My fico score is low...540 but debt is low. can i still buy a house in may with low score?

Asked by Mstiffany, Houston, TX Tue Jan 8, 2013

By march 1st the last fee items will be off my credit report. Can i find a lender with a low score? $5000 for down payment. First time buyer. In Houston Texas. Current lease is up in may. Please help! Maybe a foreclosure for more house.

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8
Al Geffon, Agent, Houston, TX
Tue Jan 8, 2013
Several agents here have posted the names of (or references to) mortgage brokers who could possibly finance an individual with a FICO score 100 points below the FHA minimum and only $5000 in cash. With a combined forty years in the industry, neither my wife nor I have ever heard of such a transaction. If you could please e-mail me the names and contact information for these folks (if they're not already posted), I'll be happy to put them at the top of my referral list. ... al@geffon.net. Thanks.
Web Reference:  http://www.har.com/algeffon
0 votes
Gail Levin, Agent, Houston, TX
Tue Jan 8, 2013
Hi Mstiffany there is a possibility that you might be able to find a house with that type of credit score, however, if you contact me I will give you the name and numbers to various Mortgage Brokers who will be able to answer those questions. At that time you can make a decision after you have spoken to them.
0 votes
Lance Loken, Agent, Houston, TX
Tue Jan 8, 2013
Hi Mstiffany,

We recommend getting in touch with the Steve Kyles Team - they are passionate about helping people and offer to help come up with a plan to improve your credit score. They are experts based here in Houston and can recommend specific actions you can take to improve your score. It's not a fast process, but it'll take you a step in the right direction.

Steve Kyles Team
Legacy Mutual Mortgage
(713) 844-8060
http://www.thekylesteam.com
monique.wyatt@legacymutual.com

Hope this helps!

The Loken Group
281- 861- 4624
info@thelokengroup.com
Web Reference:  http://www.thelokengroup.com
0 votes
, ,
Tue Jan 8, 2013
Hi, if your credit score is below 580, then the down payment is 10%. Lenders look for a minimum of 3 accounts on your credit report with a 12 month payment history and no late payments. You can start by getting a couple of secured credit cards from your bank and charging a little and paying them off each month or keeping the balance low.


Anna Maria Durr, NMLS 266699, TREC 596662, Codemark Financial
2626 Richmond Ave., Houston, Texas 77098, 281-592-0667
anna@codemarkfinancial.com
0 votes
Sabrina McKn…, Agent, Houston, TX
Tue Jan 8, 2013
Tiffany,

What everyone before has said is trye, 540 is too low to qualify for actraditional mortgage. However, one option you may want to look into is the NACA Homebuyers program. They work with you and don't follow the same guidelines as traditional lenders. I do suggest you give myself or an agent familiar with the program a call before you make the decision to work with them though, so you have realistic expectations. I have a couple clients who got their mortgage through them and I am very familiar with their processes.

If you'd prefer to go the traditional mortgage route, give me a call or send me an email and I'll send you some information to help with raising your credit score.

Best wishes on your journey to homeownership! If you have any real estate questions, I'd love to help.

Sabrina Dupas
Better Homes and Gardens Real Estate
832-264-3956
sabrina.dupas@garygreene.com
0 votes
My NC Homes…, Agent, Chapel Hill, NC
Tue Jan 8, 2013
Your score is too low to qualify for a mortgage. Keep your debt down and focus on getting your score up. Check your credit reports carefully (Everyone is entitled to a free Credit report from the three major credit reporting agencies once a year. While they won't give you your score you want to check and challenge any misinformation shown (you can do this online) as this could help raise your scores. There is only one Government approved site for this the web address is https://www.annualcreditreport.com/cra/index.jsp

When the time comes and you are able to get a mortgage and start house hunting I strongly advise you not to consider foreclosures as a first time buyer. Trust me their rarely the deal most buyers assume them to be and will likely drain you of any resources you have. I've attached a link below for more information on this topic.
0 votes
Al Geffon, Agent, Houston, TX
Tue Jan 8, 2013
In a word ... no. You're about 100 points below what would be considered a minimum score. The lowest qualifying FICO score I've seen was around 580 ... and there were several extenuating circumstances (medical, job layoff, etc.). Even if it were possible, $5000 down wouldn't get you much more than a $60,000 home ... I always use 6%-8% as a minimum cash outlay for FHA-insured loans, which factors in both the 3.5% down payment and closing costs. As for "a foreclosure for more house," ...

It’s a common misconception that these properties can be purchased for pennies on the dollar. If such were the case, they’d be gone before they even hit the market. While they may be aggressively priced when first posted for sale, the strategy is to attract attention to the listing, and raise the stakes through a “bidding war.” In so many instances, foreclosures end up selling for more than the original asking price, and closer to market value.

Just about all of them need considerable work, well beyond cosmetic improvements ... sort of fixer-uppers on steroids. In a nutshell, they’re suited primarily for investors with deep pockets. I work with several, and see firsthand what these places go for … and how much it can take to get them into livable condition. Believe me, it’s pretty serious money.

The terms of a foreclosure sale alone should be sufficient to drive all but the most savvy buyers away … “as-is, where-is, with all faults and defects.” Bottom line: it’s yours as it sits, with no recourse. In most cases, there’s an opportunity to inspect the property and get out of the deal, but only after a contract is signed … and since the homes are generally in pretty rough shape, it’s imperative to have all major components checked out by experts: roof; foundation; under-slab plumbing; structural integrity; electrical; HVAC; drainage; insect/rodent activity, etc. The cost of these inspections is totally on the buyer, and none of it is reimbursable, even if the transaction fails to close. Further, in virtually no instance will the lienholder/seller make any allowances for repairs … “as-is, where-is” sums it up.

While you're certainly headed in the right direction, it doesn't appear as if you're quite there yet. Keep working on that FICO score. I wish you well.

Al Geffon
(713) 213-6350
al@geffon.net
Web Reference:  http://www.har.com/algeffon
0 votes
Tina Lam, Agent, San Jose, CA
Tue Jan 8, 2013
Realistically, you'll need a score of 640 to have a shot with low downpayment. There are government backed programs that can work with scores as low as the 500s, but you'll have to review your situation with a loan officer to determine if you qualify.
Web Reference:  http://www.archershomes.com
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