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I have low Fico mortgage scores 499, 541, and 535. I found a lender that prequalified me with 10% down and a 5.5% interest rate.I have 33% credit card utilization which I plan on paying the balances off this week. I have LOTS of baddies on my credit report. 3 charge offs (2 from credit cards and 1 from student loans) and several late payments (mainly from student loans). 2 of the charge offs were there when I got the prequal back in May. The last one was being charged off but hadn't hit my credit report at the time. They are all paid but still showing charge off. For some reason they all updated this month too (July). I went under contract on a house June 27th. I have 30 days to get my ernest money back. The lender that prequalified me is now saying they aren't sure whether I will be approved by underwriting or not. No matter what questions I ask he just keeps saying "there's no guarantee". He hasn't sent it to underwriting to give time for some of the things I've paid to reflect on my credit report. Should I go get my check back before it's too late? What are the chances of me getting approved by underwriting?
I should also note that I have 5 cards in good standing never late low utilization and I had a mortgage loan before that was just closed out in June due to me selling the house. I had never missed a mortgage payment either.
No two underwriters are the same. No one knows why they make the decisions they make, and the lender that qualified you should know what the underwriters take as high risk or not. Do not pay all credit cards to 0 - bad idea, keep your utilization between 1-9%. Do not take my word for it, but if the charge offs are from years ago then you should be fine as long as they report as paid.
I could be wrong but I think someone is pulling your leg. I don't think any mortgage company is going to approve a loan with those scores. I believe the lowest would be 580 for that to happen.
I've actually found a few (not many) lenders that can do an FHA mortgage with scores as low as 500 but you have to put 10% down. Above 580 and it's only 3.5% down.
@Anonymous wrote:I've actually found a few (not many) lenders that can do an FHA mortgage with scores as low as 500 but you have to put 10% down. Above 580 and it's only 3.5% down.
You are correct.
@Anonymous wrote:
Hi. Which lenders have you found that take 580 credit scores??
Carrignton Mortgage is one i know of. 550 in fact for USDA.
does it have to be usda when that low?
no they also do va at 550
Freedom Mortgage is who I send all of mine when I need FHA <580 with 10% down. Have not used Carrington, but I believe they do as well.