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Old 06-12-2008, 03:28 PM
 
86 posts, read 327,333 times
Reputation: 21

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This time last year my credit score was around 620. I became very, very sick for awhile and while I was sick (and then declared disabled), my zillion student loans came out of deferment. Because I was very ill I didn't get the new deferment requests turned in in a timely manner. As a result, my credit score took a HUGE hit (now in the mid-400s). The loans are in the process of being discharged due to my permanent disability, and in fact two of them have been discharged already.

This is my situation: I have been paying $550 a month in rent for over a year, and can continue to pay this, and up to $100 more if need be, without hurting anything. However, I'm kind of paranoid about arbitrary rent increases that could end up having me pay more than I can comfortably spare, being on a fixed income. Sooo, I'd like to buy a small house (in South Carolina). I've crunched the numbers and have a target price range that will get me below $550/mo. for everything (P&I, PMI, taxes, homeowner's ins), and will allow for wiggle room for property tax increases, etc.

I know this is a long shot, but I can show that I've paid rent, utilities, my credit cards, and car note decently in the last 12 months, which is what the FHA looks for. So, what I'm asking is if anybody knows of any FHA or VA Loan lenders who will give a mortgage to someone with a credit score in the mid to high 400s? I know the FHA/VA will guarantee the loan, but the problem is finding a lender who will give me one. BTW, I do have the 3% down payment for the homes in the price range I'm looking at.

Can anybody recommend any mortgage companies? Thanks!
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Old 06-12-2008, 04:14 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 11,756,958 times
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FHA is concerned with all of your CREDIT debts to be current, and to have been made on time in the last 12months. I'm not sure how you have a score in the 400's if you been current in the last 12months?

They're very strict on student loans or federal loans.

Another problem you may have is finding a lender that will do a loan less than 100k.
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Old 06-12-2008, 04:48 PM
 
86 posts, read 327,333 times
Reputation: 21
Well, I just took a look at my credit report and there were some OLD medical collections (originated more than 12 months ago) that have been re-reported in the last 6 months. I'm confused about this, because when I first made the debts, they were reported to the credit bureaus then. It looks as if they were sold and are now being reported as if they are new debts, which they aren't. So, I'm confused.

I didn't think it was legal do this? I read that the only way old debts/collections can be re-reported is if the debtor makes a payment arrangement, therefore bringing it back "current" and I did not do that. I haven't had any unpaid medical bills since July 2007. In the 13 months I've had my car, I've only made 1 payment 30 days late. Only 1 of my 4 credit cards is showing any delinquent payments (but it's caught up), and my current address is on the credit report, therefore I don't have to provide 12 months of canceled rent checks or a letter from my landlord (which I can do, btw).

Around July/August of 2007 some of my student loans (I have lots combining undergrad and grad school) came out of deferment, but I was very sick (I have Lupus). As a result, they became delinquent and hit my credit reports before I could get the new deferment requests turned in - but I did get them turned in and the loans went back into deferment. Currently, they are now in the process of being permanently discharged, and in fact, two already have been.

Why would a disabled person on a fixed income have a hard time finding a lender for a under $100k loan? I'm to be penalized because my fixed income can't support a large loan? That's crazy. It's also discriminatory.

So, do you know of any lenders?

ETA: I heard that just paying off one bad debt can raise a credit score by 20-30 points? Is this true? Does that only work if the creditor agrees (in writing of course) to have the debt taken off the credit reports, or will it work also if it stays and shows paid? If this is true (either way), then I can postpone my home search for 6 months (to give my credit reports time to be updated to reflect the improved score) and pay off the small bad debts that are showing on my credit report - including the ones that are old but have been re-reported as if they are new. Does that sound like a viable plan? If it won't work and my credit score will still be in the toilet, then I'm keeping my money and just let time take its course, because there is no benefit to me for me to pay anything off.


Quote:
Originally Posted by renriq02 View Post
FHA is concerned with all of your CREDIT debts to be current, and to have been made on time in the last 12months. I'm not sure how you have a score in the 400's if you been current in the last 12months?

They're very strict on student loans or federal loans.

Another problem you may have is finding a lender that will do a loan less than 100k.

Last edited by SoloStar; 06-12-2008 at 05:00 PM..
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Old 06-12-2008, 04:52 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 11,756,958 times
Reputation: 975
it seems that you may have had credit lates in the last 12months.

Lenders don't make a lot of money on small loan amounts, so they choose not to do the loan.

I would try your local bank for fha/va.
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Old 06-12-2008, 05:10 PM
 
86 posts, read 327,333 times
Reputation: 21
Update: A debt collection that I paid and that was supposed to be removed from my credit reports is still showing on my credit report. I have a paid in full letter from the collections agency that says they would notify the credit bureaus to completely delete this account from my credit reports. I called the collections agency and they told me that they did indeed tell the credit bureaus to delete the account from my report and since it wasn't done I need to dispute this directly with the credit bureaus. How much can that raise my credit score?

Not many, and the ones I did have were not my fault. I am disabled and basically at the mercy of the disability company (I get private disability). If they screw up, for whatever reason (and this one screwed up a lot and finally got their act together) and don't send my check when they are supposed to, there isn't anything I can do but wait. And, that's what happened (with the exception of my student loans).

I need a lender who understands what DISABLED people on fixed incomes have to deal with, and understand that sometimes things are out of our control as we are at the mercy of other individuals doing their job competently or not. Do you have a recommendation for a lender that deals with getting home loans for disabled people?

Quote:
Originally Posted by renriq02 View Post
it seems that you may have had credit lates in the last 12months.

Lenders don't make a lot of money on small loan amounts, so they choose not to do the loan.

I would try your local bank for fha/va.

Last edited by SoloStar; 06-12-2008 at 05:27 PM.. Reason: update
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Old 06-12-2008, 08:01 PM
 
Location: South Carolina
5,289 posts, read 4,422,877 times
Reputation: 8057
Quote:
Why would a disabled person on a fixed income have a hard time finding a lender for a under $100k loan? I'm to be penalized because my fixed income can't support a large loan? That's crazy. It's also discriminatory.

So, do you know of any lenders?
I would try Wells Fargo,they will do well under $100,000 at least here in Minnesota they do. Just moving from SC and so many homes that are priced well under $100,000 in areas I would think you should be able to find someone willing to finance under $100,000 as long as it isn't a mobile home.
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Old 06-12-2008, 08:56 PM
 
86 posts, read 327,333 times
Reputation: 21
Thanks mystree, that's what I was thinking too. I mean, there are plenty of people with homes under $100k and they all got mortgages some kind of way. I was starting to think this was due to the new guidelines lenders have put in place, but that still didn't seem right to me. I don't think this is the case, but I also don't think I can get a loan right now, either, and that's okay too.

Quote:
Originally Posted by mystree View Post
I would try Wells Fargo,they will do well under $100,000 at least here in Minnesota they do. Just moving from SC and so many homes that are priced well under $100,000 in areas I would think you should be able to find someone willing to finance under $100,000 as long as it isn't a mobile home.
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Old 06-12-2008, 09:16 PM
 
Location: South Carolina
5,289 posts, read 4,422,877 times
Reputation: 8057
I think alot has to do with what area of the country you are in.I'm sure if you're in an area where home prices are much higher getting a loan under $100,000 would be like pulling teeth.Where I am there are an abundance of homes under $100,000 so we had no problems finding financing.
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Old 06-13-2008, 09:56 AM
 
7 posts, read 51,622 times
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It sounds like you've suffered quite a few misfortunes recently, and you are at the mercy of the private company that sends your disability payments. It seems like you are currently in a position where you can afford your rent, so maybe you could use the next 12 months (instead of six months) to save enough money for an emergency fund?

If you concentrated on paying or resolving your debts (including inaccurate accounts), settling old accounts and establishing a pattern of timely payments, your credit score would start to improve.

In addition, if your disability payment was delayed and you had money in savings to cover expenses, you would be in a position where you had the funds to timely cover necessary bills. There are a lot of expenses that come with owning a home, and you do need to budget for replacing and repairing things as necessary.

If you concentrate on repairing your credit and saving some money, you will be in a much better position to obtain a mortgage and afford homeownership, and from your post, it seems like you know this.
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Old 06-13-2008, 02:55 PM
 
86 posts, read 327,333 times
Reputation: 21
I know you're trying to help, and I'm not being rude. But, please respect the fact that I didn't ask for a lecture or for budgeting help. I did not tell ALL of my business, only that which was relevant to the specific question I asked. Please do not make assumptions, based on the limited information I gave. Thank you.

Quote:
Originally Posted by osugirl View Post
It sounds like you've suffered quite a few misfortunes recently, and you are at the mercy of the private company that sends your disability payments. It seems like you are currently in a position where you can afford your rent, so maybe you could use the next 12 months (instead of six months) to save enough money for an emergency fund?

If you concentrated on paying or resolving your debts (including inaccurate accounts), settling old accounts and establishing a pattern of timely payments, your credit score would start to improve.

In addition, if your disability payment was delayed and you had money in savings to cover expenses, you would be in a position where you had the funds to timely cover necessary bills. There are a lot of expenses that come with owning a home, and you do need to budget for replacing and repairing things as necessary.

If you concentrate on repairing your credit and saving some money, you will be in a much better position to obtain a mortgage and afford homeownership, and from your post, it seems like you know this.
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