topic Re: Denied on first loan application. Other options? in Mortgage Loans

Denied on first loan application. Other options?

Anonymous — Thu, 23 Mar 2017 14:14:31 GMT

My husband recently applied at our credit union for a mortgage because we heard good things about it. He's the only one applying because my scores aren't great right now from high credit card utilization and we had just got his middle mortgage score above 620, his highest was over 630, so we felt confident. We got the call today he was denied. They said his credit history was a factor (he has three collections from 2013 but we've been improving his credit since and haven't had any other issues), his credit scores weren't good enough because his lowest mortgage score wasn't over 600, and he hasn't worked at his current job long enough (almost a year, they said they like two years). They even said we didn't have enough money in savings. What? We have 2,000 dollars in savings and will be adding more.

I don't understand. He's had great and consistent employment history for almost ten years and has never been fired from a job but they sounded like this was the biggest issue. We feel so defeated since we've worked so hard to get to this point. From everything I've read on the forums, it seems strange that they would flat out deny him without allowing any letters of explanation or even advise him on what to do to increase his chance of approval.

We really need a mortgage right now so I don't want this to be the end of the line. I'd like to keep exploring my options. Any advice on where to go from here, or lenders to reccomend that would work with our cutrrent situation?

Re: Denied on first loan application. Other options?

StartingOver10 — Thu, 23 Mar 2017 14:23:00 GMT

@Anonymous wrote:
My husband recently applied at our credit union for a mortgage because we heard good things about it. He's the only one applying because my scores aren't great right now from high credit card utilization and we had just got his middle mortgage score above 620, his highest was over 630, so we felt confident. We got the call today he was denied. They said his credit history was a factor (he has three collections from 2013 but we've been improving his credit since and haven't had any other issues), his credit scores weren't good enough because his lowest mortgage score wasn't over 600, and he hasn't worked at his current job long enough (almost a year, they said they like two years). They even said we didn't have enough money in savings. What? We have 2,000 dollars in savings and will be adding more.

I don't understand. He's had great and consistent employment history for almost ten years and has never been fired from a job but they sounded like this was the biggest issue. We feel so defeated since we've worked so hard to get to this point. From everything I've read on the forums, it seems strange that they would flat out deny him without allowing any letters of explanation or even advise him on what to do to increase his chance of approval.

We really need a mortgage right now so I don't want this to be the end of the line. I'd like to keep exploring my options. Any advice on where to go from here, or lenders to reccomend that would work with our cutrrent situation?

I love credit unions as a whole. However, they are not the best place to obtain your mortgage (in general). You are better off going to a non-bank type mortgage lender that does nothing but originate, underwrite and fund mortgages. Stay away from the big box banks too.

It sounds like the particular credit union you went to for your mortgage has some specific overlays.

Mortgage lenders don't use the highest (mortgage) score nor the lowest. They use the middle score. So if your husbands mid score was above 620, then most mortgage lenders can work with that - most, not all.

As to the amount in your savings, $2000 does seem to be on the light side. How much house are you looking to purchase? If you are going USDA then you might be able to get in with very little down. I don't know enough about that program to help you. Others here know much more than I do about USDA.

Do you have a Realtor yet? Get a good Realtor to help you find a reliable lender in your area. Or check with friends and family that have successfully gotten their mortgage from a good lender in your area.

Re: Denied on first loan application. Other options?

MauiMan85297 — Thu, 23 Mar 2017 14:25:14 GMT

I don't think the medical collections 3-4 years ago are your problems especially if going FHA/VA unless they're huge debts >3k. Your problem is less than 2 years verifiable income as they want to see steady employment and yes $2k in savings isn't much when you typically have to come up with 3-3.5% but can get DP assistance from programs but still have closing costs. Granted when you apply you don't need to have it in your account just by the time you expect to close and your mortgage company can give you an approval based on that contingency. The 600 lowest score gets thrown out and they base it on you MMS. Hope this gave you some insight...

Re: Denied on first loan application. Other options?

Anonymous — Thu, 23 Mar 2017 14:37:28 GMT

@StartingOver10 wrote:
@Anonymous wrote:
My husband recently applied at our credit union for a mortgage because we heard good things about it. He's the only one applying because my scores aren't great right now from high credit card utilization and we had just got his middle mortgage score above 620, his highest was over 630, so we felt confident. We got the call today he was denied. They said his credit history was a factor (he has three collections from 2013 but we've been improving his credit since and haven't had any other issues), his credit scores weren't good enough because his lowest mortgage score wasn't over 600, and he hasn't worked at his current job long enough (almost a year, they said they like two years). They even said we didn't have enough money in savings. What? We have 2,000 dollars in savings and will be adding more.

I don't understand. He's had great and consistent employment history for almost ten years and has never been fired from a job but they sounded like this was the biggest issue. We feel so defeated since we've worked so hard to get to this point. From everything I've read on the forums, it seems strange that they would flat out deny him without allowing any letters of explanation or even advise him on what to do to increase his chance of approval.

We really need a mortgage right now so I don't want this to be the end of the line. I'd like to keep exploring my options. Any advice on where to go from here, or lenders to reccomend that would work with our cutrrent situation?
I love credit unions as a whole. However, they are not the best place to obtain your mortgage (in general). You are better off going to a non-bank type mortgage lender that does nothing but originate, underwrite and fund mortgages. Stay away from the big box banks too.

It sounds like the particular credit union you went to for your mortgage has some specific overlays.

Mortgage lenders don't use the highest (mortgage) score nor the lowest. They use the middle score. So if your husbands mid score was above 620, then most mortgage lenders can work with that - most, not all.

As to the amount in your savings, $2000 does seem to be on the light side. How much house are you looking to purchase? If you are going USDA then you might be able to get in with very little down. I don't know enough about that program to help you. Others here know much more than I do about USDA.

Do you have a Realtor yet? Get a good Realtor to help you find a reliable lender in your area. Or check with friends and family that have successfully gotten their mortgage from a good lender in your area.

Thank you so much for your reply! Yeah we have friends who have gotten their mortgages through our credit union and had no issue so we didn't realize just how strict their overlays could be. I figured since we've worked so hard to improve his credit since the issues in 2013, and haven't had any issues since and got his middle mortgage score where it needed to be, our CU was a safe bet. Guess not lol.

Our savings will be up to 4,000 by next month and we also qualify for our local down payment assistance program which will give us $10,000 towards the down payment and closing costs. The home we want is a townhome listed at 69,900 but the seller is very eager to sell and our realtor told us that we can easily lowball, so we were going to put in an offer at 60,000. We love our realtor and will consult her about lenders she could recommend as well.

Re: Denied on first loan application. Other options?

Anonymous — Thu, 23 Mar 2017 14:43:01 GMT

@gsully00 wrote:
I don't think the medical collections 3-4 years ago are your problems especially if going FHA/VA unless they're huge debts >3k. Your problem is less than 2 years verifiable income as they want to see steady employment and yes $2k in savings isn't much when you typically have to come up with 3-3.5% but can get DP assistance from programs but still have closing costs. Granted when you apply you don't need to have it in your account just by the time you expect to close and your mortgage company can give you an approval based on that contingency. The 600 lowest score gets thrown out and they base it on you MMS. Hope this gave you some insight...

Thank you! The collections aren't medical. There are three totalling about 2,100 when he left his job at the time. And he's been steadily employed for almost 10 years, minus the lapse is work in 2013 for three months but that was only lapse. He's only been at his current job a year and that was the issue apparently.

We qualify for the local down payment assistance program which will give us up to $10k and we told them that on the application. Again all their explanations seemed frivolous to me. Like you said, the lowest mortgage score doesn't even matter so why bring it up like it does? It doesn't make sense to me.

Re: Denied on first loan application. Other options?

StartingOver10 — Thu, 23 Mar 2017 14:52:40 GMT

Also, check with your down payment assistance rep for a lender. They frequently work with a limited number of lenders and can provide you the name and contact info for several of their preferred lender partners. Most DPA's have "lender partners" that they work with all the time.

Re: Denied on first loan application. Other options?

Anonymous — Thu, 23 Mar 2017 15:34:48 GMT

@StartingOver10 wrote:
Also, check with your down payment assistance rep for a lender. They frequently work with a limited number of lenders and can provide you the name and contact info for several of their preferred lender partners. Most DPA's have "lender partners" that they work with all the time.

Their website doesn't list any and they're actually hard to get ahold of, they don't even want you calling to schedule the appointment until your pre approval letter has been faxed to them. But I'll try anyway.

Some dispute remark that we JUST had removed two weeks ago showed back up on Equifax yesterday so we called and had it removed, again, so once it's officially off I'll be applying with a local lender. What a pain. I didn't even know dispute remarks could show back up, let alone only two weeks after removal.

Also, and I feel kind of silly for even asking after what I've read haha, but what's the general opinion of that Quicken Rocket Mortgage? I've read some good things but I've also read that they can pre approve you easily but will find a reason to not go through with the loan at the last minute. So I won't even consider them if that's a legitimate possibility. Like I said I'm just trying to explore all my options now. We really, really want this townhome. And staying in our rental isn't even an option for much longer.

Re: Denied on first loan application. Other options?

JayTee1 — Thu, 23 Mar 2017 18:15:19 GMT

@StartingOver10 wrote:
@Anonymous wrote:

As to the amount in your savings, $2000 does seem to be on the light side. How much house are you looking to purchase? If you are going USDA then you might be able to get in with very little down. I don't know enough about that program to help you. Others here know much more than I do about USDA.

Even with USDA, you're still going to have closing costs unless you can get the seller to cover them, and in this market, that might be difficult.

I'm going USDA (0% down) and my first closing cost estimate was $7,700. I don't think that included the $2000 earnest money I put down, and the taxes were overestimated because the closing was months away (buying new construction here, almost done, but it's been a year-long process).

$2000 might be enough in some real estate markets, but not where I live, not even close.

Re: Denied on first loan application. Other options?

JayTee1 — Thu, 23 Mar 2017 18:16:36 GMT

@Anonymous wrote:
@StartingOver10 wrote:
Also, check with your down payment assistance rep for a lender. They frequently work with a limited number of lenders and can provide you the name and contact info for several of their preferred lender partners. Most DPA's have "lender partners" that they work with all the time.
Their website doesn't list any and they're actually hard to get ahold of, they don't even want you calling to schedule the appointment until your pre approval letter has been faxed to them. But I'll try anyway.

Some dispute remark that we JUST had removed two weeks ago showed back up on Equifax yesterday so we called and had it removed, again, so once it's officially off I'll be applying with a local lender. What a pain. I didn't even know dispute remarks could show back up, let alone only two weeks after removal.

Also, and I feel kind of silly for even asking after what I've read haha, but what's the general opinion of that Quicken Rocket Mortgage? I've read some good things but I've also read that they can pre approve you easily but will find a reason to not go through with the loan at the last minute. So I won't even consider them if that's a legitimate possibility. Like I said I'm just trying to explore all my options now. We really, really want this townhome. And staying in our rental isn't even an option for much longer.

In addition to contacting each bureau, you should inform the original creditor (or collection agency, whoever is doing the reporting) that you no longer dispute the account. If they have the account on record as being in dispute, they can continue to update it that way if they want to.

Re: Denied on first loan application. Other options?

MauiMan85297 — Thu, 23 Mar 2017 19:18:42 GMT

@Anonymous wrote:
@StartingOver10 wrote:
Also, check with your down payment assistance rep for a lender. They frequently work with a limited number of lenders and can provide you the name and contact info for several of their preferred lender partners. Most DPA's have "lender partners" that they work with all the time.
Their website doesn't list any and they're actually hard to get ahold of, they don't even want you calling to schedule the appointment until your pre approval letter has been faxed to them. But I'll try anyway.

Some dispute remark that we JUST had removed two weeks ago showed back up on Equifax yesterday so we called and had it removed, again, so once it's officially off I'll be applying with a local lender. What a pain. I didn't even know dispute remarks could show back up, let alone only two weeks after removal.

Also, and I feel kind of silly for even asking after what I've read haha, but what's the general opinion of that Quicken Rocket Mortgage? I've read some good things but I've also read that they can pre approve you easily but will find a reason to not go through with the loan at the last minute. So I won't even consider them if that's a legitimate possibility. Like I said I'm just trying to explore all my options now. We really, really want this townhome. And staying in our rental isn't even an option for much longer.

Based on what I've read on this forum I've heard more bad than good, many of stories of getting you to the dance floor but firing the DJ before the party gets started.

Stay away from big box banks and ask your LO for recommendations.

Re: Denied on first loan application. Other options?

MauiMan85297 — Thu, 23 Mar 2017 19:25:45 GMT

NEW POST:

http://ficoforums.myfico.com/t5/Mortgage-Loans/my-quicken-loans-mortgage-experience-journey/td-p/4897996

Re: Denied on first loan application. Other options?

Anonymous — Thu, 23 Mar 2017 20:00:17 GMT

@gsully00 wrote:
NEW POST:

http://ficoforums.myfico.com/t5/Mortgage-Loans/my-quicken-loans-mortgage-experience-journey/td-p/4897996

Yeah I think I'll steer clear from them for the time being lol. I've found some local lenders that seem to have good reviews, so I'll try them first. I read that after your first mortgage inquiry hit, others don't count or hurt your credit as long as you apply within 30 days. True?

Re: Denied on first loan application. Other options?

MauiMan85297 — Fri, 24 Mar 2017 16:52:48 GMT

That's correct but wouldn't chance 30 days but within 3 weeks should be safe

Re: Denied on first loan application. Other options?

Anonymous — Fri, 24 Mar 2017 17:27:52 GMT

@gsully00 wrote:
That's correct but wouldn't chance 30 days but within 3 weeks should be safe

Thank you! Definitely wasn't planning on going crazy hahaha. We applied with a local lender and she wants us to settle two of the collections so we'll be doing that today. Also wanted my husband removed from a few accounts as authorized user so we took care of that as well. She mentioned his credit score being 609, and yet again, that's his FICO8 TU score but not his mortgage score. When we mentioned that to her, and that his mortgage scores are above 620 except for the lowest, she didn't respond to that. Just let us know about settling the two collections and removing him as AU for certain accounts. Am I missing something? I would really hate for us to have had worked so hard getting his mortgage scores where they needed to be just to be held back by the FICO8 scores.

Re: Denied on first loan application. Other options?

Anonymous — Fri, 24 Mar 2017 17:46:44 GMT

That sounds odd to me. When I asked my lender about our scores, she didn't use the term "mortgage scores", but she did show me which scoring versions the bank used, which are the "mortgage scores".

I've also been told I need to settle the collections on my credit. As much as I hate to seeing that they are all scheduled to fall of by January 2018, the construction on the house will be done by August, and it will matter what shows at that time.

Re: Denied on first loan application. Other options?

Anonymous — Fri, 24 Mar 2017 17:57:47 GMT

@Anonymous wrote:
That sounds odd to me. When I asked my lender about our scores, she didn't use the term "mortgage scores", but she did show me which scoring versions the bank used, which are the "mortgage scores".

I've also been told I need to settle the collections on my credit. As much as I hate to seeing that they are all scheduled to fall of by January 2018, the construction on the house will be done by August, and it will matter what shows at that time.

Right? Twice now we've been quoted FICO8 scores. It's frustrating. I'm not sure if I just should try yet another lender or what and see what they say.

I know what you mean about the collections. I'm thinking that once their settled his scores will improve, but I'm also worried about how long it will take. We are absolutely in love with this townhome and even though it's been on the market for months I'm still paranoid about someone getting it before we're even able to put in an offer. :/

Re: Denied on first loan application. Other options?

Anonymous — Fri, 24 Mar 2017 18:16:36 GMT

One of my collections was with Comenity. I settled the debt in exchange for "paid" status, and it was reported to TransUnion within 5 business days. My score jumped 26 points I think. It took about 2 weeks with Equifax and Experian, and had the same impact.

Fair Collections reported to TransUnion within 2 business days, and I had a jump as well. My mortgage scores started at 523/547/564 in February. They are now 571/574/602 as of March 22. So paying off those collections definitely helps.

That's just two of my collections. One is scheduled to fall off from Experian in August 2017, but I called Experian and asked for early exclusion and was told to call back on May 29th. That may be an option for you if the collections are scheduled to come off within the next 3-5 months.

Re: Denied on first loan application. Other options?

Anonymous — Fri, 24 Mar 2017 20:54:52 GMT

That's awesome. I know it will help his scores so I'm not stressing about the money. The collections are from 2013 so we can't wait for them to fall off unfortunately. We've already settled the account with Convergent for 350 and it should be off his reports soon. Jefferson Capital is closed so we have to settle that one tomorrow morning. Fingers crossed everything reports sooner than later! I'm so impatient lol.

Re: Denied on first loan application. Other options?

MauiMan85297 — Mon, 27 Mar 2017 21:27:12 GMT

FICO8 scoring has nothing to do with your mortgage, they shouldn't even be brought up unless they are telling you how to improve your score to get cards and loans. Only the mortgage scores plays a part in their decision. Some old collections that you pay may bring down your score because of re-aging the account but your UW will tell you if they need to be paid in order to be approved.

Re: Denied on first loan application. Other options?

Anonymous — Mon, 27 Mar 2017 22:32:57 GMT

@gsully00 wrote:
FICO8 scoring has nothing to do with your mortgage, they shouldn't even be brought up unless they are telling you how to improve your score to get cards and loans. Only the mortgage scores plays a part in their decision. Some old collections that you pay may bring down your score because of re-aging the account but your UW will tell you if they need to be paid in order to be approved.

Exactly! I knew when that lender brought that up I'd be moving on. I hope I wasn't wrong to take her advice to settle that collection. We never settled the other one she said to because I actually found another lender in town who's very highly rated with an amazing reputation, and I want his opinion first. We called today and gave all our info over the phone to the secretary and the broker will be calling us tomorrow morning to discuss everything. They already pulled my husbands report, and the settled collection hasn't reported yet and the authorized user accounts I removed him from haven't either. So now I'm really really hoping his mortgage scores don't drop any when they finally do and cause an issue. :/