Profile picture for cbersell

With a credit score in the mid 600s, how realistic is it for me to get a home loan right now?

I have great debt to income ratio, have been in the same job for a couple of years now, have no foreclosures, repos, or bankrupcies.  First of all, I wonder why I can't get my credit to come up except for the fact that I have paid off most of my debt and don't use credit cards much.  But is a mid 600 credit score enough to get a home loan right now?  I hate throwing my money away on rent, especially when a mortgage for 100 to 150k would be less than I am spending per month anyway.  Also, I am a first time home buyer.  Is that enough to cause a death blow to my dreams of owning a home?
  • June 18 2009 - Buckeye
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Answers (7)

Profile picture for penguinphan
I got my home loan (FHA) 6 months ago with a 610, so I don't see why you couldn't get a loan.
  • June 23 2009
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you can get a loan. 620 credit with FHA 3.5-5 % down.
  • June 23 2009
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Very realistic. FHA would probably be the best route for you unless you were planning on putting down a substantial down payment.  Give me a call when you get a free moment and I can do a free prequal for you.  Call 602-688-1339 and ask for Brian.
  • June 23 2009
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cbersell:

Congratulations on your decision to investigate the possibility of home ownership. In order to find out what is best for you personally, I would strongly suggest speaking to a qualified mortgage lender soon. 

Why?  Starting the process now will still give you time to close on a home (should you make the decision to pursue buying) before the First-time Home Buyer's Tax Credit provision/benefit runs out on December 1st, 2009.  This can potentially be a big benefit to you and your homeownership plans, so taking advantage of the time you have available now is important.
Contrary to the fears you expressed regarding your being a first-time buyer, it can actually be huge positive for you.  The Tax Credit mentioned above is just one reason.  Other low/no money down payment opportunities may exist for you, depending on your final credit scores, whether you are a veteran, and locale.

I applaud your decision to remain out of debt through prudent use of your credit cards.  However, if you are paying cash for monthly expenses such as rent, utilities, etc., I would strongly urge you to keep/obtain receipts or pay with a traceable documentation, such as your personal checking account.  Documentation and/or proof of payment history is very important and definitely needed when applying for a mortgage, so a "heads-up" on that issue.  If you have been paying cash for your rent, please ask your landlord to start working on a payment history of that rent for your benefit now.  You will be asked to provide a history of that rent at the time of an application.

By running your credit report now, you and your lender will be able to address any issues or errors on it.  Unfortunately, right now paperwork at title companies, lenders, credit companies, underwriters, etc. can move very slowly, so again ... by starting now you are still allowing yourself time to get everything accomplished by the important December 1st date.
Only through this pre-qualification step, will your lender be able to answer all your questions and address your financial needs.  By taking part in pre-qualification, you will be able to determine what is your best financial currently and into the future.  Until you have that full and complete picture of your current financial status, you cannot determine that best course of action.

Should you have more specific questions, please do not hesitate to write. I'll be happy to assist.

Gene Mundt
Chicago Bancorp    
  • June 18 2009
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Rates have gone up which means, you're payment has gone up. You can still get a lower rate but it will costs you twice as much as it did a couple weeks ago. Each month you wait to buy is costing you more money in the long run. All you need the following:



620 credit score---FHA...Maybe lower, but this is the average with lenders

1% down VA loan

3% FHA loan. 

If you have these, let's do business!

 
  • June 18 2009
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Profile picture for BMFPitt
Don't just look at the mortgage.  When considering what is cheaper, you have to factor in the property taxes, insurance, and PMI.  If rent = mortgage, your cost of living in the house you bought could be 50% higher.

Have you checked your credit report to find out why it's so low?  Do you have any late/missed payments?  Do you maybe just have a small/short credit history?
  • June 18 2009
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Based on the information you've provided, you should be able to get a mortgage. The fact that you're a first-time homebuyer does not count against you. If you're qualified and if you close on your new home on or before November 30th, you'll be entitled to an $8000 tax credit. Click here - http://www.irs.gov/newsroom/article/0,,id=204671,00.html - for more information about the tax credit.

You should consult with a lender in your area and have him or her do a mortgage pre-approval for you before you go out looking for your new home. The pre-approval will help you determine how much home you can afford to purchase. You will want to compare a convetional mortgage with an FHA mortgage to determine which is righ tfor you.
  • June 18 2009
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