Seeking credit and snail mail offer

[8bitmachinegun]

Due to tight finances for several years my house is in pretty bad shape and in need of several repairs. Toward this end I have been seeking credit, with limited success. I've primarily been trying to get credit cards, and succeeded in getting a Cap1 MasterCard ($500 CL) and hit the jackpot with AMEX ($8K on BCE, but at 24% interest). But I will likely need in excess of $20K for all the repairs I'll need. I also got turned down for about 5 other CCs, resulting in several hard pulls. Car loan refinancing also racked up several hard pulls, though I ultimately succeeded in cutting my car payment by ~$100/mo.

The other option is a home loan. I've been afraid to pursue this route for fear that I'll require an appraisal, which likely won't be in my favor due to the poor shape the house is in. The house was originally purchased in 2004 for $95K, which I've paid down to $76K. I nearly ended up in foreclosure after my job loss and BK7 several years ago, but tapped out my 401k to save the house. 

Zillow estimates that the house is worth $145k now, but I've had 2 or 3 flippers tell me the house would need $30K or $40K in repairs (not sure if that includes updates/remodeling to kitchen and bath) to fetch ~$125K. 

I also recently got a letter from a company called "Figure" or figure.com. They said I was pre-approved for $64K based on their AVM. Apparently final approval rests not on a formal appraisal, but on a few different AVMs. The fact that they seem to base their decision solely on AVMs seems to be in my favor, but I've never heard of them before. Has anyone here heard of them? Are they easy to work with? Do they foreclose at the drop of a hat?

They mentioned 'strong credit', so they must have done a soft pull on Experian, which is the only CRA I have a 'good' rating with.  I assume they're likely to hard pull TU and EQ when I apply, which could well sink my 'pre-approved' status and cost me one (or three) hard pulls.

I also recently got a Navy Federal savings & checking account (and membership, obviously.) I would seek out credit from them, but from what I understand they usually pull TU and EQ for loans. I plan to eventually get a CC from them, but wanted to wait 6-12 months for all the hard pulls to fall off and build up payment history with my two new CCs.

[CreditInspired]

Hi there

We need some DPs in order to assist you.

• 3 FICO scores
• Income
• DTI

I will say that if these declines are recent, it says you need to work on getting your credit profile in better shape. I suggest not even contemplating applying for another card until what's causing the declines are corrected.

Yes, every refinancing will require an appraisal unless your loan is an FHA loan. If yes, then you can do an FHA streamline mortgage. But even this comes with a few restrictions. You must have 12 months of near perfect payment history and the last 3 months of no late payments. 

What is AVM?

[8bitmachinegun]

Thanks for the reply. Here are the DPs you asked for, with a question:

* 3 FICO scores: EX 695, TU 623, EQ 635

* Income: $60K

* DTI: Not sure about this one. Does it include secured loans? Is it calculated per year or per month?

To expand on DTI a bit: I have about $450 in CC debt, a $76K (originally $97K) mortgage (at $540/mo), a $30K car loan (at $530/mo) and the usual utility bills. Monthly pre-tax income is ~$5k, about $3.2k after taxes & payroll deductions.

To be clear, this is not a refinance but a HELOC instead. AVM is "Automated Valuation Model", a house valuation calculated by a computer based on similar house sales in your area, as well as other factors (# of beds/baths, acreage, location, etc.) This is used by some lenders in place of a formal appraisal.

[CreditInspired]

Belo is a DTI calculator

https://www.credit.com/calculators/dti/

[8bitmachinegun]

Running through the calculator, the number I got was:

11/22

I did NOT include utilities, gasoline, car maintenance, etc. Please let me know if I should re-run the call.

[CreditInspired]

---

@8bitmachinegun wrote:
Running through the calculator, the number I got was:

11/22

I did NOT include utilities, gasoline, car maintenance, etc. Please let me know if I should re-run the call.

---

Correct; those things are not needed. Your DTI looks really good. I think you should get a Realtor or two to come out and do a Comparative Market Analysis (CMA) just to get an idea of what your home would sale for in its present condition. This actually just sounds like a different name from the AVM you explained to me. I guess it's called different things in different parts of the country. This way you will have a very good idea of what your house is worth before you apply for a HELOC.

EDIT: Do you happen to know your mortgage scores (specifically the middle one). Your FICO scores are low, which make me think your mortgage scores may be even a little lower.

GL2U

[8bitmachinegun]

I’ve already had a couple of realtors do a CMA. One said $90K, another said $104K. The difference with an AMV is that no one actually looks at the house. It’s all done by computer. In the case of the CMA, someone actually looks at the house.

This might be helpful: https://en.m.wikipedia.org/wiki/Automated_valuation_model

EDIT: I have mortgage scores, but they’re from before I went on my app spree.

[8bitmachinegun]

Got good news today from MyFICO - a 36 point bump in my TU score. That should help with getting some kind of credit, but I'm still not sure if I should try for a home loan. Any thoughts?

The MyFICO app didn't specify what caused the bump, but it was probably Cap1 and/or AMEX finally reporting my new cards. 

[iv]

---

@8bitmachinegun wrote:

I also recently got a letter from a company called "Figure" or figure.com. They said I was pre-approved for $64K based on their AVM. Apparently final approval rests not on a formal appraisal, but on a few different AVMs. The fact that they seem to base their decision solely on AVMs seems to be in my favor, but I've never heard of them before. Has anyone here heard of them? Are they easy to work with? Do they foreclose at the drop of a hat?

---

Well... they are as legitimate as any other flashy fintech startup.  (Mike Cagney, formerly of SoFi, is running it.)

They've been lending for less than two years, so there won't be much experience with them out there yet.  (And their customer base is pretty small - it's actually still possible that they haven't needed to foreclose a loan quite yet.)

They are actually targeting your specific demographic, so that helps.

Also, with the type of loan your are looking at (HELOC backed directly by the lender, not packaging it for sale to Freddie/Fannie), they are not required to use the standard credit scores that a Conventional/FHA/etc require.  They could choose a different scoring model (FICO 8/9, or their own internal score), and could choose to pull just a single CRA, if they wanted to.

The downside vs a traditional refi, HEL, or bank HELOC... is the rate - they are currently offering 4.99-13.74 on HELOCs.  Current floating rates on bank HELOCS are available in the 4.xx range, 30--year refis are in the mid 3.xx range, and it's possible to get 15-year refis as low as 2.75 today.

But given the condition of the house, a full appraisal might put those loans out of reach. (Not all bank HELOCs require anything more than an AVM and a drive-by, though.  It's still worth exploring the bank options...)

For any lender that depends on an AVM... as long as a photo taken of the house from the street (in many cases, a "drive-by" appraisal includes the results of the AVM and a basic photo of the house, to prove it actually exists) doesn't show it blatantly falling down, you'll pass the house value part of the application process.

[8bitmachinegun]

Thanks for the detailed run down. One other fact both puzzles me and complicates the situation: my mortgage does not appear on my credit report. Thanks to my BK7 several years ago, the mortgage servicer no longer reports anything, positive or negative, about my mortgage to any of the CRAs. As far as they're concerned, my mortgage doesn't exist. So I'm curious as how Figure knows about my mortgage, and if it's stealth status could complicate the loan process. Oh, and they also show that I owe $67K, when I really still owe $76K. That may be due to a loan modification I got a couple of years after the BK7.