Question about qualifying for refinace mortgage

[tonsers]

My parents are looking to refi and I am wondering if qualfications have changed in this economic crisis.

I know that lenders used to pull all three reports for each person and that they looked at the middle score of each person.  Is this still the case?  My dad has one low score (EQ) that is currently being cleaned up, but his other two scores are above the 680 that is required.  Does is matter that one is lower?

They are looking to do this near immediately - so any quick responses would be most appreciated.

Thanks! 

tonsers

[ShanetheMortgageMan]

Yup, a tri-merge is pulled on each borrower who would be on the mortgage... the score that is used for qualifying/pricing purposes is the lowest qualifying score from all applicants.  The qualifying score is the lower of two or middle of three.  So Person A with 720, 680, 697 scores has a 697 qualifying score, and Person B has a 720 & 749 scores has a 720 qualifying score, and the lower of the two qualifying scores would be the 697 score... so that is used for qualifying and pricing out interest rates.

When you said, "..other two scores are above the 680 that is required"... what are you referring to that requires a 680 score?  Mortgages in general or a specific program, etc.?  Mortgages in general don't require a 680 score, conforming loan programs just require a 620 score (although 720 or 740 is needed for the best rates) and FHA has no minimum score but most lenders require a 580 (with a 620+ getting the best rates).  If you are financing above the conforming loan limits ($417k on 1-unit in the 48 contiguous states) then higher FICO scores are required, and in some situations that could be a 680.

[tonsers]

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@ShanetheMortgageMan wrote:

When you said, "..other two scores are above the 680 that is required"... what are you referring to that requires a 680 score?  Mortgages in general or a specific program, etc.?  Mortgages in general don't require a 680 score, conforming loan programs just require a 620 score (although 720 or 740 is needed for the best rates) and FHA has no minimum score but most lenders require a 580 (with a 620+ getting the best rates).  If you are financing above the conforming loan limits ($417k on 1-unit in the 48 contiguous states) then higher FICO scores are required, and in some situations that could be a 680.

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Shane,

Thanks so much for the quick response.  They have been working with a certain lender - and apparently a certain rate that they could get requires a 680.  They are trying to lock in now while the rates are so low.  However, I've been working on some credit clean up on the one report - getting some med collection deleted - and that process is not completed yet.  As soon as we are finished with the HIPAA process, his scores should go up... just not fast enough to bring the score up before they pull the trigger!

Once again, thank you so much! 

tonsers

[ShanetheMortgageMan]

You are welcome.  You might want to ask the lender if they had a 700, 720 or 740 score if the rate would get any lower.  You can also lock in a rate now, based on a lower score, and then if scors improve, have credit rechecked and use the new score to get the rates that that particular score would've been able to get back when you locked in the rate (same day's rates, just a new tier due to higher scores).