Financing in Denver>Question Details

Beth B, Home Buyer in Morristown, NJ

we qualify for the homepath renovatin loan except our credit score is 20 points too low. what can we do to get approval? we had extenuating

Asked by Beth B, Morristown, NJ Wed Aug 10, 2011

we had extenuating circumstances in the last year that forced our credit score to drop. again, we are shy 20 points of the 660. we have found a house and want to buy it but have been turned down for this reason.

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Beth B.

How much time do you have. If you can get one of the companies on board that can help you clean up your credit report 20 points is not a lot to correct. If you can do this and have your lender pull your credit again and accept the new results, this could work for you. Have your lender get you in touch with one of these companies or you can contact me for the information. Best of success to you. I think the 203k may be a little more cumbersome; but could be another option if Homepath doesn't work.

Robert McGuire
Your Castle Ral Estate
0 votes Thank Flag Link Wed Aug 10, 2011

Your FICO score will have an impact even being able to qualify on the HPath Reno for your mortgage interest rate. Even getting your score where you will need it, will still likely yield that and FHA 203K will be better financing for your family for the long-term. Find a lender who can do the streamline and full 203K loan so you don't pigeon hole yourself. Because you can finance more than $35K into the home if needed. And if there are structural issues and you use a lender who only does the streamline 203K then you will be out of luck. Because you can't do structural improvements in the streamline ($35K) 203K mortgage.

Once you look at comparisons with your lender you will see what I am talking about now and 5-7 years into the future. With a 640 you seem to have now you would be eligible for a 203K, and Fannie Mae will still give you the 3.5% seller concession towards closing costs for FHA. You could then look at having your lender pay the 1% FHA (normally financed mortgage insurance) out of this to maximize your financing. The HPath with lower scores means more expensive financing costs to you now and into the future.

But other than that I agree there are things that can be done, unfortunately , to clearly see what can be done, one needs to see the consumer's credit report since there are many variables as to why your score could be where it is.

Ray Williams
Branch Manager
Summit Home Mortgage Denver
1 vote Thank Flag Link Thu Aug 11, 2011
Switch to a FHA 203K. You can get up to 35K in repair/renovation. Mortgage Insurance is tax deductible. The rates are considerable better. The costs considerably lower. And, unlike Homepath or any Conventional/Fannie Mae loan, a FHA mortgage is also assumable! Which, if you every decide to sale the home, will give any prospective buyers a greater significant incentive to purchase your home since they would be able to assume your mortgage and interest rate (which will probably be significantly lower than offered rates at that time).
1 vote Thank Flag Link Thu Aug 11, 2011
Hi Beth B.

There is a considerable amount of complexity to how credit scores are computed so you might want to be careful about what you do to improve yours. For example, closing a line of credit may seem like a responsible move, but can actually hurt your score. You can check the link below for some basic information. Also, a good credit counselor or a knowledgeable loan broker can help. Sometimes, when you are close to your target score, it is as simple as correcting one or more mistakes on your credit report.

Kind regards,
Ron Rovtar
Prudential Real Estate of the Rockies
Days: 303.981.1617
Evenings: 303.473.1926
0 votes Thank Flag Link Fri Nov 11, 2011
If the points are too low, then you do not qualify for a homepath renovation loan, however if you allow for a few months you can try to improve the FICO Score and then qualify.
0 votes Thank Flag Link Wed Nov 9, 2011
You may want to talk to a credit counselor and see if they can help you raise your credit scores. Don't let people pull your credit that lowers your credit scores.
0 votes Thank Flag Link Wed Nov 2, 2011
@ Beth, your best bet is likely to sit down with a knowledgable loan officer who can review your credit report to see if there are any minor changes to your balances to see if a rapid rescore would help raise your score.

@Jacob, that is some of the worst advice I've seen in a while. Your profile says ''Home Buyer'' but you're giving mortgage advice and asking people to send you their credit report??? So after they ''Dispute Everything'' how are they to obtain financing on a Home Path property? Does DU like accounts in dispute in your experience?

Nic Netherton
Mortgage Banker
Cornerstone Mortgage Co.
Fort Collins, CO
0 votes Thank Flag Link Wed Nov 2, 2011
There are several ways to increase your credit. 1. Dispute Everything. 2. Pay down balances. 3 Look at the top 5 reasons you get the score your credit is posting. 4. Wait time heals all. 5. Call me for a free credit check or send a copy to me and I will review free of any charge.

0 votes Thank Flag Link Wed Nov 2, 2011
If you're buying in Denver, I know of a great lender who can help you with both a homepath loan and with advice and rapid rescore on your credit ratings. If you'd like to contact him, his name is David Thomas with Colorado Mortgage Alliance at 303-467-7676. He's been able to help buyers of mine raise their scores by telling them what to do with the credit items on their reports and he has a method by which he can get a rapid rescore on your credit within a few days. It's worth a call.
0 votes Thank Flag Link Thu Sep 29, 2011
Hi Beth,
I am currently working with a buyer who has a credit score just over 620. She received approval from Key Bank on their KeyCommunity Loan product. Interest rate is great and there is no mortgage insurance!
If you're still looking for a loan give me a call and I'll refer you over to the person I work with at Key Bank.
Mark S. Keene
Web Reference:
0 votes Thank Flag Link Tue Sep 27, 2011
Check out, they have a free time period. You can look at the "what if" scenerios to see how your score might change if you do certain things. This will also give you a great look at what is on your report from all 3 agencies so you can dispute what ever isn't accurate. Good luck to you!

If you aren't working with a realtor, please contact me at 720.260.7774

SueEllen Naegle, Broker Associate
Sellstate ACE Realty
0 votes Thank Flag Link Sat Aug 13, 2011
Many good answers below. If you are set on the Homepath, you would need to have your credit report analyzed to see how you could increase your scores. Could be a mistake, could be high balances, could be lack of use. My experience with Homepath is that getting closer to a 680 is better.

As others have said, an FHA 203(k) streamline would be a good Plan B.
0 votes Thank Flag Link Thu Aug 11, 2011
Hi Beth:

The first thing you should do is have your lender pull you credit report to see if there are any mistakes. This happens more often than you might think. And getting errors corrected can be a quick fix. Also you lender may be able to give you specific advice about improving your score as quickly as possible.

For more information about credit scores, compiled from several sources, see the link below. Understanding how credit scores work may give yo an insight into improving your score.

Kind regards,
Ron Rovtar
Prudential Real Estate of the Rockies
Days: 303.981.1617
Evenings: 303.473.1926
0 votes Thank Flag Link Thu Aug 11, 2011
the fastest way to increase FICO scores is to pay down your credit card(s) below 50% of your credit limit (preferrably 30%). Some lenders can do a rescore immediately, otherwise you'll have to wait for your balance to post and have the lender repull credit.

good luck!
0 votes Thank Flag Link Thu Aug 11, 2011
Go with an FHA 203k rehab loan. You will have mortgage insurance with FHA, but a lower rate than the Homepath program.
0 votes Thank Flag Link Wed Aug 10, 2011
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