Mid Scores - Low Scores

Guest

If anyone is still "listening". We have a BK - 2 years out. One set of scores is 539, 561, 600. The other set is 524, 595, 602. We are speaking with a lender who says that it's possible with VA and/or FHA. I'm reading a lot of forum talk and I'm not feeling it's possible. No money to put down - they're saying sellers now are willing to pay closing and VA will not require a down payment. I feel I'm being strung along - please let me know what you think. Thanks.

banker0679 · Posted: Sat Jun 21, 2008 8:16 am Post subject:

It depends on the lender you're working with. There aren't many lenders that will do a loan with a score less than 580. Your middle score for both borrowers is 561.

FHA/VA have the same credit guidelines for approval.
You can't have credit lates in the last 12months.
A lot of ppl say they dont, and end up having 2-3 lates on the car payments, student loans, and/or credit cards. NO LATES!
Also, you can't have a BK 13 in the last 12months.
This means that you would have to have your BK 13 Discharged before the 12months. With refinance purposes you have to be in it for 12months to do the FHA buyout.
No BK 7 in the last 24months.
Same applies as above. 24 months discharged
No Foreclosure in 36 months
Same applies as above. 36months discharged

You can have medical collections, and they dont have to be paid off.
All Judgements (not collections) have to be paid off.

laphillips · Posted: Sat Jun 21, 2008 8:46 am Post subject: Mid Scores - Low Scores

Desperate to Buy,

It may help you breathe better to take some time to rebuild your credit. You may want to check into a Lease Option situation (Rent-to-Own). Yes you may feel this is risky in the prevailing Real Estate market considering the foreclosure rate BUT look for help setting this up. There are some very knowledgeable agents and attorneys out there who can help set up a situation with protections built in.

That said your main point to consider at this time is whether a foreclosure was involved in the BK. If an actual Trust Deed Sale Notice (Sheriff's Sale) had already been filed and recorded this changes your chances of getting financing. Recently the industry standards led by FNMA (which would include VA & FHA) have changed and if a home was lost in the BK it will take 5 years of showing a good credit rating to be able to finance a new home not the 2-3 as in the past.

As far as your FICO scores (credit scores) try to get them up to a mid score of at least 620 to receive a better rate.

Good Luck Smile

Guest

There was no forclosure. We filed due to serious medical bills. My have just paid down the 2 credit cards below the 30% - and that is not reflected on the credit report yet - probably not until next month I imagine. There is 1 late payment on 01/08. So basically, you are saying that we would have to wait until around December/January before we can get a loan?

cliff · Posted: Sat Jun 21, 2008 2:51 pm Post subject:

These are low scores but it is still possible to obtain a loan. However, I would enroll in a customized credit repair program to ensure your scores come up enought to close on this and future loans.

brian1 · Posted: Sat Jun 21, 2008 2:53 pm Post subject:

Having any lates after a BK makes qualifying very tough
Once you have a BK you need to establish CLEAN credit for FHA.

I would work on your scores and make sure you do not have any lates. Unless there was a very good reason for the last late payment you will probably need to wait until January 09 to qualify for FHA or VA.

Good Luck
Brian

Guest

The credit card was late due to my husband being out of work. We wrote a letter explaining it. I'm not sure if that is considered a "good" reason or not?

brian1 · Posted: Sat Jun 21, 2008 5:42 pm Post subject:

That would be a reasonable explanation for an underwriter provided you can document the unemployment. FHA is common sense underwriting and allows for things that are somewhat out of your control... now if he quit his job that may not fly? otherwise give it a shot..

Brian

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