Hello all, the hubby and I are going to try to get a mortgage next year. His credit is pretty blank so we got him a secured card to see where that takes us. We use it for small purchases and are paying it off every month. My credit isn't great, I have a car loan that is showing 30 days late (I disputed with no luck) and that's pretty much all. I'm thinking I'll get a secured card within the next few months to see how that works out. I've also got a second job that, coupled with our tax return from this year and next year, should make for a nice start to a down payment. We've been paying our utility bills and rent on time and our scores are in the low 600s. My question is this: What will the lender look at to approve us for a mortgage? I was overdrawn in my account a couple of months ago (only $48.00) and I'm worried that they may need a perfect bank statement history... Has anyone been turned down because of an imperfect bank statement. Dumb question, I'm sure... but CNetters wouldn't judge me... . Thanks in advance, prissypoo
If you're not looking till next year, the NSF on the bank statement isn't an issue. We typically look for the last two months of bank statements....and if they show overdrafts, we can get alternate documentation such as a VOD (Verification of Deposit) where a form is sent to the bank to verify the funds in the account. You don't even necessarily need a down payment, and a motivated seller can pay up to 6% of the purchase price toward closing costs...what is helpful though, is if you have money put away which can be documented as "reserves" (ability to cover the mortgage payment for X months, should you temporarily lose your income.) If you're in the low to mid 600s, my rough guess would be that you can get a 30-year fixed, 100% financing, with 2 or 3 months of reserves in the bank. (If you have a 401k which allows withdrawals for "hardship," this is an acceptable source of reserves as well.) Nowadays, "automated underwriting" is frequently used, so as long as the system approves you, you don't have to have x number of accounts open for x number of months...usually don't need to show rental history either.
Regarding the 30 day late on the auto loan, did you try speaking with the loan holder directly? Sometimes they will remove if you give a valid/acceptable reason for the late. It's worth a try.....
Yeah... I actually sent a sticky sweet letter thanking them for their great customer service/asking them to remove the late... Didn't work. But I figure I'll dispute it during CHOD this year and see what happens. Thanks! prissypoo
You might gain quite a bit from adding a close friends' or family members' account to your file as an authorized user. The account must be have a perfect record, it ought to be very low utilization, and the older the better.
Good idea I have thought about it... my mother has great credit. The sad thing is, I'm too embarassed to ask her... I know, I know, everyone in Cnet-land just groaned. But she is my mother and I know she'd say yes. I'll build up the courage. Thanks for all the great feeback! prissypoo
Maybe you can ease this request a bit by telling her that you do NOT want the actual card; let her hold it. Let her know you only want the credit report "bump". With a good reason, such as working towards a home purchase, I'm sure she'll feel good about it.
One thing to keep in mind from the mortgage standpoint...when you are ready to buy, and your mortgage consultant pulls credit, the "authorized user" account will likely get lumped in with the rest of your debts, and if there is a balance, will be counted against your debt to income ratio. Be prepared with some documentation that the other person has 100% responsibility for this account (have them save cancelled checks which show that they always make the payments.) Or, if it's notated on your credit report that you are just an "authorized user" this works as well. But, you may need to point this out to the person working on your loan....typically, we pull credit and it gets automatically imported into whatever Loan Origination Software we are using. Sometimes there can be like 30 tradelines in there, and a loan officer might not give it a second look unless it's a derogatory.
Some new programs are not even looking for seasoned funds whatsoever. Seems the industry and underwriting is changing literally every week. With that said, I couldn't recommend the "authorized user" approach in your specific situation any stronger.
