Home Buying in 78503>Question Details

Nana, Home Buyer in Texas

My credit scores presently are 595, 612 and 643. would I qualify for any FHA, homepath, homepath reno?

Asked by Nana, Texas Sun Apr 5, 2009

scores are per mycreditkeeper.com. There is a recent medical report on credit report

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Emily Erekuff’s answer
Hi Everyone,

Healthy debate is certainly encouraged and I'm sure Nana appreciates everyone's attempt to give her the correct information. That said however, please make sure that your answers are respectful towards other Trulia Voices community members. Everyone attempting to help here deserves to have a voice and doesn't deserve to be insulted.

Thank you,

Emily Gibson
Community Moderator
2 votes Thank Flag Link Tue Apr 7, 2009
Margaret, wrong again: You Said"Again,
the credit score of 620 is as good as 800 on the loan she is going for." here is the criteria for two of the programs asked about:
Colonial is one of the approved lenders for homepath.
HomePath® Mortgage features:

Minimum credit score of 660 is required
Select from a wide inventory of Fannie Mae’s real estate owned (REO) properties
High loan-to-value ratios
3% down payment
10% down payment on investment properties
No appraisal requirement
No mortgage insurance requirement
Financing available for renovation

HomePath® Renovation Mortgage features:

Minimum credit score of 660 is required
Renovation loans are not available from Colonial National Mortgage in New York, New Jersey, Delaware, North Dakota, South Dakota as well as Florida Counties of Broward, Dade and Lee.
High loan-to-value ratios
Property must be owner-occupied
Renovation component is built into loan amount
Appraisal required
Renovation must be completed within 3 months of closing

Here is the link: http://www.cnmcs.com/homepath.aspx
2 votes Thank Flag Link Tue Apr 7, 2009
Nana,

As I am not licensed in the state of Texas, I am not here to try to sell you anything. You have truly been given a lot of advice here some from other Realtors and a home buyer. I believe that you should not continue to have to credit pulled as it does drop your credit score. What you need is someone who will credit counsel you as to what your goals are while taking into account your financial situation while acting with your best fiscal interest in mind.

While it is typical to find that 1 in 4 credit reports have erroneous information on them, there are options for home loans if you wish to purchase a home. Many lenders and credit counselors will rescore your credit report after making sure everything is accurate on the report.

FYI: The USDA Rural Development Loan offers 100% financing and allows for buyers with no credit scores, credit scores between 580 and 620 as well as below 580 under certain circumstances but I am not giving lending advice as I am not a lender. I have attached the actual underwriting guidelines in the web reference - there are several sections depending on your credit scores. This is public information you can find on the USDA Rural Housing website and from a lender that provides USDA loans. These loans are made presently in Georgia at 4% fixed rates in the direct loan program and at 5% fixed in the guaranteed loan program. This has been the best loan I have seen in many years but there are income restrictions on qualifying - you can't exceed a certain percentage of median income for your county and that information can be found on the USDA website as well.

I wish you the best and hope that you are able to achieve you dreams but in a fiscally responsible manner.
2 votes Thank Flag Link Sun Apr 5, 2009
Nana,

Your score is marginal at best. You are officially in the "sub-prime" category. This is NOT where you want to be.

Forget about buying a house right now. What you NEED is a solid 6 month plan, that will still allow you to take advantage of the $8000 by buying before Nov 30th - AND - improve your credit so that when you are ready - that you'll get a much better rate and a quick approval.

Here's what you should do for the next 6 months:

- Get a 2nd job, Fast, and use that money exclusively to pay off credit cards. If you are married, have your husband do the same.
- Do NOT be late - EVER - with payments on cards, cars, etc.
- Do NOT cancel any of your cards (this hurts your credit)
- Spend as little as possible for the next 6 months - don't buy anything at all that you don't need. Bring lunch with you to work, don't eat out, except perhaps one inexpensive meal per week. Check to see if you can save money on car insurance by switching companies.

If you do what you need to do, your credit could be above 680 (perhaps even 700) when we need it to be. If you seriously want a house, then it's time to get serious about your finances.

I'm not sure what that "medical report" is supposed to be since there are no details. But if there's anything inaccurate or bad on there - get it cleaned up, right away.
2 votes Thank Flag Link Sun Apr 5, 2009
Again,
the credit score of 620 is as good as 800 on the loan she is going for. Yes we all would like her to have a higher one. You don't know her circumstance. She may be recovering from a divorce an supporting a four children. She may have several medical bills as mentioned below.
Your bank loan officer does not do FHA loans if he/she does not know the way they work. Now this is not a forum for you and I to act like children it is a forum to help people like Nana, not one to belittle her for her
credit score.
Now let us go to another question and try to help that person

Nana, I stand by the fact that you should contact a mortgage person that handles USDA, FHA, homepath and Conventional loans. Not all banks will. Call around or better yet contact a Realtor and ask them.
Do not have your credit pulled by more than one Mortgage Co. , If you are already working with one that does not handle all these loans ask for a copy of your report. Another will have to be pulled once your loan is chosen but a copy will get you started. If you pulled your own, you will have to have a mortgage broker pull it as it is quite often different from what you get. See what has to be done to get you approved. Sometimes it is something simple. Sometimes it just takes a couple of month and sometimes it will take longer. Let your Realtor and your Mortgage person advise you. If you give us your area we can send you to one if you want or as I say chose a Realtor and have them do so.
Don't look at homes until you find out what you can purchase, Good luck

Margaret
1 vote Thank Flag Link Tue Apr 7, 2009
Jefferson,
I said Texas to give you an out and not call you an idiot. But you wanted to stay in long enough to prove that.
One of her credit scored is over 620. The way it got to 612 is the fact that the mortgage company take the mid score. The three scores show that re scoring will be no problem. Sometimes it is as simple as something being listed twice on the credit report, or incorrectly.
I am glad you were not saying something against FHA now let us clear up - you were not saying something against Nana since you have not met her as yet , were you?
Everyone deserves a home if and when they can afford one, I do believe that rental amounts will be going up as everything else will in order to pay off our national debt all prices must go up.
So it is a buy now time. Interest rates will go up as well. So Nana should do what she con to buy this year and get her $8,000 tax credit.
Thank you for attempting to help
Margaret
Web Reference: http://Century21Conroe.com
1 vote Thank Flag Link Tue Apr 7, 2009
Tom,

Did I say anything that was not factual?

Credit Rescore- fact
http://www.associatedcontent.com/article/9133/increase_your_…

Mistakes on credit reports- fact http://www.cbsnews.com/stories/2004/10/12/earlyshow/contribu…

Lending off ability to repay- fact (no link for common sense)

We are basing our discussion off of a loose scenario with little known information. Your ignorance to common sense lending is obvious.Here is a scenario for you to rebut your ridicules claims that credit determines repayment.

Scenario-

credit score 599
income- $6000 per month
current rent- $1500 per month
purchase price of new home- 100k
new mortgage payment- $536
taxes $2000 per year= $166
Insurance= $750yr= 63
Total mortgage payment= $765

DTI- 13%

Would you tell this person not to buy? Im lowering their monthly obligation by almost 50%.. Thats not called fiscal responsibility??

Maybe giving a loan to someone with a 700 credit score and a 40% DTI is better...lol i will take the 599 13% all day.

You dont just lend off of a credit score. Lending should be based of Debt to Income Ratio and not governed by a few points on your credit. If Nana had a 450, that would be different. For you guys to slam her as a irresponsible borrower is just unfair.

Sorry kiddo, your out of your league on this one.
1 vote Thank Flag Link Tue Apr 7, 2009
Thanks for clarifying your position. It is precisely this loose attitude toward lending restrictions and fiscal responsibility that is a significant root cause of our situation today - and worse in your home state of FL than most places.

And - I never said that she shouldn't get a home ... just to get her affairs better in order first. I stand by that. If you wish to guess at why the score is 612 you may do so - but it's unlikely that "the majority of the things on the report are incorrect". Anyone may guess at the particulars of her credit report.

I spent some time involved a few years ago with a firm that handles special financing for consumers in the used auto market. Most of the people that applied and had bad credit scores did have serious issues on those reports. The vast majority of these were "not errors". Even if one were to agree with your assertion that 90% of reports have "one or more errors" - that really doesn't change the overall fact that these people didn't manage their affairs very well.

I advocate getting good credit because it has many benefits. Most (but not all) people with scores that low would generally be well-advised to improve their financial habits. I'd stand by that too. If one wishes different results, then one may not continue employing the same tactics. Banks that are still playing by the rules that got us into this mess will only serve to perpetuate the end result.
1 vote Thank Flag Link Mon Apr 6, 2009
Hi Ryan,

Thanks for not reading the entire thread, missing the point, and then jumping in with both feet. None of this changes the fact that her credit score isn't 620 today.

Ok - now do you have an actual stance on what she should do? I'll gladly accept that I'm wrong on the FHA thing. How about the bigger issue at hand ... ?
1 vote Thank Flag Link Mon Apr 6, 2009
Your wrong Jefferson, The pricing adjustment for credit score on a FHA loan is minor and not enough to effect the rate. Considering you had to call someone at Wells Fargo to find the "untrue" facts shows you should not be answering questions you dont no the answer to.

Here is a link to a lenders website that you can pull the rate sheets from. As you can see on the bottom of the page under "FHA Goverment Programs" There are no pricing adjustments for credit scores over 620.

http://www.assuritywholesale.com
1 vote Thank Flag Link Mon Apr 6, 2009
Oh yeah ... and when Nana wants to buy a car ... I suppose it's also true that 620 or higher is all the same in Texas? Ah heck - let's ignore that ... this isn't an AUTO forum ...
1 vote Thank Flag Link Mon Apr 6, 2009
Well let's say for a moment that I'm wrong. It has happened before and will again. So let's all agree that "Texas is, in fact, THE Wild West of FHA Loans" Yeeeeee-HAW!

Ok ... now would you please be so kind as to advocate for (or against) the notion that Nana should "merely push her score up 10 points and get herself that FHA loan"? Come on, Texans :-)

To do that without building a foundation of fiscal responsibility is irresponsible - from my standpoint. Wouldn't this be just more of the same - that has gotten us to exactly where we are now?

I'm trulia looking forward to your responses.
1 vote Thank Flag Link Mon Apr 6, 2009
We do think we need hgher regulations with our lenders in Texas BUT they don't seem to be as far off as y'alls. And we as Realtors have very strict regulations. So again I say If in Texas listen to the answers from Texas. First = no loan at 612 - bring that up to 620 (FHA) and the interst rate will be the same as a 720 or over.
Margaret

You did hear abut that assume thing
1 vote Thank Flag Link Mon Apr 6, 2009
>> Once you get your scores over 620, you will get the same rate as someone with an 800 credit score with an FHA loan. And this is for a 30yr fixed rate. I wanted to clarify that as there may be some mis-information here.

Hi Nana,

This is not true - I was just talking with my loan officer at Wells Fargo on other matters and ran this by him. He confirmed that the information that I provided to you is correct. So this is NOT "my opinion" - it's directly from a major bank that I've dealt with for over 10 years.
1 vote Thank Flag Link Mon Apr 6, 2009
>> I do not see the problem with a FHA loan. will you please educate us.

I have no issues with FHA loans. My point should have been clear - it is to Nana's benefit to first increase her credit score PRIOR to looking for a house and gettting a loan for said house. I'm well aware of exactly what she asked for - but felt that it would be worthwhile to share a different point of view that was credit-related and greatly effects the rate that a lender will provide. Since She provided her scores, the info is relevant.

My bit about the "horrible FHA loan was merely imagining the rate she'd get now with 612 vs. the rate she'd get with 680 or 720 ...". Therefore my strong recommendation to deal with one before the other. I hope this clarifies my position.

>> the last FHA loan my client just received was at a fixed rate of 5% for 30 years

Ok .... what was their credit score? I'd wager that it wasn't 612 ... and that's my point. If you wish to be sarcastic then please do so - I'm from NY and love it - no offense taken. But it would be appreciated if you use relevent apples-to-apples info in your rebuke.

>> I am certainly happy that a home buyer in Pa knows more than a professional in the same state as Nana.

Hmmmm ... are you seriously saying that Wells Fargo or any other major lender charges a different rate for a 30 year FHA with 3.5% down - to buyers in Texas than they do for a buyer in NJ/PA - with $X income, Y credit, and Z DTI ratio? You aren't REALLY saying this .... right? Right? :-)
1 vote Thank Flag Link Sun Apr 5, 2009
Well Margaret, I'm with you on this one. I stand nothing to gain from advising Nana to talk with a lender regarding a FHA loan. I don't even service her area, so not sure why anyone would think my advice was merely to gain a commission from it. :) Nana simply asked if she would qualify for any type of home loan. She didn't ask for advice on how to get her credit score up, etc.. My answer and several others was to simply guide her to what loans she might possibly qualify for. As far as trying to ""help her get a horrible FHA loan with a high rate in the near future", the last FHA loan my client just received was at a fixed rate of 5% for 30 years. WOW, that's really horrible! lol My clients seem really happy with that "horrible" rate!

Jackie
1 vote Thank Flag Link Sun Apr 5, 2009
Jefferson,
It may not be necessary for Nana to get a FHA loan, but in this year it may be all she can get. I do not see the problem with a FHA loan. will you please educate us. I have been using them for approx 40 years.
There have been times I steer people into other loans but your language is a little strong.
But I am certainly happy that a home buyer in Pa knows more than a professional in the same state as Nana.
Nana do not pay for a loan as yet - that may be what our Northern neighbor is trying to tell you, just get your report and see how far you can get this year. The loan officer would rather do a conventional loan as well - they are simpler than FHA, but at this time I am not sure that they are any cheaper for you down payment and closing cost assistance wise.
Maybe the person in Pa that does not work with this every day know something we in Texas have not found out yet.
I know I need to know the problem with FHA loans LOL
Margaret
1 vote Thank Flag Link Sun Apr 5, 2009
>> You still need to speak to some one about mortgages.

Actually - no she doesn't - she needs to get her house in order, not rushing ahead to work with any mortgage person or realtor. If this means that neither you nor any other agent gets to "help her get a horrible FHA loan with a high rate in the near future" - then that's just too bad. To do so works against HER best interests.

As far as I'm concerned, any advice to her about trying to get qualified right now in her current situation is completely irresponsible - that would only suit to help someone who gets a commission of the sale - not her needs.


>> It is not always true that cancelling a card hurts your credit. Sometimes you need to cancel several and other times you need to open some. There is such a thing as having too much credit available as well. In this day and time if you ave several gold and platinum cards with a 0 balance and you can go out and borrow 100,000 with out a problem that hurts your debt ratio.


It is extremely unlikely that Nana has "too much credit". I could be wrong to assume so, but chances are that she does not have 5-6 cards with 15,000+ credit on each. My advice was based on the norm for someone in her position. It is also generally TRUE that cancelling a card WILL hurt her credit. She doesn't know this stuff yet, and needs some initial guidance. The very last thing that I remarked was for her to clean up anything bad or inaccurate on her report.

The last thing in the world she needs right now is to "get hooked up with an FHA lender".
1 vote Thank Flag Link Sun Apr 5, 2009
Hi Nana,

Each time someone pulls your credit report it will ding your score another 12 points so no more mortgage pulls for now.
I would suggest that you look into credit restoration which will include credit repair and credit education services. You will learn that 10% of your credit rating is based on new credit and 35% of your credit rating is based on your payment history. Fabulous stuff to know.
I can certainly assist you with repairing your credit for your upcoming purchase. I will be featured in the June edition of INC Magazine as a credit restoration expert for me information please feel free to contact me.

Hannah Fliegel
415-999-9348
http://www.thecreditrestorationexpert.com
1 vote Thank Flag Link Sun Apr 5, 2009
Nana,

Margaret is exactly right. You need to speak with a lender. I currently work with a lender that still does FHA with a 580 score or above. If you are interested in his contact info, just drop me a quick email at truvaluerealty@gmail.com I'll be happy to pass that on to you.

Thanks and good luck!

Jackie
1 vote Thank Flag Link Sun Apr 5, 2009
Nana,
You still need to speak to some one about mortgages. It is not always true that cancelling a card hurts your credit. Sometimes you need to cancel several and other times you need to open some.
There is such a thing as having too much credit available as well. In this day and time if you ave several gold and platinum cards with a 0 balance and you can go out and borrow 100,000 with out a problem that hurts your debt ratio.
Talk to someone in the complete know.
1 vote Thank Flag Link Sun Apr 5, 2009
Nana,
Close - they are going to call this 612. Call a FHA lender have them look at your scores, it should not take much to pull that 612 up
Margaret
1 vote Thank Flag Link Sun Apr 5, 2009
Nana

Have you reviewed the Homepath site created for the public to see what you can learn?

http://www.homepath.com/

You may learn some things that can assist you if you Browse the Gov. and Bank sites created for the Public to view Properties available (Listed) and explain the financing options, various Purchase options and for some the Bidding process...Sites like..
.... http://www.wamuproperties.com/ .... http://www.hud.gov/homes/index.cfm

https://www.citimortgage.com/Mortgage/Oreo/SearchListing.do ...

The links to these Bank and Gov. sites can be found here.... http://www.mortgagenewsdaily.com/wiki/REO_Database_List.asp http://www.biggerpockets.com/bank-reo.html

This site may help you also as it is the Fed Gov. site of all current available housing loan programs(FHA. Rural, Veterans ect,) You can get specific information, compare options, or take a short questionnaire to determine your eligibility for each program.
http://www.govloans.gov/govloans_en.portal?_nfls=false&_…

Good luck, Dunes
0 votes Thank Flag Link Tue Sep 22, 2009
I do these tpye of loas all day for a living. Yes you can get a FHA loan under a 620 credit score. No you can't get a Homepath or Neighborhood Stabilization under a 620. FHA currently can go down to a 540 mid score with 3.5% down.
0 votes Thank Flag Link Tue Sep 22, 2009
Tom,

You are the only one who has contributed ZERO facts to this thread. We are all having a discussion and contributing to the solution. No need to post your opinion if you cant contribute solutions with it. Every single one of my posts have been backed by proof, yours have none so far.

your post should be flagged for lack of substance.

p.s Having your credit pulled 50 times by 50 different mortgage companies only affects the score once for 30 days. Dont be afraid to shop lenders because your afraid of your score going down. Here is a link to support this. Here is a link supporting this rule.
http://www.myfico.com/CreditEducation/CreditInquiries.aspx
0 votes Thank Flag Link Tue Apr 7, 2009
Hi Margaret,

>> I said Texas to give you an out and not call you an idiot. But you wanted to stay in long enough to prove that.

Thanks for the personal attack. It's always nice to know when someone has run out of ways to intelligently discuss the points when they break out the insults.


>> One of her credit scored is over 620. The way it got to 612 is the fact that the mortgage company take the mid score. The three scores show that re scoring will be no problem. Sometimes it is as simple as something being listed twice on the credit report, or incorrectly.

It's understood that the middle score is used - we all know this. How it got there is not likely just a single wrong entry (vs. having a score of 720, 750, etc.). Yes, one bad entry might have brought it down from 650 to 612 - but wouldn't she be much better off by having a 680 or better?

I'm still not sure if you agree or not that "having good credit is a good thing" or more specifically, "Would Nana benefit from a better score". Would you please clarify your position?

>> I am glad you were not saying something against FHA now let us clear up - you were not saying something against Nana since you have not met her as yet , were you?

Since when did I do so? I'm discussing things that I believe might HELP HER. I'm not trying to bash her or you or Ryan.

>> Nana should do what she con to buy this year and get her $8,000 tax credit.

I said as much in my very first post on this thread.

>> Thank you for attempting to help

You're welcome! :-)
0 votes Thank Flag Link Tue Apr 7, 2009
Ryan,

Again - my point - and my question is the following: Do you agree or disagree that it would be to Nana's benefit to improve her credit score?

One would think that you do - by the content of the two URLs - heck - one of them is all about how to rapidly improve one's score! And the other details how a lower score negatively impacts auto and insurance rates - as well as potentially hiring practices of employers.

So ... are you agreeing that good credit is important or not? Let's not lay out any more scenarios out of thin air. I could just take your existing one, cut the income and raise the home price and change it that way. But that isn't the discussion at hand. I raised the subject of DTI a fair way back in this thread.
0 votes Thank Flag Link Tue Apr 7, 2009
Hi Jefferson,

I only jumped in with 1 foot...........here is the other,

Credit scores can be adjusted through a process called Rescoring. You may refer to that as "manipulating" but industry pros refer to that as "correcting" Considering 90% of credit reports are incorrect, this would be an easy one.

Now I know what your going to say " Why should we change the scores so he artificially qualifies?" Since when does the score on credit determine someones ability to repay a mortgage? I know a woman with 80k in medical bills with a 540 credit score and I qualified her. What? because she had breast cancer and fell into medical debt, she should not qualify for a mortgage loan?

Just because some "morons" at a bank raise the score limits because of their bad accounting "Nana shouldnt get a loan" I dont think so! If Nana can pay the mortgage each month based off his/her income GO BUY!!

How does my other foot feel? lol
0 votes Thank Flag Link Mon Apr 6, 2009
We all know you shouldn't answer a question about credit scores in Texas, Jefferson, texans are only allowed to answer that.

They also don't use national lenders as they have their own.

They probably have their own FHA division. FHA TEX
0 votes Thank Flag Link Mon Apr 6, 2009
one more thing, a lot of mortgage brokers seem to charge more to people with lower credit scores, not based on the lenders criteria but just because they think they can use that as a reason to get more money from you, get a Good Faith Estimate and be careful who you use.
0 votes Thank Flag Link Mon Apr 6, 2009
Jefferson, you seem to have the best answers but I would like to address one point. There can be an adjustment on rate due to the state they are buying in, some lenders charge for what they consider declining markets and some don't.

Nana, I would recomend taking Jeffersons advice, prices should be a little better in the fall. Why not wait, talk to a mortgage broker about the qualifications for getting a mortgage. There are a lot of factors to consider, some can help with rate and some items your application you could be rejected on. Don't give them permission to check your credit yet. Pull it up for free at https://www.annualcreditreport.com/cra/index.jsp and discuss it with your mortgage broker. I subscribe to http://www.truecredit.com/ and check it often.

For two months before don't shift your money around, it looks funny when the lender looks at your bank statements. Don't bounce any checks, get your tax forms in order, keep all your paystubs, pay your rent on time if you are renting, pay your mortgage on time if you own, don't buy a new car, don't apply for new credit cards.

Here is the Homepath website, you can use the lenders listed or mortgage brokers approved with those lenders. http://www.fanniemae.com/homepath/financing/index.jhtml I have looked at it and think it is a good program but the number of listings is limited.
0 votes Thank Flag Link Mon Apr 6, 2009
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