Hi everyone..... I'm positioning myself to purchase my home in the next 8-10 months. My defaulted student loans will be rehabbed by then (actually within the next 4 months). My BK was discharged in 3/1998 and I've got a few CCs that are 24 months never late. I also have a $7K auto loan that's 24+ months never late. My current scores: EX - 622 EQ - 549 (several dupes of the student loans) TU - 646 What should/can I do at this point to begin preparations for the mortgage process and what type of loan could I expect with this situation? Thanks
I'm no expert in mortgage area but to tell you from my experience on appying for mortgage I had the same scores all 3 reports in the 620's, I only qualified for sub-prime lenders and the deciding factor that was explained to me from a lender was my years at my current job (15 years) which showed stability. I would honestly try to get EQ into the same level as your other scores first befor applying. I'm sure someone in here is more helpful in this area I'm just explaining from my experiences with lenders at those scores. Kinetix
I agree. I think you're almost on the borderline, but enough so on the sub-prime side that most lenders will not give you the prime rates. Since you are almost there, I would wait until you could move you scores up a little bit more, especially your lowest score. That is definitely sub-prime territory, in fact it may be hard to get a mortgage with the score in the mid 500's.
You're best bet at conventional rates may well be FHA. I'm told they require 24 moths of perfect payment history post bk. They are a pain to close but, you get them with very little down and you get conventional rates.
They aren't really hard to close but, they are timeconsuming. The biggest hassle can be the inspections and then the repairs that FHA will require before you can close. Don't get me wrong here. Everyone should get a home throughly inspected prior to purchase but, FHA can sometimes be unreasonable. I've know a couple of people that were selling their home and the buyer trying to finance with FHA and they refused to do the repairs or upgrades or whatever that FHA required. At that point, the buyer had to start all over. All in all though it is a source of financing at conventional rates so if your options are limited, you just have to put up with it.
I'm in the same boat as you and am waiting for wife's student loans to rehab before apllying for a mortgage. I'm looking at attaining 620s across the board to help qualify for FHA and I'll have $10K for downpayment and closing costs in spring 2003. My wife will have great credit once these student loan are gone.
