: Credit score 540 need home loan.

Anonymous — Tue, 06 Oct 2015 07:05:31 GMT

Well I spoke to soon, got the letter today that all collections from this account has been removed! I'll take that as a win! It was bs collections and im happy to be done with this sob forever.

Re: Credit score 540 need home loan.

2b2rich — Tue, 06 Oct 2015 13:52:38 GMT

@Anonymous wrote:
Well I spoke to soon, got the letter today that all collections from this account has been removed! I'll take that as a win! It was bs collections and im happy to be done with this sob forever.

Who did you get this letter from?

If you disputed this with the credit bureaus and you received a letter from the credit bureaus that it was deleted, you would still want to get legal advice from an attorney because it doesn't necessarily mean it's over. They may have just not responded to the dispute and could easily put this back on your report, or worse yet, just sue you and hope you don't show up in court so that they win by default and then you're going to be asking us how to remove a judgement :/

If it is from the actual owner of the property who first reported it, then good! Make several copies of it and even scan it and back it up on a disc! You never know when someone like that may come back later and claim you actually do still owe it. Better to be safe than sorry! (Really happy for you that you got out of there, sounds sort of like the Hotel California!)