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Advice Before Applying For Mortgage

iwan2
New Contributor

Advice Before Applying For Mortgage

Hi,

 

A friend of mine is relocating and needs to sell his home in one state while buying another in a different state. His current FICO (3?) score is 721. First, I'm wondering if that score will be good enough to get a decent mortgage rate. 

 

Second, he has a couple of baddies from two student loans he co-signed for his kids. One is showing as charged off entirely, and the other is showing one +60 and one +90. Frankly, I'm surprised his score is as good as it is with this negative information on it. 

 

I told him to pull his free reports and I'd go over it with him next week. I figure it can't hurt to first at least try filing disputes on all the negative information and see if the CRA can verify them. What's he got to lose? 

 

Lastly, I'm going to help him write a letter of good will to the creditors and see if we can get anywhere with that. I've already told him to pay his credit cards in full off his statement balance, which he's been doing for the last 3 months (leaving a couple dollars). His total credit line is roughly $18k. His average age of accounts is 20 years. He has 2 inquiries in past two years, and everything else looks good. 

 

Does anyone have any other advice on how I can help him, or experience with student loan debt? His kids screwed him and I feel badly. But he did co-sign and I'm not sure there's anything he can do about it. I'm meeting with him next week and would appreciate any advice from the experts here on what else he might do. I'll update if I find any further info out. 

 

Thanks! 

 

Starting Score: 630
Current Score: 801
Goal Score: 750

Message 1 of 6
5 REPLIES 5
Adkins
Mega Contributor

Re: Advice Before Applying For Mortgage

Tell your friend to pay to get all his scores from myFiCO - they have mortgage scores included. Your mortgage score can be very different from your FICO score. For example, there is a 20-30 point difference (negative, lower) from between my FICO scores and the mortgage scores MyFICO gives me. Another option is to go to a potential mortgage lender who'll do a soft credit pull only, and go over his score and what needs to happen to get the best rate. He has a good score, but score alone isn't the only determining factor in a loan.

If those are FEDERAL student loans, getting the lates removed is nearly impossible. Private loans, he'll at least have a chance.

Last HP 09-14-2020



Message 2 of 6
Adkins
Mega Contributor

Re: Advice Before Applying For Mortgage

Make sure he's paying his statement balance BEFORE the statement cuts, then paying the little amount that left in full.
Last HP 09-14-2020



Message 3 of 6
India_d782
Established Member

Re: Advice Before Applying For Mortgage

It also depends on the bank/where he’s looking to get the loan from. I’m a mortgage loan Originator and we look at the middle of the three scores. And then look at how much the monthly payments are to calculate into their dti. If he can have zero to little monthly payments as possible will be a huge help. How long ago are those lates from? His credit score right now is good to get a decent rate. I would be careful with the disputes, I’m currently working with a client who has a dispute on his credit report and we cannot move forward until this comment is removed. But every lender has their own criteria and expectations. I hope this helps a bit. I’m available to answer more questions as well.
Message 4 of 6
iwan2
New Contributor

Re: Advice Before Applying For Mortgage

Thanks for the advice everyone!. Especially for pointing out that having an open dispute can delay mortgage approval. I think he'll be fine. He's never missed a payment on his current mortgage, is well in the 700s and will have a decent income to expense ratio. 

 

Thanks again!

Starting Score: 630
Current Score: 801
Goal Score: 750

Message 5 of 6
idelgado782
Established Member

Re: Advice Before Applying For Mortgage

I agree. It seems he is in a great position honestly. I wouldn’t worry about much. Tell him we said good luck! Keep us posted.
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Message 6 of 6
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