Financing in 11550>Question Details

Shannon.Mari…, Home Buyer in Hempstead, NY

A first time homebuyer needs credit help

Asked by Shannon.Marie316, Hempstead, NY Sat Feb 2, 2013

I'm a first time home buyer. I worked with a mortgage broker to improve my credit, then got a pre approval. I'm now less than a week away from closing and am having difficulty getting through the mortgage process. My student loans were in default, I consolidated and worked out a repayment plan. I have a letter stating that my loans are in good standing and that issues have been resolved. My credit score has risen, but the student loan still shows on my credit report. I had a judgement agains me in 2007 that says my mom was served for me, but she did was not and they don't have her description or signature. This is the first I have know about this. I settled the very day I was told and have a letter stating that the judgment has been settled and a motion to vacate is in process. That same day, I received an offer letter at my job for a promotion and $15K a year raise that goes into effect in one week.

What is the likelihood that my loan will make it through the process?

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Shannon, it's difficult to guess why you're having trouble closing on your loan. Many of my clients need some sort of credit repair in order to qualify for a mortgage, so I am very familiar with your situation. Credit repair for a mortgage is more than just fixing or paying old collections or judgments, it's also about having credit that is open and active today. In other words, if your credit is full of old derogatory credit (even if you paid it) and very little to no open and active credit, there is a very high possibility that an underwriter will not approve you. It's more than just getting your credit score up.

If you'd like, you can send me a copy of your credit report (white out your social security #) and I can review and give you some better advice from there. Other things can also be factors, such as down payment, what loan program you're applying for, amount of reserves, etc.

Javier Meneses
NMLS #23130
Senior Loan Officer
Sterling National Bank
(516) 606-9648
2 votes Thank Flag Link Sun Feb 3, 2013
Good afternoon Shannon.Marie316,

We see many credit reports with low credit scores (anything less than 620), and often many scores in the 500's. This is BAD credit. If you are one of the folks affected by this terrible economy, you have a low credit score and you have a dream of buying a home, here's some simple advice for you.
It is unlikely you could be approved for mortgage financing with that credit score at this time.

Beware of any mortgage professionals promising you an approval with such a low score. Wait on buying a home. I recommend you take the time to resolve your credit issues.

First, settle any outstanding debt. If you owe money on collection accounts, charge-offs and/or judgments, make payment arrangements and get these accounts paid promptly.

Next, begin rebuilding your credit. If you have current accounts with good payment histories, or even some previous late-payment-blemishes, make sure you continue to pay those accounts on time. If you do not have any existing credit accounts then you'll need to establish several in order to create a viable credit history.

I have found that CONSUMER ACTION is an excellent resource for objective advice on all things credit related. You'll find free and sincere advice on everything from settling collection accounts to rebuilding credit to building credit from scratch on their website.

Beware of anyone offering to "repair" your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE.…

The best way to buy a home is to have a decent credit history combined with sufficient Income and Assets for a home purchase.

The best way to have a decent credit history is to settle negative outstanding obligations and pay all your bills on time for at least two years.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
1010 Northern Blvd. Suite 234
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services

*If you thought my answer was helpful, please give me a “Thumbs Up” or “Best Answer.” Thanks!
0 votes Thank Flag Link Thu Apr 25, 2013
A week before closing is strange to have it come up then. Most of this should be figured out before a buyer makes an offer.
0 votes Thank Flag Link Sun Feb 3, 2013
I agree. I took care of everything before I cot a Commitment Letter for 150k. The house I want to buy is only $121k. The loan contingency is up tomorrow. We can only extend for a week.
Flag Sun Feb 3, 2013
Hello Shannon. I agree with Javier. It is difficult to understand why you are having difficulty closing your loan if you are a week away from closing. Did your lender already issue you a Commitment letter? A commitment letter is generally issued before a closing date is issued. Was it a conditional commitment letter, where you had to resolve credit issues, and these issues still remain? You should consult your mortgage broker. Your mortgage broker understands your situation better than we do, and can review your finances, and credit with you, and give you a clear and precise answer.

As a previous credit analysis, I also agree with Javier in the aspect that, if credit issues still exist on your credit report, such as judgments, loan defaults, and other adverse credit, these issues will more than likely keep an underwriter from approving your loan.

Again, pose this question to your Mortgage Broker and your Real Estate Agent? What are there take on the situation.

I hope this answered your question! If you have any further questions, please feel free to contact me by the ways below.

Wishing you all the best,

De Vonte Williamson , LSA
Proudly Serving Long Island
Coldwell Banker Residential
"I Stand Behind Getting You Results!
0 votes Thank Flag Link Sun Feb 3, 2013
Hello Shannon. I think you are talking about a pre-approval letter. A pre-approval letter is a basic letter that states that the lender will lend you up to this certain amount. A commitment letter comes after you find a home, and you submit your mortgage application. Did you sign a contract for the home, and place a down payment?
Flag Sun Feb 3, 2013
Thank you DeVone. The Commitment Letter had no conditions. The issues had to be cleared before the letter could be issued. The real estate agent insisted on it from the very beginning. We did not even look at houses until we had the letter.
Flag Sun Feb 3, 2013
Unfortunately none of us can accurately speak for the lender, your loan officer is your best source of information....
0 votes Thank Flag Link Sun Feb 3, 2013
It sounds like you are doing all you can. No one can know the mind of an underwriter, but if they provided the conditions and you meet them, they are likely intending to fund the loan if they like your response.
Congratulations on your raise, but I doubt that will assist you. Lenders only consider income with established history.
0 votes Thank Flag Link Sat Feb 2, 2013
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