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I am getting close to going to apply for a mortgage but I have fears and questions HELP!!!

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Anonymous
Not applicable

I am getting close to going to apply for a mortgage but I have fears and questions HELP!!!

I have been working on my credit score since October a year ago. I have no old credit, no bad credit, just new credit. I went years (more than 7 yrs) saving and paying cash for what I bought because I didn't think having debt was a good thing for your credit score. After I started reading these post and researching I learned that you have to have credit on your report to have a high score. SO...I have had 2 credit cards for 1 yr and 6 months all paid in full  ($2700.00 available credit) balance currently at $4.00. I pretty much pay them off each month leaving just a minimum balance to show activity. (I accidentally paid them in full this past month and my score dropped 12 points on Equifax. This and the credit card company raised my credit limit $150.00. Not sure which or if both caused the drop.) I have a car loan that is a year old this month. All paid on time. I have no late payments just no old credit. (So my first questions is...will a short credit history hurt my chances when applying for a mortgage?)

 

My current scores FICO 8 - 747 Equifax, 754 Transunion, 728 Experian and mortgage scores Equifax 693, Transunion 739, and Experian 732. (Score 8's have risen since mortgage scores were pulled 2 in February and Transunion was done when it opened up to allowing you to view the scores. So they might have changed since then. Not sure how often Mortgage scores update but I assume along the same lines as the Score 8.



I have $15,000 for a down payment. My annual salary is $87,000. My debt is 1 auto payment of $ 404 a month and then just general utilities etc. No other  monthly debt on my credit report.  So DTI should be fine.

My concern is the short term credit history on my report. (Had I only known before that having a credit card would have made a difference I would have had one all these years.) Do you think with my scores and income I will be approved with less than a 2 year credit history. I plan to apply next month. The loan is for $295,000. less my down payment. I should have a higher down payment before I apply. The house isn't available for purchase until mid June. The owner isn't listing it and it is a family friend. I am actually getting it for less than he has in it. Total remodel a few years ago. They have built a new home and are just asking a little more than the pay off on this one. So I am not under a tight time line for approval and or closing. The appraisal was for a higher value than the asking price. About $25,000.00 more than I would be paying.



Also I think I  understand you have to show seasoned money for a down payment. How long does the balance have to be showing. As I am saving and the balance is rising every 2 weeks.  I believe I read 2 months banks statements are usually required. Should my bank statement show the whole $15,000 for 2 months before I apply? I have $10,000 in the bank and the other $5000 is in the form of my last two pay checks sitting at home. I didn't deposit them because I was saving them towards the down payment. I believe from what I read I should go ahead and deposit them so the money is showing in my account.



So basically my question is with 3 credit listings on 1 credit report (My auto loan is only listed on Equifax) and 2 on the other 2 reports. (All paid on time with no late payments or collections) With my mortgage scores 693,739,732 (I expect these scores might be a little higher because score 8's were lower when I pulled these reports) and annual w-2 income (same job 6 + years) of $87,000.00. Monthly payment (auto loan) $404.00. Do you think I have a chance at qualifying for a conventional loan. I know the down payment isn't 20% but I read there are new programs out there with lower down payment requirements. Or should I try FHA. I would rather do conventional to avoid the extra cost with FHA.



Any help, input, or suggestions are greatly appreciated. I just need to calm my fears. I don't want to apply too soon and not be qualified and then have the hard pull hurt my scores. Realizing I need to be able to do something within 30 days based on what I have read from the hard pull date. Also should I try a credit union, (I have read big box is not the best idea)? I have nightmares about this so please help me sleep better by giving me some much needed advice! Thank you in advance!

 

Message 1 of 6
5 REPLIES 5
StartingOver10
Moderator Emerita

Re: I am getting close to going to apply for a mortgage but I have fears and questions HELP!!!


@Anonymous wrote:

I have been working on my credit score since October a year ago. I have no old credit, no bad credit, just new credit. I went years (more than 7 yrs) saving and paying cash for what I bought because I didn't think having debt was a good thing for your credit score. After I started reading these post and researching I learned that you have to have credit on your report to have a high score. SO...I have had 2 credit cards for 1 yr and 6 months all paid in full  ($2700.00 available credit) balance currently at $4.00. I pretty much pay them off each month leaving just a minimum balance to show activity. (I accidentally paid them in full this past month and my score dropped 12 points on Equifax. This and the credit card company raised my credit limit $150.00. Not sure which or if both caused the drop.) I have a car loan that is a year old this month. All paid on time. I have no late payments just no old credit. (So my first questions is...will a short credit history hurt my chances when applying for a mortgage?)

 

My current scores FICO 8 - 747 Equifax, 754 Transunion, 728 Experian and mortgage scores Equifax 693, Transunion 739, and Experian 732. (Score 8's have risen since mortgage scores were pulled 2 in February and Transunion was done when it opened up to allowing you to view the scores. So they might have changed since then. Not sure how often Mortgage scores update but I assume along the same lines as the Score 8. Your scores are in excellent shape - your mid score is 732 so you qualify for excellent interest rates for conventional loans. You can get a conventional loan with 5% down. 



I have $15,000 for a down payment. My annual salary is $87,000. My debt is 1 auto payment of $ 404 a month and then just general utilities etc. No other  monthly debt on my credit report.  So DTI should be fine.

My concern is the short term credit history on my report. (Had I only known before that having a credit card would have made a difference I would have had one all these years.) Do you think with my scores and income I will be approved with less than a 2 year credit history. I plan to apply next month. The loan is for $295,000. less my down payment. I should have a higher down payment before I apply. The house isn't available for purchase until mid June. The owner isn't listing it and it is a family friend. I am actually getting it for less than he has in it. Total remodel a few years ago. They have built a new home and are just asking a little more than the pay off on this one. So I am not under a tight time line for approval and or closing. The appraisal was for a higher value than the asking price. About $25,000.00 more than I would be paying. I don't see any issue at all with your short credit history.



Also I think I  understand you have to show seasoned money for a down payment. How long does the balance have to be showing. As I am saving and the balance is rising every 2 weeks.  I believe I read 2 months banks statements are usually required. Should my bank statement show the whole $15,000 for 2 months before I apply? I have $10,000 in the bank and the other $5000 is in the form of my last two pay checks sitting at home. I didn't deposit them because I was saving them towards the down payment. I believe from what I read I should go ahead and deposit them so the money is showing in my account.Go ahead and deposit your paychecks into your savings account. You may have to write a short LOE as to why you didn't deposit them earlier, but it isn't an issue. Just tell them what you said here - you were saving them. It is better if the lender see's that you deposit your checks regularly into checking/savings.



So basically my question is with 3 credit listings on 1 credit report (My auto loan is only listed on Equifax) and 2 on the other 2 reports. (All paid on time with no late payments or collections) With my mortgage scores 693,739,732 (I expect these scores might be a little higher because score 8's were lower when I pulled these reports) and annual w-2 income (same job 6 + years) of $87,000.00. Monthly payment (auto loan) $404.00. Do you think I have a chance at qualifying for a conventional loan. I know the down payment isn't 20% but I read there are new programs out there with lower down payment requirements. Or should I try FHA. I would rather do conventional to avoid the extra cost with FHA. Go apply for a conventional loan - you are in excellent shape.



Any help, input, or suggestions are greatly appreciated. I just need to calm my fears. I don't want to apply too soon and not be qualified and then have the hard pull hurt my scores. Realizing I need to be able to do something within 30 days based on what I have read from the hard pull date. Also should I try a credit union, (I have read big box is not the best idea)? I have nightmares about this so please help me sleep better by giving me some much needed advice! Thank you in advance!

 


I like credit unions for auto loans, checking and savings accounts, credit cards but not as much for mortgages.

 

Go to a mortgage person - a correspondent lender is your best bet (also called mortgage banker). They do nothing but mortgages and have a wide variety of programs. You usually get an excellent rate - especially you since you have such a great mid-score. Get a referral from friends or family. if you don't know of any come back here and we can give you a few.

Message 2 of 6
Anonymous
Not applicable

Re: I am getting close to going to apply for a mortgage but I have fears and questions HELP!!!

Thank you so much!
Message 3 of 6
Anonymous
Not applicable

Re: I am getting close to going to apply for a mortgage but I have fears and questions HELP!!!

I completely agree with StartingOver10, you look to be in great shape! Where are you looking to buy?
Message 4 of 6
Anonymous
Not applicable

Re: I am getting close to going to apply for a mortgage but I have fears and questions HELP!!!

Outer Banks NC


@Anonymous wrote:
I completely agree with StartingOver10, you look to be in great shape! Where are you looking to buy?

 

Message 5 of 6
Anonymous
Not applicable

Re: I am getting close to going to apply for a mortgage but I have fears and questions HELP!!!

The only thing that I could possibly see messing w/ your DTI would be the cost of insurance in the Outer Banks, which is going to be higher than the national average. 

Message 6 of 6
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