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Kunk10, it is tough giving you a helpful response w/o knowing what the credit score was. You never said. So many things can affect your score. And as someone stated, it's one thing if you need to go from 610 to 680. But it's a different ballgame entirely if you need to go from 560 to 630.
Certainly high balance to credit limit on credit cards can tank your score. Keep your balance no more than 30% of your limit for the best score. Paying down revolving debt CAN raise your score by 70 points very quickly IF the balances were a major problem to begin with. If they were not, then you could have used those funds for a higher down payment. But if the cause of the low score is primarily the prior late mortgage payments, then paying down debt won't help that much. Only time will help that.
What happened to the other mortgage that was modified? Are you selling that home, or are you trying to buy an investment property? Getting qualified for an investment property is a whole different animal.
If you had mortgage lates and a modification just 18 months ago, be prepared to fight tooth and nail for a new loan regardless of your credit score. If you are no longer self-employed, be prepared to prove everything with copies of tax returns for the prior 2 years. If you changed your line of work from what it was when you had your business, you could be denied if you haven't been doing that job for 2 years.
If you haven't given Wells Fargo a complete application WITH all supporting documentation, I wouldn't put much faith in whomever told you "all but certain." Loan officers love to mislead borrowers with false hope.
The mortgage business is unforgiving these days. The borrower either has their ducks in a row or no loan. A history of a recent modification will be looked at almost like a bankruptcy to many lenders. They don't like it.
Good luck.
Btw, not just talking off the cuff. I am a mortgage broker.
I've had success bumping my FICO score in a hurry when it was due to bill I had overlooked on a department store credit card. I made a full and immediate payment and the black mark was cleared within 3-6mos.
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fell behind and got my mortgage modified, which actually raised my monthly cost but had me paying into principal after IO for a few years. The bank told me not to catch up or the mod wouldn't go through so I foolishly took their advice. I have had no negatives for 13 months but old ones are killing me.
Only a 13mo clean history and non-payment on a mortgage? I wouldn't expect there to be any quick fixes. Heck, I missed two payments eleven years ago and even that still follows me around!
Last edited by likesAppliances; 02-06-2011 at 12:30 PM..
thanks for the thoughtful reply. score was 590, had someone run it today and it's 645 a week after i paid balances. got the mortgage co to remove the old lates as well. i have income and cash for purchase but the mortgage is the tough part. I am selling the home whose mortgage was modified and will lose money so not waiting for proceeds and have little equity (which is why something like a bridge loan makes no sense). the mod was from an IO to a fixed rate 30 with I and P, my payment actually went up so no forgiveness or savings - in retrospect i would have refied instead but the costs didn't seem to measure out knowing we were going to sell. as far as job, the purchasing company retained me as an fte now so I don't think it will be an issue.
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Originally Posted by JerseyEstate
Kunk10, it is tough giving you a helpful response w/o knowing what the credit score was. You never said. So many things can affect your score. And as someone stated, it's one thing if you need to go from 610 to 680. But it's a different ballgame entirely if you need to go from 560 to 630.
Certainly high balance to credit limit on credit cards can tank your score. Keep your balance no more than 30% of your limit for the best score. Paying down revolving debt CAN raise your score by 70 points very quickly IF the balances were a major problem to begin with. If they were not, then you could have used those funds for a higher down payment. But if the cause of the low score is primarily the prior late mortgage payments, then paying down debt won't help that much. Only time will help that.
What happened to the other mortgage that was modified? Are you selling that home, or are you trying to buy an investment property? Getting qualified for an investment property is a whole different animal.
If you had mortgage lates and a modification just 18 months ago, be prepared to fight tooth and nail for a new loan regardless of your credit score. If you are no longer self-employed, be prepared to prove everything with copies of tax returns for the prior 2 years. If you changed your line of work from what it was when you had your business, you could be denied if you haven't been doing that job for 2 years.
If you haven't given Wells Fargo a complete application WITH all supporting documentation, I wouldn't put much faith in whomever told you "all but certain." Loan officers love to mislead borrowers with false hope.
The mortgage business is unforgiving these days. The borrower either has their ducks in a row or no loan. A history of a recent modification will be looked at almost like a bankruptcy to many lenders. They don't like it.
Good luck.
Btw, not just talking off the cuff. I am a mortgage broker.
thanks for the thoughtful reply. score was 590, had someone run it today and it's 645 a week after i paid balances. got the mortgage co to remove the old lates as well. i have income and cash for purchase but the mortgage is the tough part. I am selling the home whose mortgage was modified and will lose money so not waiting for proceeds and have little equity (which is why something like a bridge loan makes no sense). the mod was from an IO to a fixed rate 30 with I and P, my payment actually went up so no forgiveness or savings - in retrospect i would have refied instead but the costs didn't seem to measure out knowing we were going to sell. as far as job, the purchasing company retained me as an fte now so I don't think it will be an issue.
A score of 645 is not going to get you a good rate/pricing for a conventional loan, unless you could take on a 15-yr note. You need a mid-score of at least 700 to get a good rate for a 30-yr mortgage. Has nothing to do with which lender you choose. The rates have to do with Fannie Mae/Freddie Mac guidelines.
However, if you don't mind FHA, you wouldn't get hit on the rate.
You are going to have an issue getting a new mortgage if your prior home has not been sold. That's because of a new phenomenon in the market called "Buy and Bail." That's where borrowers claim they will be buying a new primary residence and selling/renting the old primary. However, their true intention is to qualify for a new primary and walking away from the old home ASAP after closing the new loan.
How do you get over this? You must have at least 30% equity in the current home before you can use any rental income to qualify for the new loan. Otherwise, you must qualify to hold and make payments on two mortgages.
AND, in most cases, you need 6 months reserves on both homes. So, unless you have substantial assets to qualify, you will need to sell your home first. Of course, you don't want to do that until you know you can qualify for the new loan. Be sure you feel confident about any approval.
This may be just the tip of your situation - but very critical.
i can carry 2 if I absolutely have to; I have 20% to put down and a year cash reserves so that I think is covered. Buy and bail sounds like a good plan if you have no scruples
I am probably going to try to go the FHA route because of the credit score and who knows, when I go for the real-deal mortgage maybe the credit will have improved more.
i can carry 2 if I absolutely have to; I have 20% to put down and a year cash reserves so that I think is covered. Buy and bail sounds like a good plan if you have no scruples
I am probably going to try to go the FHA route because of the credit score and who knows, when I go for the real-deal mortgage maybe the credit will have improved more.
Most borrowers wouldn't buy & bail. The thought has never occurred to them. Though I can easily understand how people who are upside down by 50% or more can resort to desperate options.
But I say this not because the borrower might be thinking it, but because the underwriter always has this possibility in mind when the loan applicant has a zero-equity primary residence looking to buy another primary. In the back of their minds, they are also wondering if the borrower intends to rent out the new home but is trying to get an interest rate for a primary residence. I wouldn't want to be an underwriter in today's market.
You may already know that the drawback to FHA for someone like you who has 20% down is that you will pay that awful mortgage insurance regardless of your 20% down. The only way to avoid mortgage insurance for FHA is to get a 15 year loan and put down at least 10%. And unlike conventional, you cannot later have the home appraised to drop the insurance. Why not? In order to discontinue the insurance, you must pay your loan down so that your balance is less than 78% of the purchase price or the appraised value, whichever is lower. And, you are required to pay it for 5 years no matter what.
If your current home is FHA and has not been sold, you cannot buy a new home with FHA. Only one concurrent FHA loan per borrower.
That mortgage insurance is not cheap. You must pay a 1% fee upfront - 1% of the loan amount. PLUS, .85% per year. For example, if your new mortgage amount is $250,000, the monthly mortgage insurance would be $177.08. Ugly.
If you are buying a home using FHA with 20% down, have your mortgage consultant compare FHA vs conventional. In this example of the $250,000 home, you would pay over $10,000 in mortgage insurance over 5 years. Taking the higher conventional interest rate or paying the Fannie Mae fee might be better.
thanks for the in depth responses, much obliged. Ok if I pm you a question?
Sure. No problem.
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