Hi All, Me and the wifey(wife in training) are applying for a big ole mortgage on a house we watched be built for the last 5 months and will be closing mid May by the looks of things.(those Mexicans just don't stop working!!) Financially we can afford it no prob but our credit is a bit sketchy. I have decent scores but no history besides two 10 month credit cards on two credit reports(EQ, EX) and a good score and 2 years of history (1 honda car financed for 2 years and the 2 10 month credit cards) on another(TU). My questions are these. Will the mortgage company use the car payment as part of my credit history even if its not on the other reports?? I want them to use that. My scores are good but I heard that history is more important. My girlfriends credit is a bit more messy. She had a couple foreclosures on her report from last year but until then and since she has never paid late. Also she has those accounts that were in foreclosure process paid off. She also has 1 repossesion. Her credit however is still not that bad. Shes low 600's and @ 620+ I believe when averaged out. Taking this info above into account do you think we could still qualify? Also is there anything she can do when we meet with the mortgage broker. Divorce was what killed her credit but anything that was ever under her name was never late. Can that be taken into account? There is also a court ordered letter that states that the repossessed vehicle was the financial responsibility of the other person. Can we use that? I've never done this before, and obviously stressed out about it , but I'm wondering what these mortgage people are gonna say when I apply. I'm in south florida and I'm really looking for a good rate or advice from people that got good rates with sketchy credit. Thanks. jason TU 720 EQ 715 EX 695
Hi Jason, You are obviously better off applying for the mortgage on your own, the only drawback with that being your scores are a bit low. Imagine yourself in lender's shoes; would YOU lend money to someone who has a foreclosure on their reports in the past? I will leave it to others (fla-tan?) to give you mortgage-specific advice and more to the point. But let me suggest a couple of techniques to boost your score with minimum fuss that should help you. (1) Ask your current credit card accounts if they can increase your credit limits without pulling a hard inquiry on your credit report .. This reduces the debt/CL ratio on your cards and increases FICO (2) Move your balances on your credit cards around, so that none of the cards have more than 20% of the credit limit used up (3) Pay down your balances; but keep at least $1 balance on each card (4) If you have $1000, go to nearest bank, and open a savings account, and take out a secured loan on it to be repaid in 1 year. But pay it off before you apply for your mortgage. This adds a tradeline to your credit report, boosting your scores. Fleet Bank is willing to do this, as do many others. (5) Repeat (4) at more than one bank, to add positive tradelines to your report. But you MUST pay them all back before you apply for mortgage. If you decide to follow (4) and (5), make sure that you get zero balance statement(s) from the bank(s) just in case the reports are not updated in time for your mortgage. Good luck,
Since the house you want to buy is under construction, you can make an offer on it and pay some earnest money deposit. But you can start looking for mortgage only when the house is completely done and even then you can request for a closing date about a month into the future. So if the house is going to be done by May, you can ask for a closing date in mid-to-late June, that should give you almost 3 months time to boost your scores in the interim. Just my opinion.
lakpr's advice is good but i think he may have misunderstood your scores with your wifey's your scores are good enough to get the best rate on a mortgage (at least the bank i am dealing with says anyone above 680 gets best rates, 700 for others, but you are right there). the only thing that may work against you is the credit history. for scores, they go with the middle score, so in your case they will take 715 (they don;t average, they just take the mean score). but, you can use the TU report to show 2 years of history (you are in the right place b/c banks want to see at least 2 years of good credit history). also, they will ask you for other signs of good bill paying habits if this isn't enough (they will look at phone bills, utility bills, etc.), but it sounds like it should be. with scores like yours, you shouldn't have too much trouble if you sign for the loan yourself, and DON'T cosign with your girlfriend..... -------atiYana!
Hi, Plead guilty as charged ... I did not look at Jason's signature line.. But as an aside, when I got my mortgage, my credit union said that the cut-off score is 700 for getting the best rates, and yes they would take the middle score. -- lakpr
Thanks for the advice lakpr! I might try that tradeline advice! Anyone have any bad experiences with doing that? So all I have to do is apply for a secured loan and then pay it off? Should I wait for a month first or just get it one day and pay it off the next? Also I don't think I can afford the house by myself. If they just use me to get the house then do they even consider her salary?? Together we make say $117000 a year and me say $67000 of that. I don't think I could get the $242000 loan we are looking at. Any advice? THANKS ALOT!!
Oh yeah my scores dropped cause I put a plane ticket on my credit card which ate up 40% of my credit card funds available. I will pay that off and my scores usually hover in the 740's. My main worry is my salary? Do I make enough to get approved with what I have stated earlier?
you have to figure out your debt to income ratio. I believe it is your total monthly debt (credit card, rent, student loans, other loans, etc. EXCLUDING insurance, utilities, phone, cable, etc.) divided by your total monthly gross income. The lower the % the better. The lender will determine how much you can afford to borrow using this ratio. Obviously, there are other factors too but that is one of the main thing for sure.
and My wife had NO credit history 2 years ago, and now her FICO is 670, thanks to the technique I followed above. About the installment loan, you HAVE to cycle it through at least one month. Only then the bank will have time to report it to the credit reporting agencies. Then pay it off completely, and don't forget to take a zero-balance statement. I don't think you will have trouble getting a $242000 mortgage on your own. The thumb rule of house affordability, I have been told, is 4 times the gross salary assuming a 30-year fixed mortgage, plus the PITI payments not exceeding 36% of the gross. I think on both counts, you qualify; as long as you dont have any other regular monthly payments (student loans, child support, alimony, etc.). Without revealing exact figures, let me say that I got qualified for pretty much the same amount of mortgage, with almost the same gross annual salary, and I am in NJ.
lakpr THANKS!! Hope is a wonderful thing and you're giving me some! The only things that are reported on all my credit reports are: -2 credit cards with $500 max credit with say $10 oweing on each(to keep the wolves happy). -1 car loan for $300 a month (this is only on TU) and thats it..besides my name, address and the long long list of daily inquiries I make on my Equifax Creditwatch!! So all I claim I guess in expenses would be my car loan. Should I call the mortgage broker and get him to pull my record and see what he can do or should I just wait till the final day and see what happens? I hear pulling my CR will drop my score a few points but I dont want to wait till the last minute and not get approved and have no alternatives available...
Re: Re: Nervous Hi, Thanks for flattering me ... If you want to go to a mortgage broker and take his opinion, I suggest that you take your own report, of course with FICO scores, and ask his opinion. Do not let him pull your report having an unnecessary hard inquiry. That should give you an idea. In addition, I suggest that you get your paperwork in order, as many mortgage professionals consider the "alternate credit history" as well. That means bank statements for the last 24 months, utility bills for the last 24 months, statement(s) from your landlord(s) attesting to your timely payment of all your rent payments, etc. This should help a lot. About the car loan - try to eliminate that too from your reports. If we are going with the premise that you are going to apply on your own, can you get your girlfriend to pay the car loan off completely using a balance transfer check from her credit card, perhaps?? I know the interest rates are going to be high, but on the positive side, it will get your monthly expenses ratio down, and will enable you to get your house. Just a thought.
Re: Re: Nervous I used one of the mortgage affordability calculators and taking off the car loan payment never changed what I could afford. I think the only thing I can do is either 1. Put more down! or 2.Get a good raise!! Plus a good bonus this year could help as well. Do they include that as yearly income??(bonuses)
Re: Re: Re: Nervous When you apply for a mortgage, one of the primary requirements will be to produce paystubs for the last three months supporting your stated income. So, if you are expecting a bonus in the near future, it pays to wait until you receive your bonus on hand. They project your income to be 4 times the total amount in the paystubs from the last 3 months..., and a little bonus may work figures in your favor Higher down payment will CERTAINLY help in securing the mortgage. I have seen my friend put 30% down on a house, and still get 6.375% for 15 years on a NINA (No income, No asset) program ... slightly higher interest rate, but got the loan. The condo he bought was for $170K ..
