Dauenson, Home Buyer in New Martinsville, WV

I have a middle beaon score of 585 and make 50000k a year. I would like to purchase a home is this doable.

Asked by Dauenson, New Martinsville, WV Tue Mar 16, 2010

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585 is low in this tight lending market. 100 percent loans are a thing of the past except for VA loans. It doesn't matter how much you make but what your debt ratio is.

Most buyers are purchasing homes with an FHA loan because they only have to put 3.5 percent down instead of 5 to 10 percent with a conventional loan. There are things you can do to increase your credit score with all 3 agencies.

First determine if your low score is from high debt OR from being late on payments OR both. If it is from high debt then you can pay down the balance which will up the score. If it is collections and late payments many times you can dispute those negative items and if they don't respond with proof within 30 days it will be deleted from your record.

On balances generally it works like this.

If you have a 1,000 limit credit card and are at 75 percent or above of usage it hurts your score a lot. 50 percent it is not a positive or a negative against credit and 33 percent or below balance the computer scoring model adds points to your score. The reasoning is if you are using a lot of credit then you are in financial trouble so it dings you for it. If you can't pay the balances down you can ask for a credit limit increase which will lower your available balance usage and help your score.

While it is true that FHA does not require a credit score the lenders who fund the loans do and they like to see a middle score of 620 or higher. Find a good mortgage broker who will go to lunch with you and point out what you can do to improve your credit score over the next 30 to 60 days.

Good luck-no legal advice.
1 vote Thank Flag Link Tue Mar 16, 2010
It is doable. However, do your self a favor, put a small earnest money deposit down and don't let the appraisal be performed until you have a loan submitted to underwriting with an approval with conditions. The loans I do down to 580 scores are very difficult to close. These lenders promise the ability to close the loans but then pick the loan to pieces causing delays and turn downs. Almost as if they don't want to close the loan. I can hook you up with a company that can help increase your scores over the 620 tier. You'll have better access to more companies and better rates. 585 is still only 3.5% down FHA (funds have to be yours - no gifts) and a lot of explaining on credit issues. You need to have at least 3 credit lines at least 1 year old each and no open judgments or liens. Good luck.
0 votes Thank Flag Link Wed Apr 28, 2010
Hi Dauenson,

You might consider working on your credit rating first to get your score up to where you can obtain financing. You make a great income it appears but your credit needs some work first. Once you get a good credit score you can then look for a mortgage product, and then you identify the property to purchase. Good luck!

Hannah Fliegel
The Credit Repair Expert
415-999-9348
0 votes Thank Flag Link Wed Mar 17, 2010
Not knowing any other specific details about your finances--visit with any qualified loan officer and see exactly what your budget can handle and check your credit score again--your officer may have tips on how to best improve your credit score in the fastest time. FHA loans currently do require a minimum credit score of 620 and 3.5% down--there may be some lenders that will allow a lesser score but with higher interest rates. In the meantime work diligently on repairing your credit--pay bills on time, pay off old debts, pay down debt, keep credit cards below 50%, dispute old negatives, etc.
0 votes Thank Flag Link Tue Mar 16, 2010
Most lenders want a minimum 620 fico score. I would suggest that you talk to a local lender or non-profit credit counseling service and ask them for ways to improve your score. You may be able to improve it quickly, maybe it will take a longer time frame.

You might be able to get a loan now, but the interest rates and points would really hurt you. You would be better off improving your score and then buying.

generally speaking income x 3 = safe mortgage.

you will need 3.5% down and more for closing costs.
0 votes Thank Flag Link Tue Mar 16, 2010
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