Financing in Austin>Question Details

Steph, Home Buyer in Austin, TX

Will my poor credit keep me from getting a house?

Asked by Steph, Austin, TX Sun Aug 23, 2009

My boyfriend and I are planning on buying a home together. His credit score is around 740, while mine, as of about 6 months ago, is an embarrassing 500. I've paid down a lot of debts since then, but I doubt my credit score has improved much in so short a time. We have about $2k in debt, none which is to landlords, $20k for a down payment (a gift from his father), and are planning on buying a house around $100k. We would like to put both names on the mortgage, as we are a two-income family. We've tried to get pre-approval letters, but every time we're shot down for my credit score. Do we have any hope, or do I have to fix my credit score first?

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As of now you must have a 620 credit score or higher in order to use your income to qualify for a home mortgage. Raising a credit score a 120 points unfortunately is not easy nor fast. Have you had a lender look at the file with just your boyfriends credit and the 20K down payment gift? To me this seem like the only logical way for approval at this point, this is the first option I would look at in regards to debt to income ratios. If the ratios are still to high under this scenario and the file receives a refer with desktop underwriter then the only option then would be to wait till your scores are improved. If this is the case I would suggest paying the money to a reputable credit repair company.
1 vote Thank Flag Link Sun Aug 23, 2009
I am not a realtor so I don't know about the purchase of a $100K property. Since I am a mortgage banker, I may be able to help you. I would like to visit with you and spend sometime discussing your situtation. There are simply too many questions that I need answered and this is not the media to do it. But, pulling your credit will be necessary. If you cannot buy a home now I willl work with you to develope a plan to get there. You certainly can have some hope.
0 votes Thank Flag Link Thu Mar 25, 2010
There is always hope. Nothing lasts forever. Anything that can be damaged can be repaired. It just takes time, effort, and doing the right things. I am sure in 1-3 years you could do the right things and buy a house.
0 votes Thank Flag Link Thu Mar 25, 2010
And by the way, if you ever do an owner-finance situation (something I don't always recommend) make sure you get an attorney to review the paperwork BEFORE YOU SIGN and MOST IMPORTANTLY, make sure you order an appraisal on the home prior to committing to any owner-finance situation.

Because if you agree to buy a home for $110K and it's only appraised at $90K, chances are you won't be able to get a conventional or FHA mortgage when you do qualify.
0 votes Thank Flag Link Thu Mar 25, 2010
I'm a lic. mortgage broker and I would encourage you to think about repairing your credit in real, practical ways. First, make sure all your credit is accurate. Call me and I can give you a free copy of your credit profile or they are available online.

You'll need at least a 620 to qualify for any loan. FHA is a 3.5% down program

#1) Make sure your credit report is accurate
#2) Begin opening new credit. I'm not suggesting you get into debt but you'll need new credit to see an improvement in your scores.
#3) As your credit begins to improve pay your new credit like clock works, eventually your creditors will extend you more and more credit and this is how scores improve. Time and diligence!
0 votes Thank Flag Link Thu Mar 25, 2010
Why don't you try to get a loan only with the one of you who has a better score, you are not buying an expensive house ($100K) and giving 20% down give you a better position, but yor 500 Fico score is preventing you of getting a loan approved. Also you can ask for closing costs, But if you have a lot of debt, try to get an FHA loan, just with 3.5% down and also you can ask for closing costs up to 6%, But your score has to be at least 620. Good Luck!!!!!!
0 votes Thank Flag Link Sat Aug 29, 2009
Can he qualify for the loan without your income?
You would still be on title.... As Texas is a Community Property State.
We will pull your credit to add your debt payments to his loan application , but YOUR credit will have absolutely no bearing on the loan unless you have a judgment or something. If it does, get a different lender who knows the guidelines. This would be the same for FHA or Conventional mortgage.
0 votes Thank Flag Link Tue Aug 25, 2009
Steph: Unless you are planning to go FHA, your boyfriend may be able to qualiy on the loan by himself. You could and should be on the title. Then when you get your credit improved you can consider refinancing with you on the loan. If it is an FHA loan then your credit will be used. I suggest that you get with a mortgage lender that will recheck your credit eventhough it may have been 6 months.
0 votes Thank Flag Link Tue Aug 25, 2009
You can do owner financing in this situation. Guaranteed.
I have successfully placed several folks with bad credit into
homes that do not require credit checks.

If you're interested in how it works, please contact me.
0 votes Thank Flag Link Sun Aug 23, 2009

I am a local Mortgage Banker and we work with borrowers with less than perfect credit all the time. The first step in the process is to see where you are now in regards to your credit. Once we know your current credit scores we can create a timeline to give you a much better idea of what needs to be done and how soon. Its very possible you may qualify right away or in a very short amount of time. We have a very strong relationship with a credit repair company that offers some of the lowest prices in the country. Give me a call and lets talk about it.

Steve Ferguson
0 votes Thank Flag Link Sun Aug 23, 2009
I am a credit repair consultant contact my office schedule time review all particulars.

Have you considered his name on mortgage? Both names on title? could be a solution

Many issues are involved increase credit scores to obtain a loan DEPENDS on circumstances you might have scores increase within 60 - 90 days.

National Featured Realtor and Consultant, Mortgage Loan Officer, Credit Repair Lecturer
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0 votes Thank Flag Link Sun Aug 23, 2009
6 months is actually plenty of time to raiser your scores - IF you have been diligent. If you haven't been coached in the "right" things to do in order increase the scores, you are probably correct that they have not rebounded as much as you would like to see. Regardless, that doesn't help your situation now. Depending on what the scores have changed to, there are one or two FHA lenders still out there that will lend down to a 530 score with the right kind of supporting documentation. Otherwise, use the boyfriend's scores while you work on your credit. If you are concered about contributing to the mortgage and not being listed - you should be able to consult with a real estate attorney and be added to title afterwards for approximately $50. That way you are at least guaranteed your interest in the property until you can refinance and be placed on the mortgage as well.
0 votes Thank Flag Link Sun Aug 23, 2009

Here is an ebook about credit. Free to download.
Maybe you can pick up some tips.
0 votes Thank Flag Link Sun Aug 23, 2009

Your best approach may be twofold......with number one, working toward improving your credit score, while number two is continuing to consult with lenders to find someone that is willing to support your needs.

We have seen people turned down by many lenders that refused to give up and eventually found the right combination. Our best recommendation is to not give throw in the towel but continue knocking on still may open for you.

Good luck
The Eckler Team
0 votes Thank Flag Link Sun Aug 23, 2009
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