Mortgage Scoring models

LEXiiON · ‎02-06-2023

Hi All,

my stepson wants to buy his first home and is using the Colorado first time home buyers program. His mortgage scores are 731/780/780... now we have been told that he needs to raise his middle score to qualify. He stated that the scores provided by the mortgage company were about 70 points lower than his FICO 5 4 & 2. Are they already using the new scores?

Thanks,

LEXiiON

MauiMan85297 · ‎02-07-2023

Scoring models for a mortgage loan we use are 5, 4 and 2. Not sure if you're using them with a MMS of 780, they must be looking at something else.

VAMortgageGuy · ‎02-07-2023

@LEXiiON wrote:
Hi All,

my stepson wants to buy his first home and is using the Colorado first time home buyers program. His mortgage scores are 731/780/780... now we have been told that he needs to raise his middle score to qualify. He stated that the scores provided by the mortgage company were about 70 points lower than his FICO 5 4 & 2. Are they already using the new scores?

Thanks,

LEXiiON

Most DPAs require a 620 - 640 mid score to qualify. My guess is the lender is making an excuse to steer your step-son away from using a DPA program. Why would a lender do that? Because they make a lot less on DPA loans.

LEXiiON · ‎02-07-2023

Yeah it's weird. He's ways above the 620-640 especially if his mortgage middle score is 780. No idea what's happening. I contacted the mortgage broker but didn't get a reply on the scoring model. I guess it's either VS 4.0 (that got used for my HELOC last year) or FICO 10T. Can't explain that other than this. I was surprised that it's not FICO mortgage 5/4&2

VAMortgageGuy · ‎02-08-2023

@LEXiiON wrote:
Yeah it's weird. He's ways above the 620-640 especially if his mortgage middle score is 780. No idea what's happening. I contacted the mortgage broker but didn't get a reply on the scoring model. I guess it's either VS 4.0 (that got used for my HELOC last year) or FICO 10T. Can't explain that other than this. I was surprised that it's not FICO mortgage 5/4&2

I don't know of any mortgage lender (I'm a loan officer) that does not use 5, 4 & 2. Like I said above, I think the broker is using this as an excuse to get your step-son to forgo the DPA.

Your step-son should really compare the difference in the mortgage payment. Here's why.

I ran a scenario for client and compared the rate/payment for a loan with DPA and without. Here's what it looked like.

On a $375,000 purchase price, the principle and interest payment on the DPA loan was $2,511.87. That program offered 4% for the down payment and closing costs which totaled $15,000.

On a standard FHA loan, the principle and interest came in at $2,297.13. That's a difference of $214.74 per month.

Is it worth it to pay that much extra?