Financing in Des Moines>Question Details

Sandra, Home Buyer in Des Moines, IA

Is there anyone who will give a loan to a couple with 550 credit score?

Asked by Sandra, Des Moines, IA Wed Jun 29, 2011

We make 60,000 and dont have much for down payment? We are looking to relocate to FL from IA. We do not have foreclosure or bankruptcies in the last 5 years. Also I have seen people say that we can raise our credit in just a couple of days. Is this true?

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That program from Wells Fargo is more or less a marketing gimmick, as most of the time they don't do a full underwrite until the property is under contract (evidenced by repeated reports of people getting denied for credit issues after they go under contract, but were "pre-approved" before). Not doing a full credit underwrite for someone with lower scores until after they are under contract is a disaster waiting to happen. If it takes less than 24 hours to get a pre-approval, and your situation is tricky, that is a red flag. I am not saying that people don't get approved for it, but you better have the some of the best looking credit for sub-580 FICO score from what I've discussed with a few WF loan officers.
0 votes Thank Flag Link Wed Jun 29, 2011
Locally Wells Fargo will do a 500 - 580 credit score only thru manual underwritting and buyers must have 10% saved as down payment no gifting this is a FHA loan that will have a higher intrest rate for the risk involved on the low score allowance and no late paynments on your housing for 12 months will be allowed

Also contract for deed homes can be bought with 5% rare down most will want 10% - 20% down and plan on 8% intrest

contact me if i can help you
0 votes Thank Flag Link Wed Jun 29, 2011
FHA requires a 500 credit score, and most FHA lenders minimum score requirements tend to be 600, 620, or 640 - with FHA anything less than a 580 score requires a 10% down payment
VA financing has no score requirement, but VA lenders score requirements are similar to FHA's.
USDA financing has no score requirement - however if you go through a lender most will have 620 or 640 minimum scores, but if you go Direct to USDA they do not have any minimum score requirements, but it takes a little bit longer.
Fannie Mae & Freddie Mac require a 620 score.

Credit score isn't the only item considered though, what is on your credit report is equally as important. If there are late payments or delinquent accounts in the last 12 months when you apply then that can really curtail your chances of qualifying.

USDA financing is 100% financing in rural areas, and there are two versions, Direct & Guaranteed. Direct you go direct to USDA, Guaranteed is where you go through a mortgage lender and at the end they send it to USDA. Guaranteed allows higher income limits, but the underwriting requirements are tougher. http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do has the income & geographic eligibility limits for USDA.

Credit improvement isn't an overnight feat. Tips on how to improve your credit score: http://www.myfico.com/crediteducation/improveyourscore.aspx

Have you checked your credit to see what is bringing your scores down?
0 votes Thank Flag Link Wed Jun 29, 2011
Hello Sandra!

I work in Central Florida and there is only one bank that is providing financing to customers with a credit score of 500 to 579, but the conditions are strict.

Here are the conditions:

30 years fixed interest

500 to 579 credit score
10% Down payment
3% Seller concessions
No gift money
5 to 5.5% interest rate

580 to 600 credit score
5% Down payment
3% Seller concession
No gift money

600 credit score or more
3.5% interest rate
Up to 6% Seller concession
Gift money allowed

About Collections:
If the person has collections, bank can still lend to this person, but not if customer has any past dues or disputes.

Let me know if you have any questions as I will be more than happy to assist find the loan and the property.

Javier Rodríguez
HouseStar Realty Group Inc.
Real Estate Broker
Lic: BK703443
Certified SFR Short Sale and Foreclosure Resource

: 407.429.5243 | P: 407.301.3401 | F: 407.373.0064 | eFax: 407.264.6260
0 votes Thank Flag Link Wed Jun 29, 2011
Talk to a lender or mortgage broker who can review all of your financial information and see what you qualify for, and see why your credit score is 550. To answer your question -- NO. You really need a minimum of 640.. I sometimes hear rumors of lenders willing to go to 620 or 580. But 550? Don't think so. A lender may be able to identify items on your credit report that could easily be fixed. Like paying off an old doctor's bill that has gone to collections. Or paying down a credit card. But you say no bankruptcies or foreclosures in the last 5 years....what about before that? If you had one less than 7 years ago, that's going to be an issue.

Not much money for a down payment? Remember, it costs money to buy a house. You need at least 3.5% down (for an FHA mortgage). You'll also want to have money for closing costs (if you can't get seller to pay them). You need money for the inspection and any tests needed. PLUS...what if something breaks the month after you move in? After you put all of your money into the house, will you have the $1500 to replace the hot water heater?

I hate seeing people barely scraping by, putting everything they have into the downpayment. Yes, lenders are willing to take all of your money, but is that best for YOU?

Work on reducing your debt, then save save save. Good luck!
Web Reference: http://www.sallygrenier.com
0 votes Thank Flag Link Wed Jun 29, 2011
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