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Sub-600 FHA Borrower... Cleared to close with a 594 Middle score.. It is possible!! Thank you FGMC

New Member

Sub-600 FHA Borrower... Cleared to close with a 594 Middle score.. It is possible!! Thank you FGMC

I ran across this site by accident one night and read someones dreadful experience, and realized that my personal mission to homeownership was almost asvdevastating, My wife and I decided to build our first home and what an experience. First, the builders were pushing for an April closing when the house was scheduled to be completed in May. May came and then the joy of working with a sub-600 FHA lender started to take a turn for the worst. Even though we signed the contract to build, gave a preapproval letter and gave earnest money, the fun had just began.


Our MB was very difficult to get a hold of, but that was not a problem because she gave me a list of "to do's" to increase my credit score. One of her "to do's" hurt ALOT! She told me to pay off all of my credit cards and DO NOT USE THEM. So for three months I did not use one credit card. Of course, after reading this site, this dropped my score and I no longer qualified for the financing that O was pre approved for. I was also told not to pay off any previous collections because they were ALL over five years old. Total amount of collections being $4000 but eventually settled for $1900..


Now it is May and the home is built, and my file goes into underwriting and I am DECLINED. Now I am told to rush out and spend $20 on each of my credit cards, and PRAY!! Now it is the end of May and I have no idea which card will report at the end of the month, so that the bureau will update because I need 5 points for my middle score to be 580, and finance with the lender that I was pre approved with. Prayfully, Capital One came through for me in the home stretch because that same month, they automatically increased my limit from $300 to $500, and that $20 balance pushed me over the top. Now June comes and underwriting comes back with a laundry list of stips that aren't too hard. But now they want me to pay my collections (that I was told not to pay), verify rent (no problem, I rent from a management company), and couple other things.


The collection agencies were horrible to deal with. No one wanted to give settlement letters because they knew that I needed them for something important if I was calling after 5+ years, so they played the game and one company refused and made me pay the collection upfront. Taking a $1400 collection to $446 was a deal that I couldn't beat, so I took the gamble that they wouldn't give me a receipt but they did and it was considered PIF. Verification of rent was horrible. I was pre-approved with 3 months of reserves... Due to the fact that I pull cash out of my account and pay a Rental Company in cash, my rent became unverifiable. Even though, the lender called and verified successfully, I was told two days before one of my many attempt s of closing that I NOW needed 6 months of reserves.


From $4500 to $9000, in less than two days.. WOW!!! Let me remind you that the house we built and customized is built, and my wife and I drive by every Sunday to look at it. From the dirt lot to our future home.. BTW, the house that we are renting now has gone into foreclosure and the bank has it on the market SO LOW!! And our lease is up on June 28. And my wife is 7 months pregnant in June. I asked my aunt for a gift and she gave it to me, and this put me well over my 3.5% down payment, closing cost, reserves and extra funds. Waiting for the clear to close all week and they send an update that I need 21K in my bank account, and I am short funds to close..


I was calm because the last statement sent over had $28k in my account and now I know that the underwriters are rushing and not looking at everything correctly. My MB said that she will handle it, called me today and said that I will be closing tomorrow at 11am. My wife and I had to do a final walk around today, and I pray that everything is wrapped up properly. Please feel free to ask me any questions because I have kerned so much from reading these forums, I would answer any and all questions about the path to Homeownership.

Message 1 of 3
Regular Contributor

Re: Sub-600 FHA Borrower... Cleared to close with a 594 Middle score.. It is possible!! Thank you FG

   I am sending goog karma you way!!! hope it all goes well tomorrow, keep it posted.  This is a roller coaster, if my loan closes next week, I am only leaving that house in a body bag, I will never go thru this again.

Message 2 of 3
New Member

Re: Sub-600 FHA Borrower... Cleared to close with a 594 Middle score.. It is possible!! Thank you FG

This process consumed my every second but when I told myself that it is out of my control, I can only provide what I have, and just smiled. Everything had just came together. When I stopped stressing, it went fast. The more I stressed the slower it went.. Good luck on your journey. I pray that your path to homeownership is near the end as well!!
Message 3 of 3