The past couple of months I have been searching for a home to buy. I am a first time homebuyer. Let me back up a little bit before asking my question.
April 2015 consulted with a mortgage company. Lender pulled mine and husband’s credit report. His scores are better than- mine and I need to do a little work. However, husband’s employment history not great due to loss of job a few years ago, and various employers since then. Now, back in his trade with new company, but makes straight commission—so loan can’t be in name because he doesn’t have two-three years of commission income. I however, have solid employment history in healthcare. I have you should shop around for rates and not put all eggs in one basket. So, the next day I contact another lender—he said we could do something now. The following week I set up an appointment, brought required documentation, and got approved. Loan is in my name and this other lender confirmed what other lender said about husband’s employment history. Anyway, I couldn’t help but wonder what he saw on my credit report for him to approve and the other guy say I need to do some work. Scores on both reports are the same. The only thing I can think of is the fact the other lender was trying to get me assistance with down payment and other grants since I am first time home-buyer, and those programs require a score of 640 or higher (two of my scores were close, and one was higher). The lender that ultimately gave an approval, I don’t think works with these programs.
Since, April, I have been monitoring my credit scores through MyFico. Scores shown are of the new model. When I first signed up for MyFico credit monitoring it was also around the same time that my credit was pulled for these two mortgage companies. So, I also have the “older” score versions (which were used by lenders), but I don’t know how much my scores have changed with the “older” score versions, because MyFico only shows how more scores change with new model. My scores have improved and my debt-to-income ratio is decreasing.
Now, back the home search, market right now is a seller’s market. And most of what we find that is in budget and what we want, goes too quick (like within 24 hours of being listed goes into contract). And anything else that would really work, it out of budget by about 10-20,000 dollars. If I keep paying on my bills (as I should) and using credit wisely, my scores will continue to improve. The amount I was approved for is based off scores from back in April. I worry that I should have done a little more rate shopping, or even just waited a little while longer before applying because my scores are better now. My current lender says, “no more credit accrual, pay what you have down, and NO credit inquiries.”
So, now my question:
Should I consider applying to a different lender to see if I can get approved for more, or even see if current lender could approve more since my scores have improved? Or will it not make a difference at all?
Couple of points for you to consider:
1) Mortgage companies only use FICO mortgage scores - not the newer FICO 08 scores (except one poster said he ran into a lender that used the 08s). You can pull your mortgage scores here -it is a soft pull. Use the 3 B report.
2) Lenders use your Debt to Income (DTI) to determine how much mortgage you can afford. Different types of loans have different maximum amounts allowed for your DTI. FHA allows a higher debt ratio than conventional loans and a lower score - and you will get market rate.
3) You didn't give us any debt info or income so it is difficult to see if another lender would approve you for a higher amount.
Do you have a recent copy of your credit reports? If not, go to www.annualcreditreport.com and pull your reports so you can see what is on there. This is the only free site and you can pull all three cr bureaus there