Comments on: Just How Much Your Credit Score Impacts Your Interest Rate

By: Rhonda Porter

Rhonda Porter — Thu, 24 Sep 2009 18:01:04 +0000

Amber, I’m really sorry but your current credit score will prevent you from obtaining conventional or government insured financing. You might be able to find a mortgage using a “hard money lender”…however, your new mortgage paymetn will probably be higher than what you are currently paying in rent.

You cannot use your boyfriends income without him being on the loan and if his scores are low too, it’s just not going to work.

I recommend finding a local mortgage professional who’s willing to review your credit with you and help you develop a plan to get on the right track to buy a home. It may take you about a year or so depending on how dedicated you are and what your current credit issues are.

The “good news” is that credit scores are reflective and are not permanent.

By: Amber

Amber — Thu, 24 Sep 2009 17:16:32 +0000

Okay so here’s my problem….I have a credit score of 576 and want to buy a home. Our rent is ridiculous and I just think it would be better used towards my own home. I am engaged and a stay at home mom so my question is can I get a loan with that low of a credit score and will they let me use my fiancees income wihtout himi on the loan? His credit score is very awful due to family illness and letting his payments get behind to help take care of his grandmother. I found a house I LOVE and the payments per month would only be around 60 higher so can someone help me understand all this.

By: Rhonda Porter

Rhonda Porter — Wed, 11 Feb 2009 23:48:21 +0000

Stephanie, I don’t know if it will help–but it could be worth a try: have you contacted a HUD approved counselor?

By: Rhonda Porter

Rhonda Porter — Wed, 11 Feb 2009 23:16:09 +0000

Stephanie, if you both had 620 scores right now and no mortgage lates in the past 2 years and no foreclosure, your rate would be in the low 5s (I posted rates this morning at RCG) and you would need 3.5% for your down payment plus closing costs (which the seller could pay).

As I’ve been trying to explain, guidelines change constantly. Maybe in a few years, the downpayment requirement is 5% or maybe down payment assistance programs will be back and it will be zero down–who knows! And there’s no way to know what rates will be in few years.

You’re asking me to look into a crystal ball for you and I can’t. All I can do is provide you with current guidelines.

I would plan on this taking 3-5 years before will consider providing a mortgage.

By: Stephanie

Stephanie — Wed, 11 Feb 2009 22:35:04 +0000

Rhonda,

We are 10 months late on our mortgages because of the transfer to WA. He transferred to go from an income of 60k to 94k. Little did we realize the cost of living was ridiculous in WA. We couldn’t afford the 1800 rental here, the 1250.00 for my condo mortgage and his house was 1800.00 a month. We tried to go the short sale route after looking into refinancing first. We were upside down 60% of what the original home purchases were for the loans, so that wasn’t an option. He was upside down 100k on his house and I was upside down 75k on my condo. We didn’t have 175k in cash to be able to sell them.

As of last month I have a 620(from a 780) and he has a 576 credit score.

What is the preferred FHA rate right now? Also with that rate how much do you have to put down? Just to give me an idea of what % I am looking at in a few years.

By: Rhonda Porter

Rhonda Porter — Wed, 11 Feb 2009 21:14:11 +0000

Stephanie, with how much guidelines are changing, there’s no way for me to guarantee or tell you what will be available for you in 2.5 years.

Right now, 620 or higher provide you with a “preferred” FHA rate.

How many months late are you on your mortgages?

By: Stephanie

Stephanie — Wed, 11 Feb 2009 21:06:19 +0000

Rhonda,

The only debt we have are student loans, 2 car loans, and these homes. We are current on all our other monthly obligations, and have been for years. As I said before the only thing I have late on my credit report is my condo. We will have no credit card debt at the end of this month. If we were able to sell or refinance these homes we wouldn’t be in the position that we are currently in. My husband also makes about 90 to 95k a year, so I’m not worried about being able to afford a home, more about being able to get a good interest rate.

My current credit score is a 620 as of last month. What is an ideal credit score for an FHA financing loan? Also, my husband and I are saving to put down atleast 15,000 on our next home. Will this help with the interest rate?

We aren’t looking to buy another home for atleast 2 in a half years. We want to save more for savings, put more in 401k, and have a down payment for our next house.

Do you think it is even possible to be ready in 2.5 years if we have no cc debt, work on our credit score, and have a down payment?

By: Rhonda Porter

Rhonda Porter — Tue, 10 Feb 2009 23:50:06 +0000

Stephanie,

I’m sorry for everything you and your family have gone through. Odds are, short sale would have impacted your credit no differently than a foreclosure and Fannie, Freddie and FHA sees little to no difference either.

With our everchanging guidelines, it’s hard to say what they will be by the time your credit scores are repaired and enough time has passed.

It sounds like you would be a better candidate for FHA financing for your next home because of the low down payment requirement and their easier on credit scores. With that said, I would focus less on buying your next home and concentrate more on building your savings and re-establishing your credit.

Lenders will want to see 3-4 good credit lines where you owe no more than 30% of the balance (ideally less) and you’re making payments on time.

I would count on this taking about 3-5 years after the last foreclosure. And it’s hard to say where home values will be then (part of your question was being able to afford) and what mortgage programs will be available.

By: Stephanie

Stephanie — Tue, 10 Feb 2009 22:43:58 +0000

Hello, I purchased a condo in 2005 in AZ for 162k and my Husband purchased a house in AZ in 2004 for 220k. We made these purchases before we became a couple and we just recently got married in 2008. The housing crisis and loss of property values now has my condo at 90k and my husband’s home valued at 120k. My husband took a job transfer in 2007 to WA, so that he could make an additional 30k a year. I stayed behind trying to sell our homes. It has been over a year in a half and we had no choice but to go the short sale route. We couldn’t refinance or sell. We have been trying to do the short sale route and have had nothing but problems for the last 9 months and it now looks like we will both be foreclosing on our homes. ;(. We each brought in 4 to 5 offers each and the banks took to long to get back to the buyers and they went elsewhere. ;( We couldn’t afford an 1800.00 rental (that is the standard price for a rental in WA), my mortgage of 1250.00 and his mortgage of 1800.00 a month. My question is will we ever be able to afford a home in WA? My husband makes 95k a year but WA is so expensive to live. I also had a great credit score of 780 before I couldn’t afford to make my mortgage payments any longer and keep 3 homes afloat. It is unfortunate that I was never late on one bill for 12 years and had perfect credit before this housing mess where I lost 60% of the value of my home and now have a credit score of a 620 before this foreclosure. My husband has a score of 576 because of past debt (before we were a couple)and now his home before his foreclosure. We have been paying off his old debt and the only bad things now on our credit reports are these homes.
Do we have any options in the future? Any suggestions on what we can do, so that we can afford to buy in the next few years? With so many people losing there jobs and homes how is anyone going to be able to get a loan if you now need a 700 credit score and 20% down as a down payment? These are some huge concerns that I have especially with how bad the economy is right now.

By: Rhonda Porter

Rhonda Porter — Mon, 02 Feb 2009 23:12:34 +0000

Dorica, it will depend on a couple factors including how your credit has been since the bankruptcy was discharged. Late payments following a BK will make it challening to buy a home.

Conventional financing recently up the requirement to 48 months since the discharge.

With a 630 credit score, you would be more of a FHA candidate which requires 24 months since the BK.

Other factors may include if the BK was a Chapter 7 or 13 and if there are extinuating circumstances that may have caused the BK (such as medical).