Change in minimum credit score problem! PLEASE HELP, offer accepted on old pre-approval letter.

Asked by Sarahsue1152, Carlisle, MA Thu Apr 16, 2009

For a while now my boyfriend and I have been serious about purchasing a home. We went through Countrywide and got pre-approved. Yesterday, we had an offer accepted on a home we really liked and then we confronted our mortgage assistant and she said that no longer do they accept a credit score below 620. I have a reasonable credit score, above 700 but my boyfriend has around a 587 (midrange). We really want to move forward with this house, but need to find someone with ability to write a loan with one score barely below 600.

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Scott A. Nel…, , 02155
Thu Apr 16, 2009
I've had great luck with Jim Bain of Wells Fargo in Woburn, MA. He'll take an indepth look at your situation and give you a clearer idea of what loan products are out there and what if any actions can be done to improve any mis-information on your credit reports.

I always tell buyers to ask friends, family, colleagues for referrals of mortgage professionals they've used and had a positive experience with. Then also investigate the people, google them, the better business bureau, Mass Division of Banks, Attorney Generals Office etc. Then ask for the mortgage professionals resume as well as refrences, most will be glad to furnish this info.

Hope that helps,
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FSBOsuccess, Home Seller, 28590
Fri Nov 4, 2011
Good luck hooking your wagon to someone with his credit score. Hope you truly know all the reasonings as to why and how he got there . Since you aren't married, you need to protect yourself by being VERY careful during this process if you proceed to buy a home.
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Kevin Vitali, Agent, Tewksbury, MA
Fri Nov 4, 2011
As we get farther and farther into this crazy real estate market the minimum credit score drifts up. It is important to remember lenders use the lowest middle score of both borrowers. It doesn't matter if one of you has great credit.

When you are in the home buying process it is really important to maintain your credit profile. Little changes can effect you drastically from a lending standpoint.
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Monir Mamoun, Agent, Denville, NJ
Sat Oct 9, 2010
Hi Sarahsue, FHA guidelines just changed -- got two relevant things for you to read -- this is a blog excerpt from Bill Zielinski...


The FHA is introducing new guidelines on loan to value ratios and the minimum credit score required for FHA borrowers. As detailed in a Mortgagee Letter from the Department of Housing and Urban Development (HUD), the following credit requirements will apply for FHA borrowers, effective October 4, 2010.

* To be eligible for maximum financing, borrowers will need a minimum credit score of 580 or higher.
* Borrowers with a credit score between 500 and 579 will be limited to a loan to value of 90%. A sub 580 FICO credit score borrower will henceforth need to make a 10% minimum down payment on a purchase transaction.
* All borrowers with a credit score below 500 will not be eligible for FHA-insured mortgage financing.

HUD’s newly introduced minimum credit score and loan to value requirements will apply to all single family loan programs, except for Reverse Mortgages (Home Equity Conversion Mortgages) and Hope for Homeowners.

The new credit requirements are not expected to dramatically change the number of FHA mortgage approvals. Most lenders had already imposed a minimum credit score requirement of 640 or higher for FHA borrowers. In limited cases, borrowers with scores between 620 and 639 could still obtain mortgage approval.

Many potential FHA borrowers with scores below 640 who cannot obtain mortgage approval may be left wondering why this is the case if the FHA has established a minimum score of only 580. The explanation for this is that the FHA does not make mortgage loans but rather insures FHA loans made by lenders. Despite the FHA insurance, banks do not have an iron clad protection from loss.

... rest of that blog at…

And I wrote a 10 part blog called "Top 10 Credit Myths" which is good..
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Robert Chome…, , San Diego, CA
Fri Apr 17, 2009
Those are all good answers below. If you need to put your boyfriend on the loan as well, there are loans that will take his score of 587. Please contact me if you would like to discuss more.
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Dp2, , Virginia
Fri Apr 17, 2009
If you have sufficient income, and if your debt-to-income ratio isn't too high, then you could purchase the property in your name, and add him later (after he has improved his credit).

You might consider making your offer with seller financing. For example, you could offer to buy that property using a "subject-to" mortgage with a 1 to 2 year balloon, and refinance later. Or you could offer to buy that property using a lease-option (which you can think of as rent-to-buy terms).
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Lori Lewis, Mortgage Broker Or Lender, Bethlehem, PA
Fri Apr 17, 2009
There are lenders out there that will go under a 620 for FHA, BUT you will pay a premium. The rates are usually 1-2% higher than the published FHA rates. Dont be supprised if you get quoted in the high 6's to low 7's.
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