topic Re: Im goin in circles here! Please help! in Mortgage Loans

Im goin in circles here! Please help!

UpAndComing74 — Thu, 07 Jan 2010 20:30:21 GMT

After being excited that the tax rebate for first time homebuyers was extended I started my journey of credit restoration since at that time my credit union advised me that I needed at least a 620. My scores Were 517/542/572. This was Nov of '09. Now according to my fico my scores are TU 596/EQ 590. I checked scores on True Credit and it shows TU 611/EXP 612/EQ 602. B of A is telling me that I could qualify for an FHA loan with no minimum FICO needed. BUT THEN when I call my credit union, i'm being told that I would now need at least a 660. All I want to do is find a decent starter home with Lennar, or KB and take advantage of the tax credit before it's too late. Does anyone have any idea of the reason in variance of the above rules or requirements, or am I dreaming to expect to qualify for ownership before April of 2010? Please advise. Thanks.

Re: Im goin in circles here! Please help!

Anonymous — Thu, 07 Jan 2010 20:46:57 GMT

rue credit does not show you your FICO scores, but a score that they generate that resembles, but is not the same as, FICO...So ignore that.

What is pulling your score down?

Second, buying a home simply for the credit is not a good move. Either you are ready to buy, or you are not. The credit should be considered an benefit, but do not allow that tu be the deciding factor as to why to buy.

Re: Im goin in circles here! Please help!

UpAndComing74 — Thu, 07 Jan 2010 20:53:34 GMT

Thanks Mickie. My true reason to buy a home is that I currently pay $1000 for this fancy apartment and I cant stomach throwing away money every month. Whats holding my down? Lets see...according to my report I have 3 credit cards. One Visa with a 2,000 limit thats reporting as $2276, One MC with an $800 limit thats reporting as $803. 1 target store card with a $200 limit thats reporting as $172. Ive paid off the Target card, Ive paid the Visa down to 1400 and the MC down to $750. This was over a month ago and they havent updated. I have 3 old chargeoffs that I was advised not to pay. They are from 2006. But I have at least 12 accounts in good standing that have been paid on time without one late. These accounts start from 2008. So i figure a lender could look and see that Ive "turned" my life around since 2008 and started paying ontime. But FICO still has me in the high 500's

Re: Im goin in circles here! Please help!

Anonymous — Thu, 07 Jan 2010 20:55:25 GMT

and you will stay in the high 500's until you get you overall utilization under control Try to get all cards paid down to under 10% and you should be at or above the 620 you need.

Re: Im goin in circles here! Please help!

Anonymous — Thu, 07 Jan 2010 20:59:20 GMT

Also, keep in mind that the magical benefit of home ownership is largely debunked. It is great to own a home, but it takes years and years to gain any sort of equity(right now with this market and with selling fees you could be 5-10 years into the house before you had enough equity just to sell it at and break even), all the while you are pyaing more generally than rent in most places and paying for repairs. The average home probably runs anywhere from 2-300 per month in repairs (and often more in 1st time home buyers case as alot of times they are buying older homes and/or need alot of more stuff for the house/upgrades over time/etc). Each market is different for sure and there are other benefits to home ownership, but just make sure you are fully aware of what you are getting into.

Re: Im goin in circles here! Please help!

UpAndComing74 — Thu, 07 Jan 2010 21:06:15 GMT

Okay, so that's what I'll do. Over the next two pay periods, I'll put everything I have into these Credit cards to get them down to 10% and then revisit the situation. I hope that gives me the needed bump. Do they update monthly?

Re: Im goin in circles here! Please help!

XAVIERSMAMA — Thu, 07 Jan 2010 21:44:17 GMT

Also to piggyback on to what Mickie said, you really need to make sure you're ready. Once you get your credit scores where are you in terms of down payment and reserves? Even with an FHA I'm looking at about $7000-8000 in closing costs without any seller's assistance and this is on a $100000-140000 loan. So much more than the credit score determines whether you'll qualify before the tax credit expires.

Re: Im goin in circles here! Please help!

UpAndComing74 — Thu, 07 Jan 2010 22:43:39 GMT

XAVIER, I hear what you're saying. In speaknig with my loan officer at B of A, she's saying that I would need 3500. Dont know how true that is but I tend to be a little trusting. Thanks for the input.

Re: Im goin in circles here! Please help!

Anonymous — Fri, 08 Jan 2010 03:11:18 GMT

unless you are already under contract on a home, your LO can not know what your closing costs will be. they can tell you what the lending charges are going to be approximately, but not all of the closing costs. There are huge differences depending upon the property, sellers concessions, and date of closing.

You should expect 5-6% of home cost for closing costs (this is actually a higher percentage generally, the lower the home value due to fixed cost items running a higher %)

Re: Im goin in circles here! Please help!

Anonymous — Fri, 08 Jan 2010 15:04:25 GMT

Upandcoming -

I'm going through this rigamarole now. I am buying a house that is $140,000. The property taxes are about $1000 - $1200 a year (gotta love DE - 2 miles down the road in PA the property taxes are $5000) and my homeowners insurance is $540. I am putting 20% down. My "closing costs" meaning just to get the loan approved are:

FHA Closing costs of the loan, appraisal, survey, credit report and filing fees/transfer taxes are $3500 (If I wasn't a first time home buyer it would be another $1000 but DE gives you a discount as a first time home buyer). That is probably the $3500 your loan officer is talking about.

BUT:

Then you have to pay your taxes and home owners insurance premium- which for me is another $2100.(14 months at $100 a month for taxes and 14 months at $50 a month for home owners insurance) That's another $2100 that you have to bring to table.

Now FHA requires you to have something called MIP - Mortgage Insurance Premium until you have about 20 - 22% equity. They roll that upfront premium (about 1.7%) into your loan so you don't have to front it .. so my 112k loan is now 113,960. You also have monthly premiums to pay to keep that Insurance. It's based on your loan.. mine would be around $50.

So for my $140,000 house in a state with cheap taxes I have 28,000 down and $4,951 to bring to table. That's different than the $3500 I was told closing costs would be.

Make sure you ask your lender to send you a GFE (Good Faith Estimate) once you find a house that you like.. BEFORE you go under contract. That way you can find out what you have to actually pay to get the house. A lot of seller's are helping with settlement costs .. maybe 3%.. but if you buy a house that is a short sale or if the house gets into a bidding war you might not get any settlement help.

Also, I would call your insurance company with the property address and ask them to give you a yearly quote for the homeowners insurance. It is based on the property address.. and they can tell you if you would require flood insurance or anything like that in addition to your home owners insurance. I almost bid on one house but the flood insurance would have been another $1200 a year.

I hope that made sense.

Good luck.

Re: Im goin in circles here! Please help!

Anonymous — Fri, 08 Jan 2010 15:57:13 GMT

@UpAndComing74 wrote:
After being excited that the tax rebate for first time homebuyers was extended I started my journey of credit restoration since at that time my credit union advised me that I needed at least a 620. My scores Were 517/542/572. This was Nov of '09. Now according to my fico my scores are TU 596/EQ 590. I checked scores on True Credit and it shows TU 611/EXP 612/EQ 602. B of A is telling me that I could qualify for an FHA loan with no minimum FICO needed. BUT THEN when I call my credit union, i'm being told that I would now need at least a 660. All I want to do is find a decent starter home with Lennar, or KB and take advantage of the tax credit before it's too late. Does anyone have any idea of the reason in variance of the above rules or requirements, or am I dreaming to expect to qualify for ownership before April of 2010? Please advise. Thanks.

The difference in rules is do to added restriction by said banks due to the massive forecloser mess and/or people being upside down on their loans. If you look at the general fha rules although they might have changed it, it says that a fico score isn't even needed to get a fha loan but the banks themselves are adding to the rules to cover their loan investment to you.

You might want to look into to loans like usda which will fund 100% of the loan but they have strict credit requirements as well. Also check to see if your city/county has downpayment assistance grants that you might be able to qualify for. As mickie said you need to get your cc utilization down and you should see a good size score bump.

Re: Im goin in circles here! Please help!

UpAndComing74 — Fri, 08 Jan 2010 16:12:41 GMT

Thank-You steelfan. I hope that doesnt mean Steelers. as Im in Cowboy country. lol. You answer makes perfect sense. So it seems that the common thread is to reduce my utilization. On 1/15 I will pay off one card and then only have a balance of 1400 out of 2000 on the remaining card. So out of available credit of 3300, I'll have 1400 used which is 42%. Then I guess its a wiating game for the CC companies to update the report.

Re: Im goin in circles here! Please help!

MattH — Sun, 10 Jan 2010 04:53:18 GMT

@Anonymous wrote:

The difference in rules is due to added restriction by said banks due to the massive foreclosure mess and/or people being upside down on their loans. If you look at the general fha rules although they might have changed it, it says that a fico score isn't even needed to get a fha loan but the banks themselves are adding to the rules...
Among other considerations, the Feds are penalizing banks with the highest default rates, putting pressure on them to tighten underwriting standards.