topic Horrible credit but have co-signer does it matter? in Mortgage Loans

Horrible credit but have co-signer does it matter?

Anonymous — Fri, 18 Sep 2009 23:59:20 GMT

My husband and I are first time homebuyers wanting to take advantage of the housing market in AZ. We have good income but both have horrible credit (low 500's) but his dad with crystal credit will co-sign and give us the down payment. We thought this would work, but lenders are saying NO that to go on the loan our FICO has to be 620 or up?! Even for FHA? I thought FICO didn't matter with FHA's. Is it true we are out of luck until we have better credit or is there ANYTHING we can do?

Re: Horrible credit but have co-signer does it matter?

Anonymous — Sat, 19 Sep 2009 00:33:04 GMT

with low 500 FICO you are probably out of luck NACA doesn't care as much about FICO (and there should be a long thread about that if you look around), but it is a very long and somewhat difficult process

FHA does not have credit minimums, but the lenders (and the investors who either directly fund them or who buy the loans from them) can and do institute their own limitations. Very few FHA lenders are doing less than 620 (and those that are tend to be a bit shadier), and some are even moving up towards 640/660 minimums.

Bottom line is that as far as credit goes, they look at all the applicants, and use the lowest applicants credit scores. Maybe his dad could buy the property now while prices are low until you guys could get your credit done and buy it from him.

Re: Horrible credit but have co-signer does it matter?

WannaHouse — Sat, 19 Sep 2009 00:45:45 GMT

PLEASE do NOT take this personally...it is a general statement, and not directed at you specifically.

If your credit is horrible, how can a mortgage company loan out lots of money? There is no proof that you will pay the mortgage. Low scores are due to poor money management usually. Of course, there are other reasons as well. No credit (too young to have much) a couple collections or medical bills that threw a monkey wrench into your credit file, etc.

My point is the lender HAS to have some basis to feel they will be paid back. That is where a fairly strong credit history comes in. A co-signer helps, but if they don't feel you will pay, they don't want to have to force your co-signer to pay...KWIM?

I sure hope you can work this out and get your house.

Re: Horrible credit but have co-signer does it matter?

Anonymous — Sat, 19 Sep 2009 05:01:16 GMT

Thanks for the info. I'm learning a lot and feel like I'm growing up a little. Sometimes you have to have brick walls up to know you have to go in a different direction. I like this forum and hope that I will work on my credit and be more responsible here so that we can own our own house someday when the timing is right. Thanks.

Re: Horrible credit but have co-signer does it matter?

DallasLoanGuy — Sat, 19 Sep 2009 18:36:50 GMT

Current programs allow for co-signers.

Co-signer helps with income.... But you have to qualify on credit yourself.

And you do not.

Sorry