Approval odds first time fha

[Anonymous]

Hi . This would be our first time buying a home and scared to make the leap to get pre approved . Where we live our rent is very high for our income but manage to make payments on time for two years. My husband is the one to apply for the home loan himself for I am self employed and it is a new business. We would be trying for a Fha loan , loan officer says min. 580 score.

3 year job history at same job

Credit score as follows

Experian score 2 ( 606 )

Equifax score 5( 590)

Transunion ( 590)

Income annually 36,000

We have 2 installment loans . One is a car loan we have had for 4 years and unfourtunatly was late nine times, last late 6 months ago . 2nd install loan is a snap on account owe 3,000 on paid off 3,000 already and has been open and good standing for 1 1/2 . 

In the process of trying to repair credit we opened a fingerhut account with a cl of 200 as of 7 months ago and hoping for a cl increase soon . Payed on time always . We currently have a utilization of 65% but plan on paying to 0 balance . 

Second we opened a kay jewelers account to build credit with a cl of 400 as of 7 months ago . Payed on time always also a utilization of 65% plan on paying off . To help raise score . 

We are hoping to get approved for about 100,000. So we no longer have to rent . Currently paying 1200 a month .

Any good advice on raising credit and  how to get approved . Again trying for fha loan . Min 580 score with 3.5% down . 

Thanks in advance 

[frugalQ]

how many times in the last year was your car payment late? I've read where a lender may consider a file with a single late within a 12 month period, but will not consider if there are multiple lates in that same time period.

although you meet the minimum score requirement, you may want to try and GW those late payments to try and get your scores up some...i think for FHA, credit score doesn't affect PMI, but it affects interest rates.

[Anonymous]

I appreciate your response . Its been 6 months since last late with car payment . And how do I do a gw ? Do I call them or write a letter and how many lates would one typically remove ? If any at all? Never did this before . Thankss

[frugalQ]

GW means good will.  Basically asking/pleading with the creditor to remove negative remarks on your credit file.  you can post the GW question in the rebuilding forum and they will give you details of out to go about it.  I'll admit that I've never actually done a GW.  

[DallasLoanGuy]

can you put more down than the bare minimum 3.5%.... ?!?!?!

i ask because sometimes that is enough to make the automated approval system take you when it would otherwise deny. (if automated approves, then the recent late is considered addressed and shouldnt be an issue)

you really need the automated approval because if the file is a manual underwrite, i dont think you will be able to overcome the recent auto late. the auto late is very significant. not like some $50 payment on a jewelry card you forgot about. you just dont fforget those auto payments.... because you need  the car to get to work.

http://ficoforums.myfico.com/t5/Mortgage-Loans/Automated-Approvals-amp-Manually-Underwritten-Loans-W...

[skigirl916]

You'd have to have no debt and only about $550 a month in expenses (including food, gas, entertainment) to afford, let alone qualify for, a $100K home with a $36K income.

https://www.chase.com/mortgage/mortgage-resources/affordability-calculator

All the other calculators figure about the same.

[Anonymous]

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@skigirl916 wrote:

You'd have to have no debt and only about $550 a month in expenses (including food, gas, entertainment) to afford, let alone qualify for, a $100K home with a $36K income.

https://www.chase.com/mortgage/mortgage-resources/affordability-calculator

All the other calculators figure about the same.

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those expenses dont include food gas and entertainment. That is really only things that are required to be paid per your credit report. Actual debts. That calculator also assumes 20 percent down on a conventional loan.

[Anonymous]

If need be yes we can put maybe 5% down .  What exactly do you mean by automatically underwritten . Having a hard time understanding .  My idea was to go to a broker to find me a loan . I heard they will be able to do more then going to let say a bank . 

[StartingOver10]

Go to a correspondent lender rather than a broker or big box bank.   A correspondent lender underwrites and funds their own loans. A broker essentially puts the package together and then looks for a lender to underwrite and fund the loan.

Big box banks include Wells Fargo, Chase, BOA etc. They are very conservative right now.

A correspondent lender is also called a mortgage banker. They only do mortgages - ask your Realtor and family and friends for recommendations.

[Anonymous]

As in like a private investor?