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Lender rating
Since January 2009
with 20% their is not a hard and fast rule on a credit score I have seen FHA take credit scores below 580. depending on the entire credit profile. debt to income ratios are an important part of the equation.
With a low score, get ready to get reamed on the rate.... and fees....
Lender rating
Since January 2009
Corona Nick,
Why does everyone have to be getting reamed or screwed?
AA is correct -
However the reason your credit score is lower than it could be - Is much more important than the score itself.
Thanx, D
Andrew, not everyone, just the ones with bad credit... wouldnt you agree??
AA - You'd have the same attitude - If you had to live in Corona...
Thanx, D
LOL Danny... you must be as old as dirt... with that line of thinking..
While it is true that some low credit score borrowers will pay a higher rate (risk = rate), loan programs like FHA & My Community don't wiegh your credit score as heavily or at all and there are NO price adjustments on such programs for high or low credit scores. In addition, I have never seen someone's credit score impact their fees. That's just rediculous. Someone with a low credit score may pay more in points to buy down their rate, but fees are fees, I don't care what your FICO is.
There is only one problem with FHA and 20% down...you will still pay the MIP for 5 years. Just a little quirk that might be better looking a different direction. I've seen low scores get EA approval with 20% down...
The IE isn't all bad.
I even thought about moving there - But I couldn't find a 2 foot lift kit for my Benz...
Thanx, D
To answer your question 620, you may go lower however with an automated approval.
That would be for Fannie Mae and Freddie Mac...
Correction Dave...I just clsed a loan for a 512 FICO score with an 80% Loan to Value (LTV) ratio. As Davis Team pointed out, FHA does not consider the FICO score. So long as their is a logical reason for delinquency, it can be explained away.
No one is saying that a low credit score will make it impossible to get a loan, what Im saying, is that if you have a bad credit score, get ready to pay through the nose.... top dollar you will pay.....
Danny, there are some pretty rural areas in the IE, but as you know, Corona is the closest city, next to OC.... btw, I live right off Green River rd..... just passing the county line....lol
Davis, I agree that a bad credit score does not necessarily higher fees, BUT a person with that low of a score will most likely make the loan more difficult to execute, possibly requiring more paperwork... thus ultimately raising fees.
Can you only get an FHA loan if you are a first time buyer? What is the most FHA will loan?
I'd love to see more examples of how credit is tightening. I've seen some crazy stories of over-tightening in the marketplace. 30% down, 60% LTV. Love to hear more.
I'll reiterate that lending, at least private, is available, but perhaps at a steep price for lower scores.
Well, here, the FHA JUMBO is set at $567,500 for Pierce, King, and Snohomish, and requires a minimum credit score of 620, 2 appraisals if in a declining market, and low ratios, full doc, etc. Other conforming FHA (prior loan limits of $362,790 here) depends on the lender as to a minimum credit score. Some set it at 580, others don't set a minimum, still others have tiers depending on scores and have hits to fee in the pricing. FYI, borrowers, when we say a "hit to fee" it means that the "yield spread premium" is taking a hit, and that will determine the rate available to you. What may be "par pricing" for someone else, may be at a cost to you.
Remember, FHA always requires mortgage insurance, regardless of your loan to value. Conventional only requires it on the above 80% bracket on one loan.
Depending on the score and factors that make it low, there are going to be exceptions that will rely on compensating factors. It is critical to start taking steps to improve the score. Even FHA is now tiering (pricing adjustments for lower scores) so your score is now even more important than ever. If you have a low score you need to talk to a rep that is familiar with helping clients with low scores to work to bring them up. The effort is well worth it in the long run and it is not as difficult as many think.
Would not having a credit score because you've always paid cash for things and have never had a credit card actually hurt a mortgage application, provided that you've got 20-30% down? Call me old-fashioned, but the increase in the importance of needless credit in the US in the past 10 years is frightening. When my grandparents bought their house, they had never been extended any kind of credit before. My bank has offered me credit, but I've never taken it. A solid income, bank balance, or investment portfolio should mean more than any credit history.
Having a credit score in the US in no longer needless. Like it or not this is the system we are under. Besides getting a credit score is rather easy and doesn't require you to be heavily in debt. In fact many of those with very high credit scores have little to no debt. The credit score is designed to predict future payment based on historic data. If you have never had to make any payments then how does the mortgage company know you are going to pay them on time. I know it sounds silly but it is actually true. I know some clients with substantial assets that are not very good at paying monthly bills. Fortunately, in this day and age we can set up automatic payments so this whole process can be exceptionally easy. I would suggest you tip toe into the 21st century and get a credit card that allows you to auto pay the entire balance monthly. Set it up to pay from an account that you would normally use to draw your cash from. It also has the additional benefit of permitting you to review your expenses at the end of the year. You may also want to set up overdraft protection on your checking account. I know you will never use this but it is also a line of credit that will help establish a score. Ideally you should have 3 - 5 lines of credit.
There are also ways to have your cash payments or rental payments to a landlord report on a credit report. PRBC.com has it set up through them. I have only seen it advertised and written about, not yet tried it with clients. An interesting tool though. It seems you can take your bills, and have your positive pay history report as a credit line. I bought my house in 1998 on an FHA loan, that I am still in. I only owe 100k on it, or less, and am still at the 5.875% mark. I will be paying it off earlier than the 30 year mark by attacking my principal monthly. I purchased it without a credit score since I had just divorced. I used my rental history, electric bill, phone bill, and doctor's bill (I had cancer surgery and paid the doctor off on a monthly basis). For your documentation, telephone the electric company, or whomever, and ask for a letter of account on your payment history for the last 12 months or so. This is what my clients have done, and it works fine every time. Keep all of your originals, and only give legible copies to your mortgage professional.
When my dad was in banking, they had to ask for references and call the references, or send letters to be filled out. Nothing like things being faxed or emailed now. Another credit tip, keep your balance owed on your credit cards to 35% or below your limit. If you can, you can also raise your limit. These are very simple things that can raise a score substantially.
Kurtis, sorry if my post was unclear -- I admit that the credit score is necessary these days; what's "needless" is the credit itself.
I've been living outside the US for several years and am thinking of moving back, and during some preliminary discussions with my US bank -- I still have my savings account there -- the first thing they were interested in was my credit score. In my adopted country, Japan, I applied for a mortgage and they wanted my bank passbook. Seeing that the monthly inflow was always greater than the outflow, and that I had received a steady salary for many years, was what they were after.
In Japan, credit is not easily extended to non-citizens, but that's not really a problem because credit cards are rarely used here -- you pay cash in stores and restaurants, and your bills are deducted from your bank account automatically.
I keep hearing that I should take out two or three different credit cards, have a family member in the US manage them for me, carry small balances on each one, and pay them off over several months, to show future lenders that I'm "credit-worthy". What an imposition to make on my family!
Eamichal, that's encouraging news. I'll be newly married rather than divorced, but I have all my old rent records -- hand-signed my the landlord each month! No problems with utilities either, though I've forgotten to pay my phone bill a time or two.
It just boggles my mind as to why little things like that would count for as much as "important" things like income statements and savings history. I learned things the old-fashioned way, and now when I've reached the point in life where I'm looking to buy my own property, the rules have changed. If at all possible, I want to avoid getting a credit card that I don't need!
Make certain before leaving Japan, that you provide a copy of your landlord's contact information, Name, address, fax, etc. for a Verification of Rent to be sent. Some lenders will accept only that or cancelled checks. The receipts are great, but since it is out of country, if a property management company has it, even better for the lender to not send back additional conditions.
Also, if your fiancee has credit, can you add your name to a card that he/she has to establish a credit line jointly? Since you are to be married, this may be a viable option as well. Feel free to contact me with any questions! -E
I have a forclosure in 2007. Can I qualify for a loan.
Can a person with a foreclosure qualify for a home loan
If you were willing to pay an extremely high interest rate, and make a very large down payment, yes.
Dodgers.
Each situation is different but I can give you a general rule.
Fannie mae wants you out of foreclosure 5 years now. I think FHA is 3 years, unless their was unusual circumstance.
I dont know if you will qualify for a mortgage with a foreclosure from last year.
What was the reason for the foreclosure?
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What is the lowest credit score lenders will now consider for a fixed 30 yr. loan with 20% down?
virginai johnson, "ikwya"
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I've heard that lenders are tightening their lending criteria. What are the standards now?
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