The first step will be for you to spend the next 6-24 months or so working on cleaning up your credit. A 564 credit score would be much too low to qualify for any type of mortgage loan at this time. For an FHA mortgage, most lenders have required a 640+ credit score since 2008/2009.
Prospect Mortgage is one of the few direct lenders to offer an FHA 580-639 FICO loan program. Credit profile is a major factor in a mortgage approval. Generally, there should be no late payments, new collections accounts/charge-offs/liens/judgments in the last 12 months. It is required that all open collection accounts must be paid in full if their cumulative balances exceed $1,000.
The 3.5% minimum down payment can be from the borrowers own funds or it can be gifted from a family member. Two months of reserves for the PITI (Principal + Interest + Taxes + Insurance) payment + HOA Dues will be required. This must be from the borrower’s own funds and not a gift. FHA loans will allow a seller contribution toward closing costs/pre-paids of up to 6% of the sales price.
You will also need a verified 12 month on time housing history. This will need to be verified by either 12 months of cancelled check or by a Verification of Rent from your management company.
To begin improving your credit score, you would need to contact each of your creditors directly to see what your options are. Paying off derogatory debt will help improve your credit score in the long run, but not immediately.
With collection accounts, most of the damage is done when they are initially placed on your credit report. Some collection companies are now reporting you are late each month the debt goes unpaid. This continues to drag on many people’s credit scores each month until the debt is paid in full. Until you do that, your credit score has little chance of improving.
In exchange for paying the collection account in full, you can try to negotiate to have them completely remove the derogatory item once the payment is received. Some collection agencies will do this, while others will not. You will just have to ask each one and see. If they will not remove it, just having it paid and closed will help in the long run.
All liens and judgments will also need to be paid in full. These impact the title position of a mortgage so they must be satisfied.
It is very important that you be VERY careful in disputing accounts. You cannot dispute accounts which you know to be accurate. For a mortgage, you cannot have an active and open account that has a disputed status. Fannie Mae/Freddie Mac/HUD all have very specific guidelines to be followed when a borrower has an account in a disputed status. In some cases, it could cause you not to be able to qualify.
Once you are ready to purchase, working with a knowledgeable and seasoned loan officer is critical in today's market. Getting Pre-Qualified is the only way for you to find out your options. To get Pre-Qualified for your purchase, you can submit your request online at www.rodneymason.com to get started.
Rodney Mason, NMLS #151088
Sr Loan Officer
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of mortgage lending experience.
Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203(k) Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.... more
There is no question, no question no answer, come back and ask your detailed question.
Edith YourRealtor4Life & Chicago and Northern Illinois Expert
Working always in the very BEST interest of her clients, Buyers, Sellers and Investors alike....
And always with a SMILE
Covering for @Properties the city of Chicago, all N and NW suburbs, the fine homes on the
North Shore, and many of the W and SW suburbs, and with her trusted Partner Agents all of
the US and worldwide properties. Edith speaks French, German, some Spanish and other.....
@Properties ---- EdithSellsHomes@gmail.com
Check out my website at htttp://tinyurl.com/YourRealtor4Life
HAVE THE MOST WONDERFUL DAY :)... more
If you qualify for a VA loan, you most likely would not need a down payment. There are a couple lenders in Mobile that do a good job with VA loans. Please feel free to contact me at 251-402-1193 and I will be glad to pass along the information.... more
You may want to go with a company that specializes in rent to own situations. Also paying 6 months in advance and having a rental history you can show is good. Do you have copies of those "ten" years worth of "on time" payments? That's good. Also look into apartment living for a year or two so you can "regroup" Apartment are not hard to get into if your income is there and they don't key in on foreclosures. They just want to know if you can pay rent and even if your score is low they will probably just ask for a higher deposit and let you in. Apartment communities are very nice these days and can help you "stabilize" Check out Select My Space in Mobile for help they can get you placed quickly and within your price ...they also have some home rentals too! Last but not least. If you make that kind of money get your credit cleaned up you can do it. Work with a credit counselor(reputable) and start getting back on your feet. You can do this. To check credit go to annualcreditreport.com. Its truly free each year for consumers. Good luck.... more