Minimum Credit Scores for Mortgages Spring 2013 Update

May 10, 2013 by Leave a Comment

First Time Homebuyer Minimum Credit ScoresFor the past couple of years, when we talked to a borrower with a credit score of 580 to 600 – we told them they had a 3 to 4 month waiting period before they could buy a house.  In MOST cases, that was all the time we needed to help someone who was motivated, and who could really afford a home, to get their scores in order.

Minimum credit scores for the NC Housing First Time Homebuyer program was 600, and we could help people get into houses if they qualified for the program and had the scores.

On May 1, 2013 that changed.  It changed from a couple of perspectives… first the NC Housing program changed SIGNIFICANTLY. The changes include higher credit scores, more flexibility for homeownership status, and a better downpayment / closing costs assistance program.

Additionally, changes were made in April to the Automated Underwriting Systems for Fannie and Freddie – with those updates, Credit Score requirements for Governement loans went up to 640.  Can Underwriters override the “Automated” Approval systems?  Yes.  But Will They???  That takes a VERY well documented case. [Read more...]

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Can I Get A Mortgage With A 600 Credit Score in NC?

November 16, 2012 by 2 Comments

http://listings.realbird.com/Real_Estate/In-Ground-Pool-to-Enjoy-/Cary/NC/C9I7L9R4/187635.aspx?tab=photosWe talk to people everyday who want to know if they can get a mortgage, a home loan, with a 600 credit score in NC – the answer is POSSIBLY!  In North Carolina we have a program backed by the State, that allows people who meet the minimum household income for their county, and who are purchasing a home that is under the maximum sales price to buy a home if at least 2 of their 3 credit scores are a minimum of 600.

The NC First Time Homebuyer Program is not just for first time homebuyers!?  That’s right! The program is for ANYONE who has not owned a personal residence for the last three years - there are some unique caveats, so if you think you might qualify for the program, call us at 919 649 5058

Here are some of the most Frequently Asked Questions:

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Why Are My Credit Scores Different??

April 24, 2012 by 6 Comments

fico

We often talk to folks who are ready to buy a house, and they have the credit scores that they get for free every year.  Well, those scores are not the same as the scores you get for a mortgage credit report.  In fact OUR Credit Score numbers and the ones they send you, are almost always DIFFERENT!

Okay- so by now you know that you will have 3 credit scores – at least this is what we’re working towards – and we want scores that are over 700.

But since the credit scores are for the SAME person… you might think (logically) they would be the SAME.  Right?  I’ve NEVER seen 3 scores that were the same – and I’m old as dirt and I’ve seen a TON of stuff! [Read more...]

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One Idea On Fixing Bad Credit

March 7, 2012 by Leave a Comment

FICO keeps track of credit scores, and it recently released information that over 43 million people have a credit score under 599. The minimum credit score for purchasing a home (or just about anything else) right now is 620 – so that’s 43 million people who can’t purchase!  WOW!

Here’s how one strategist suggested folks look at improving their credit score:

Therefore, the best advice for people with bad credit is to dilute the negative information by maximizing the amount of positive information coming into their credit report on a consistent basis. It’s like a dirty glass of water – the only way to clear it up is to continue to add clean water until the dirt is less noticeable

One way to accomplish this is with a Secured Credit Card.  The typical  minimum deposit to open a secured credit card is around $200. This is normally a fully refundable deposit that you will get back once you close your account in good standing. Since the deposit acts as collateral, you can get the credit card at low risk to both you and your lender, so approval is likely to be easy, regardless of how bad your credit is.  There are some “hidden Fees” associated with secured Credit Cards, and if you are considering do this – please read more about it here.

If you are considering a home purchase in NC, and want more information on how to improve your credit score so that you can buy… call Steve Thorne, Mortgage Banker in Cary 919-694-5058.  He helps people every month get into their dream home with a mortgage loan they didn’t think they could get!

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Minimum Credit Scores for Mortgages in 2012

January 25, 2012 by 11 Comments

I”ve written a couple dozen times about scores and how to increase your score – but I don’t think I’ve mentioned (here anyway) what the goal is.  If you want to buy a car – your goal is to get your score to AT LEAST a 525 on all three credit bureaus.  If you are purchasing a home… the bar’s a little higher.

  • Most FHA underwriters now require a minimum score of 620.  We offer the FHA Affordable Program that will approve FHA Mortgage Loans at a minimum credit score of 600 – however, there are MANY “overlays” to getting an approval at that lower score.  FHA requires a 3.5% downpayment that can be a gift.  The State of North Carolina is also offering a $8000 DownPayment Assistance Program to those who qualify.  It’s a little tricky to coordinate – so if you have a score that you think will meet the 600, and you’re going to need that extra help with the downpayment – DEFINITELY call us prior to looking for houses!  (In Wake County the maximum FHA loan is $295k click here to see limits for other counties)
  • Veteran Home Loans don’t have a minimum credit score requirement.  However, most of the underwriters will require a minimum of 620… (although lately I’ve seen some 620′s that wouldn’t work).  We think the “black box” automated underwriting system is getting a little tighter – so you definitely want us to have a peek at your credit prior to looking for a home!  In the Triangle – we’ve partnered with a builder and several other service providers to offer SUBSTANTIAL discounts on homes and the closing costs to Veterans and their families.   Please remember to ask us about this!  (the maximum VA home loan is well over $400K… however with the number of reservist we’ve talked to lately – our stance is that we will need to look at your particular eligibility status to determine your maximum 100% loan).
  • USDA  home loans are for properties in less populated areas.  They had been the “go to” if your score was between 580 and 600.  That loophole is closing and they are really looking for 600+ now.  In fact, if you have less than a 640, it’s a required Manual Underwrite, and the guidelines are very, very specific (tight).  There’s no maximum loan – it depends on what you can qualify for.
  • The Conventional loan products and the PMI standards have also gone up.  To OVER SIMPLIFY… you can get a loan if your score is between 660 and 680 – but it’s not easy and the PMI costs are awful.  You really need a score of 720 and at least 5% to put down to get today’s best offerings.  The GOOD NEWS is that if you have a 660 score – getting to 720 is really not that difficult – it’s just a matter of taking the 30 or 45 days to do it.

If you’ve previously had a bankruptcy, foreclosure or Short Sale – it’s important to also look at how long you need to wait before you can purchase another home, no matter what your credit score is.

So the moral of this story??  You need to PLAN to purchase a home!  PLAN on speaking with Steve and Eleanor Thorne at Mortgage Banker in Cary 919-649-5058. ( I thought that was kinda’ cute!)

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