Should I Attempt a Mortgage Loan Now?

[spatrick1234]

Here are my basic stats:

Annual Income: $126,000

Savings for House: $45,000

General Cash Savings: $10,000

House Cost: Approx: $175,000

Scores

• TU: 668
• EX: 643
• EQ: 639 (Hoping this will go up this month, paid off Amex right before reporting. EQ considers it a CC balance against a $0 limit)

I feel like I am flirting with approval on this. Any insight?

[namvet]

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@spatrick1234 wrote:

Here are my basic stats:

Annual Income: $126,000

Savings for House: $45,000

General Cash Savings: $10,000

House Cost: Approx: $175,000

Scores

• TU: 668
• EX: 643
• EQ: 639 (Hoping this will go up this month, paid off Amex right before reporting. EQ considers it a CC balance against a $0 limit)

I feel like I am flirting with approval on this. Any insight?

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  Looks like you could be pre-qualified for a home loan IMO. 

[languedoctor]

First time home-buyer here, so take this with a huge grain of salt...

Is there a short term way to boost those credit scores? I'm thinking mainly of cc utilization. Since you have well more than 20% saved for down payment . . . If you're in a situation where you can take a few thousand from your down payment savings and get your revolving utilization down to 10-20% (or less), you might be better off doing that. A median FICO of 640 may not prevent approval, but you might get stuck with a higher rate. myfico provides some national averages on mortgage rates @ http://www.myfico.com/HelpCenter/FICOScores/

[spatrick1234]

The only real debt I have is an auto loan for around $18,000.

I did have a balance reported on my Amex last month of $2500, which threw off my Equifax score because they consider it a revolving balance on a $0 limit card.

Naturally I pay off Amex each month, but this month I was sure to get it down before it reported to the CRAs. So it will show as $35. That should help my utilization on that one.

My biggest hurdle is just that I spent much of my early life thinking that having cradit was bad so my history isn't that long or robust. I've worked to get it up over the past few years, but I think around 680s is the highest I can go for a year or so.

My overall Credit card utilization is only 5% and that was just because it seemed my score was higher with a 5% utilization than a 0% utilization. I guess growing up very poor I had this mindset of paying for everything up front and not using credit. That has turned out to be a bad thing now.

[JM-AM]

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@spatrick1234 wrote:

The only real debt I have is an auto loan for around $18,000.

I did have a balance reported on my Amex last month of $2500, which threw off my Equifax score because they consider it a revolving balance on a $0 limit card.

Naturally I pay off Amex each month, but this month I was sure to get it down before it reported to the CRAs. So it will show as $35. That should help my utilization on that one.

My biggest hurdle is just that I spent much of my early life thinking that having cradit was bad so my history isn't that long or robust. I've worked to get it up over the past few years, but I think around 680s is the highest I can go for a year or so.

My overall Credit card utilization is only 5% and that was just because it seemed my score was higher with a 5% utilization than a 0% utilization. I guess growing up very poor I had this mindset of paying for everything up front and not using credit. That has turned out to be a bad thing now.

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Looks like an easy loan IMO. If you are self employed may cause you a few hiccups especially if less then 2 years. If it is salary and working with same employer for 2 years of more it should be an easy approval IMO.

With the interest rates as low as they are now I am not so sure I would opt to pay 20% down. I would probably put 10% down and go the FHA route (after checking the rates on conventional loans) and invest some of that money thats left over that have higher yields. Your credit rate may be a little higher with conventional loans then FHA is why the suggestion. Also make sure you do not put too much down and not have a small reserve fund for the what if scenario's.

[Anonymous]

It looks to me like your scores may be a issue. With credit tightening these days, lenders want to see a middle score of at least 650. However, different lenders use different methods do the numbers you gave may not be what they pull. In my opinion, even though you are in fantastic shape cash and savings wise, the scores are going to get you.

I am going through a loan right now and that is what we were told. Good luck!!!

[rckstrscott]

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@Anonymous wrote:

It looks to me like your scores may be a issue. With credit tightening these days, lenders want to see a middle score of at least 650. However, different lenders use different methods do the numbers you gave may not be what they pull. In my opinion, even though you are in fantastic shape cash and savings wise, the scores are going to get you.

I am going through a loan right now and that is what we were told. Good luck!!!

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I don't agree with the 650 statement. This forum is chaulk full of people getting mortgages below that 650 number. Way below in fact. If you have good income, good cash flow and low debt the scores become less a factor actually. I think you are in a good shape, as long as you have 3 tradelines, no late payments in the last 12 months, no new negative accounts like collections in the last year.

-scott

[boomhower]

Should be an easy FHA approval.  A lot of lenders like to see a 640 middle score which you have.  Only thing you need to think about is what lender and how much to put down.  With the amount of a loan you are getting I would try and do the 20%.  Rates are very low but FHA PMI rates have gone through the roof.  You'll spend a bunch of money on PMI that you don't need too.  And with FHA you have to pay PMI for five years, you can't end it early.  So your better off paying 20% down at the start and not waste that money.

[Anonymous]

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@rckstrscott wrote:

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@Anonymous wrote:

It looks to me like your scores may be a issue. With credit tightening these days, lenders want to see a middle score of at least 650. However, different lenders use different methods do the numbers you gave may not be what they pull. In my opinion, even though you are in fantastic shape cash and savings wise, the scores are going to get you.

I am going through a loan right now and that is what we were told. Good luck!!!

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I don't agree with the 650 statement. This forum is chaulk full of people getting mortgages below that 650 number. Way below in fact. If you have good income, good cash flow and low debt the scores become less a factor actually. I think you are in a good shape, as long as you have 3 tradelines, no late payments in the last 12 months, no new negative accounts like collections in the last year.

-scott

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You are correct Scott. I was first of all thinking of a FHA loan and then a NC Bond program that we are getting. With these two, they require a 650 score. Even though people are getting loans with low scores, if I were you I would try to raise mine slightly to get a better interest rate. They can vary a lot with just a 10 point spread.

[spatrick1234]

Good news. I was approved.

If I wanted to put down 20% it was instant approval with WF.

I also had them run FHA through underwriting and was approved in 24 hours.

One piece I forgot to mention is that I also work for WF. So i am not sure if that helped any, but there is a separate group that handles employee mortgages.