Advice for first time home buyer

[Anonymous]

I am a first-time home buyer and my offer got accepted with a tentative closing date of November 5th. In my purchase offer, my realtor put in that I will be financing 95% of the conventional loan and putting in 5% down, and paying all closing costs out of pocket. When I did my preapproval, the mortgage lender also said that I was approved for such terms. But now they are telling me that I am not actually approved for those terms and they say I have to put it in 10 to 20% down instead. According to them, my scores are 720, 679, 679 so they take a mid of 679, and to qualify for a 5% down, I need a 680 (YES,  just one more point!). 

I can afford to put in up to 20% down although that will be taking about 50% of my total savings which I do not want to do because I like having the cushion as an emergency fund especially because it's my first time buying a home and I just want to feel secure in case something happens. It just makes me feel a bit deceived and now it feels like my lending officer is 'forcing my hand' so to speak to put a certain amount of money down that I am not comfortable putting because she says I have to be quick otherwise the whole thing will fall through and I might not end up getting the funding by the time I have to close. I have already done the inspection on the home and paid for the appraisal (which they have not ordered yet) so if it falls through, I'll not only lose my deposit but those two things as well. 

Does anyone have any advice on what I can do? Is there a way I can realistically and quickly raise my score by one point? Is it even worth trying that?  I just feel so disheartened by all of it. 

[VALoanMaster]

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@Anonymous wrote:

I am a first-time home buyer and my offer got accepted with a tentative closing date of November 5th. In my purchase offer, my realtor put in that I will be financing 95% of the conventional loan and putting in 5% down, and paying all closing costs out of pocket. When I did my preapproval, the mortgage lender also said that I was approved for such terms. But now they are telling me that I am not actually approved for those terms and they say I have to put it in 10 to 20% down instead. According to them, my scores are 720, 679, 679 so they take a mid of 679, and to qualify for a 5% down, I need a 680 (YES,  just one more point!). 

I can afford to put in up to 20% down although that will be taking about 50% of my total savings which I do not want to do because I like having the cushion as an emergency fund especially because it's my first time buying a home and I just want to feel secure in case something happens. It just makes me feel a bit deceived and now it feels like my lending officer is 'forcing my hand' so to speak to put a certain amount of money down that I am not comfortable putting because she says I have to be quick otherwise the whole thing will fall through and I might not end up getting the funding by the time I have to close. I have already done the inspection on the home and paid for the appraisal (which they have not ordered yet) so if it falls through, I'll not only lose my deposit but those two things as well. 

Does anyone have any advice on what I can do? Is there a way I can realistically and quickly raise my score by one point? Is it even worth trying that?  I just feel so disheartened by all of it. 

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You need a new lender. You do not need a 680 score to qualify for 5% down on a conventional loan.

The only thing that would make sense is if the lender could not get your file approved through an automated underwriting system at 5% down. If that is the case, they should have explained it to you.

[Anonymous]

Thank you so much! I will definitely start looking for a new lender! All they told me was that it would be some sort of underwriting violation because I didn't meet the credit score requirement but I don't even know what that means. 

[Applepro1990]

I agree you should look for another lender. Your scores are pretty good and it also depends on how much house you are approved for. Look into first time home buyer programs that will actually assist with paying money towards your closing. Some programs even offer assistance with down payments. A lot of assistance is out there these days. Good luck!

[NC_Mtg_Loaner]

Most LO's can also advise you on how to quickly add 1 point to your credit score as well....

[Anonymous]

in addition to what is said above about a new lender, getting your middlescore 1 point in 1 month should be relatively attainable.

we would need credit report details:

credit card - balance - limit

loan(auto/school/etc) - balance

lates/collections/bankrupcies/etc

hard inqueries

unless your carrying 0 balance across all your cards, getting 1 point can be manipulated

[Anonymous]

Thank you so much for the tip! I decided to go with a different lender because they have been very open with me from the moment I spoke to them. They even said they have a team of people willing to look over my credit report if I can get just the one-point increase. Although, I feel like I may have already done it because I recently paid off all my credit balances (All I had was my Sapphire card which had 2000 on it and I paid it in full last week. I also have an Amex Preferred that had 200 on it and I also paid that off.) Other than that, I just have a student loan and a car loan and that's it. 

I got an alert from myfico that my credit score went up today by 5 points but I'm not sure if that's the same credit score they necessarily look at for mortgages (Cause isn't that FICO 8 and they use FICO 2,4, 5 for mortgages?) But I will talk with my lending officer tomorrow to see what happens, keeping my fingers crossed that it will work out. 

Thanks so much again for the advice. It was getting so frustrating (and panic-inducing for a first-time home buyer like me) dealing with my previous lender because they wouldn't give me specific criteria that I was not meeting. They just kept saying due to the pandemic, the guidelines from their investors changed and even my credit score of 680 would no longer qualify for 5% down and I would need to put in 10% regardless. At that point was when I said, well goodbye and went with another lender who is far more willing to work with me and explain all the steps they are taking and now I am feeling a lot more optimistic that things will be okay. 

[FICOlearner123]

Good move with checking out for other lenders. You can purchase the mortgage credit score online for at least 2 bureaus and workwith you loan officer on how to maximize the score based on your constraints. Dont open an new credit lines. Try to pay off in full on any revolving lines if that makes sense. Also you can discuss with the loan officer if tranferring the savings to the lending bank can get you a better rate. All the best.