gamecockfan42

Preapproval Midscore 588

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Hi,

This is my first post here, but a long time lurker:) My wife and I have recieved a mortgage pre-approval for 1 loan at 100% and the rate is 12.35!!!

Is that the best we can do with midscore 588? I have 2 old utillity collections on my report and few medical bill collections. Have recently obtained couple credit cards (was told I needed some revolving credit). Is there someone out there that can do better with this interest rate. We havent found a home yet. We want a interest rate that we can live with before looking. Please help!!!!!!

Gamecockfan42

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Hi,

This is my first post here, but a long time lurker:) My wife and I have recieved a mortgage pre-approval for 1 loan at 100% and the rate is 12.35!!!

Is that the best we can do with midscore 588? I have 2 old utillity collections on my report and few medical bill collections. Have recently obtained couple credit cards (was told I needed some revolving credit). Is there someone out there that can do better with this interest rate. We havent found a home yet. We want a interest rate that we can live with before looking. Please help!!!!!!

Gamecockfan42

How soon do you need to be in the home?

That rate of 12.35% - is it fixed or an arm? What kind of prepayment penalties?

Yeah, you can do better.

Couple of things to look into:

1) if you need to be in the house quickly, go to www.naca.com and pray they're in your neck of the woods. If so, go to their seminar. They'll give you a rate under 6%, 30 year fixed, no closing costs.

2) if you have some time, get over to the credit repair forums, and improve your credit now. If you have a few months, you can easily reach a 620 mid score and maybe even 640-660.

You should be able to do better than 12.35. You should be looking at 80/20 loans, not 100% loans. The 20% will be higher, but should be under 12%. The 80% loan should be under 9% for sure. Those are with your scores today (and those are guesses too).

But get your scores up over 620 and you'll have a lot more options.

Good luck.

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Welcome gamecockfan42! Do you have a time limit for purchasing a home? Is there a reason you must be in a home now? If not, then you really need to do some credit repair to better your chances of getting a lower rate. W/ a 588 (which I assume is your middle score), your interest rate is going to be high no matter what. Although most lenders don't require paying off medical collections or old collections, they are still affecting your scores. Spend some time in the Credit Repair & Collections forums. You should be able to get some PFDs (pay for deletes) or even get some deletions w/ simple disputes. But needless to say, I would recommend that you clean up your credit and build some history b4 obtaining a mortgage. If you don't, a 10-11% interest rate may be the best a lender can do for you.

Have you tried SC's FTHB's program thru the SC Housing Finance and Development Authority? I'm originally from SC and I've heard great things about this program. They are not score-based, but do have other specific requirements. I believe that you can do a search on their site for lenders who uses this program. We have a similar one here in NC. I am going thru a lender that uses the program. My middle score is 619; but I'm getting a 5.625 interest rate & am not required to pay a CO (but there are certain requirements a debt must meet). Here's the site: http://www.sha.state.sc.us/index.asp Just click on the "First Time Homebuyer" link.

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Thanks for your replies.

We would like to get in a home before the end of year. My wife will be finishing school and plans to work out of our home and right now we dont have the extra room. The loan that we are preapproved for is 100% fixed, the company doesnt offer 80/20 loans to midscores less than 620. There are no prepayment penalties with this loan.

I will check out the link you provided for SC State Housing.

I did dispute the 2 utility bills and they came back verified.

Thanks again for all information and suggestions.

gamecockfan42

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I am not sure if this is acceptable in the forum, but can anyone provide information on where we may be approved for 80/20 mortgage with 588 midscore? Please accept my apologies if this isn's permitted on the forum.

Gamecockfan42

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My wife will be finishing school and plans to work out of our home and right now we dont have the extra room.

gamecockfan42

How about just renting a larger apartment? or renting a home?

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Charles/FirstSource is a good reference for getting a mortgage. PM him or wait a day or so and he'll respond to this thread.

Seriously though - improve the score first then get the mortgage. You'll likely save hundreds every month.

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Charles/FirstSource is a good reference for getting a mortgage. PM him or wait a day or so and he'll respond to this thread.

Seriously though - improve the score first then get the mortgage. You'll likely save hundreds every month.

Exactly!

I'm not even going to consider ownership until my scores are at least 650+. In fact, just yesterday I was thinking it might be beneficial for me to go ahead and buy a car through BarNone. I saw them once before, but they wanted crazy interest so I said no. But, Paying an extra $4K in interest over the next four years will help raise my score to save me 10s of Ks later, when I do buy my house. And, I get a car for it. :)

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By all means, don't do it! Take it from someone who knows from experience of believing all the bs.

You know with a score of 588 is not that good for almost anything. They know that too. You are a prime candidate for mortgage fraud.

You say that they don't have prepayment penalties. Bull.... they won't tell till closing day. Ask if they sell their loans to other mortgage servicing companies which they do.

Please be patient and wise before you walk into their trap. Do your homework and start cleaning up your credit. Dispute, Dispute, Dispute.......

you may just be able to delete those collections.

Your credit cards, charge less than 35% and pay them on time. Your credit score will improve over time and your chances on a much lower interest will improve.

There are mortgage companies out there that prey on families with lower credit scores because they are higher risks for forclosures. Don't be in a hurry! Be patient and wait for a more opportune time when you are in a position to control the financing.

Think of this....how could you and your wife enjoy a home together when you have someone calling you up telling you that you're late when in fact your not . I mean almost every month......it's very stressful and unnecessary.

If you can, put it off for a year. Reputible mortgage companies won't consider you with low scores. Rip offs will offer 100% with outragous interest rates and crazy fees. They want to put you in a home that you can't afford so that they can sell the rights to that loan to other servicing companies and thats when you'll have trouble.

Do something that I didn't do, look up websites concerning mortgage fraud and pay close attention to the similarities and patterns and see if anything that you've been offered fall in those catagories.

You can do whatever you like, that's your business and I would respect that.

It's just I did it with no help or advice of any sorts and I'm having the hardest time dealing with mortgage servicing companies.

When I read a situation such as yours, I feel that I should speak up and let you know what's up. Jamie..........

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First of all you have to sit down with your DW and decide how much you are willing to sacrafice to make this work. "Little things" like for the next year no Xmas gifts/B'day gifts/vacations/etc. Can you budget your income now to make it work? what I mean is set up a bank account now and start putting in the proposed house payment/Insurance/taxes every month. Does it work? 2 things to be gained from that. 1) good to find out what it will be like-2) you will end up with a bit of a cushion.

There are a lot of "little" things that you have to consider when purchasing your new home. Grass grows. Are you going to cut it? With what? Yes-Lawn mowers are a few hundred dollars. Can you go to Home Depot and listen to the video on how to fix the toilet? I am such a Klutz that it is better for me to get someone to fix it the first time because they charge more to fix my mess up and then do the repair. My brother in law takes one look at things and goes in and fixes them. Figure out who you are and then go from that.

One thing I can tell you is that there is nothing like owning a home. Another thing I can tell you is that it can be hard on marriages when there is money stress.

There is more but my DW just called....

Charles

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Sorry, I am a little confused by your response Charles.

My question was is it possible to get a better rate than 12.35% with a 588 midscore? Are there lenders who do 80/20 loans with midscore less than 600?

Gamecockfan42

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Sorry, I am a little confused by your response Charles.

My question was is it possible to get a better rate than 12.35% with a 588 midscore? Are there lenders who do 80/20 loans with midscore less than 600?

Gamecockfan42

Yes it's possible to get better than a 12.35% on 1 loan at 100% with a 580-599 mid score. No lenders are doing 80/20's anymore that I know of with that score, but once you get to a 600 you should be able to find dozens. I'd strongly recommend you get your mid score to a 600, the difference in rates will be tremendous.

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No lenders are doing 80/20's anymore that I know of with that score, but once you get to a 600 you should be able to find dozens.

Are you sure about that?

I've got a GFE from about a year ago for an 80/20 ARM. My mid was 570 and I was told to get it to 580.

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Are you sure about that?

I've got a GFE from about a year ago for an 80/20 ARM. My mid was 570 and I was told to get it to 580.

I'm sure that I don't know about them, yes ;) Never said that they couldn't be out there, but if they are, I'm pretty sure the interest rates are going to be unattractive vs. what a 600 could get you.

You also said "a year ago", and sometimes guidelines can change several times a year. Back in August there was a lot of credit tightening going on as Wall St. investors have seen an increase in the foreclosure activity, therefore less "easy credit" is avialable. 10 years ago you needed some pretty decent scores (not excellent but 620+) to get any type of mortgage - let alone 100% financing. I don't expect it to get that tight again, but the last couple years have made mortgage credit pretty easy to get. There used to be lenders who'd do 80/20's with a 560 score, several of them actually, and a lender or two who did them at a 525... no more.

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well, it's been a year since I looked seriously when my scores were in that range. Things certainly could change.

I stand by my original post - work on getting scores higher first and make this all a non-issue.

:)

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By all means, don't do it! Take it from someone who knows from experience of believing all the bs.

When I read a situation such as yours, I feel that I should speak up and let you know what's up. Jamie..........

Jamie: I can relate to your post as I, too, was taken in by an unscrupulous mortgage broker when refinancing in 2002. In financial distress and with horribly low scores I grabbed at what I thought was a lifeline and dearly paid the price. I hadn't yet found the CIC and in a panic I bypassed doing the necessary research before signing on the dotted line. One positive is that came from it is that I am now committed to helping others from making the same mistakes I made.

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...it can be hard on marriages when there is money stress.

That's either the #1 or #2 reason for divorces in the USA. If money's going to be really tight it might be better to continue renting for a while and have awesome Christmas's and vacations.

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Just wanted to give an update.

My mid credit score is now 621. We have been approved for an FHA loan. We have a closing date of December 1. We have to pay 3 old collections at closing, Anyone had any luck with getting PFD with Arrow Financial, CBCS or Professional Credit Services? Thanks again.

Gamecockfan

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That's great, gamecockfan! Unfortunately (or fortunately, perhaps?) I haven't dealt with any of the three OCs/CAs you listed, but perhaps others have. Keep in mind that if you settle with them and they write off $600 or more, you will receive an IRS Form 1099-C and will be required to pay income tax on the forgiven portion of the debt on your 2006 taxes.

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