Dockside Chat - Can I get a mortgage?

I currently home a home for the past 10 years, I make a (I consider) very good living, my wife is a school teacher for the past 14 years. My current credit score is 650; we were late on a student loan twice. I currently have my house for sale and have found a new home. I have a home equity loan on my current home that will be paid off with the proceeds of my sale. We have no CC debt and 2 car loans that are not much. I was recently turned down for a mortgage without having a co-signer -Am I shopping in the wrong place or is my situation worse than I think?

Many things come into consideration for a mortgage. What you intend to buy, of course your debt to income ratio and one new thing I just learned about. It's not only how much debt you carry on say credit card, but the amount of debt versus the total credit limit. So you could have say a department store charge card with a spending limit of say 5k, because who really needs that much at a department store and if you have 4k out on teh card, that is very bad. 650 is only a fair credit number these days. You really need to get into the 700s to be able to get whatever you want.

Call Wells Fargo or Suntrust. They are still handing out loans down here to anyone. Seriously. I am an insurance agent and some of the people that are referred to me cant even get homeowners insurance because of their credit score but the banks are lending them 300K with no problem. I thought BO was taking care of all that? Yeah right.

It's not only how much debt you carry on say credit card, but the amount of debt versus the total credit limit. So you could have say a department store charge card with a spending limit of say 5k, because who really needs that much at a department store and if you have 4k out on teh card, that is very bad.

Not to de-rail but the opposite can affect you too. Say that same credit card has zero balance and 5K limit. The lenders are worried that you have that much available credit and you could go out and quickly run that thing up. I used to think oh man, I have 3 credit cards with up to 40K in credit limit with zero balances! Thats good! WRONG! You cant win! ;?

Run far away from Wells Fargo. They are the worst of the worst.

Try these people:

absolutemortgageco.com

Ask for Bill Laffey, he's very straight, and very knowledgeable.

Run far away from Wells Fargo. They are the worst of the worst.


Do you have an experience you can share? Just curious, my mortgage was with Wachovia and got gobbled up by WF when they bought Wach out. I havent seen any change in the 1.5 years I have been with them? They send me a bill and I send them my $$. ;?

I have a home that is flat-to-barely-underwater, and just bought a second. I essentially had to pay off as much debt as possible and fit both mortgages into the "allowable monthly debt" portion of my income, and then had to show I had 12 months cash on hand for BOTH mortgages. When I closed basically the only debt I had was the existing house + my boat loan.

It isn't impossible, and I may not have had to jump through quite that many hoops, but that got it done. Two of the major banks were ready to lend to me, the prequal was no problem the details a little more work.

I should add that in "normal times" I would qualify for a loan of house1+house2 on my salary.

What's your realistic situation on the current house value vs debt?

Appfan: I have a good bit of unused CC credit available to me - that surprisingly was not mentioned anywhere during the process.

Do you have an experience you can share? Just curious, my mortgage was with Wachovia and got gobbled up by WF when they bought Wach out. I havent seen any change in the 1.5 years I have been with them? They send me a bill and I send them my $$. ;?

I hate Walkallovaya,had my loan with them before WF got em. My payment went down,but not a fan of WF. I took my $ from Wachovia went to BB@T much happier

I think there is something else in the story that you are not aware of. What LTV are you asking for? Remember the bigger the down payment the easier to finance the balance. Maybe you are buying too big a house for your income or the neighborhood.

wells fargo is the best , sorry dude. on 4th mtg with them. rates drop no need to refi , just call them up and they send paperwork for new mtg at lower rate. no fees just a $100 or 2 for your laywer to double check it and close it.

We have our mortgage with GMAC........no issues in 12 years. (and only 4 more to go!!!)

wells fargo is the best , sorry dude. on 4th mtg with them. rates drop no need to refi , just call them up and they send paperwork for new mtg at lower rate. no fees just a $100 or 2 for your laywer to double check it and close it.

Yeah. They tried this scam with me. They ended up dragging me along until the rates went back up, then they told me, "Opps you don't qualify" -- when I reported them the Office Of The Comptroller, they plead that the house value was too low. When pressed for comps, they used houses that flood, next to rail road tracks, or behind a major highway. I'm in a high/dry...

Suffice it to say, I ran away from those pricks and my rate went from 5.75 to 4.375.

There was a thread here about the Wells Fargo 1-2-3 refi (that hatterasman is talking about), and talks about how the 1-2-3 program is great. But you'll never do as well as you would if you leave all together. Even the deal they wanted was to go from 5.75 to 5 -- granted I had to pull about $2K out of pocket to get 4.375, but it meant I could get rid of the scum bags...

Of all the refi/buys I've done THAT particular transaction was the best, went the smoothest, and saved me the most money.

Pete

P.S. I have NO connection to Bill other than having used him. I can tell you that in the past, each time I got a call from the broker/bank it was to tell me that there was a new charge. With Bill, each time I got a call from him, it was to take out an eraser and LOWER a cost!

Can't help you with your question. I would think you need to be bringing in some serious cash to get a home loan while have a mortgage, a second, and you are not currently renting the place. Maybe if you get your score above 700, you would have a better shot. Without knowing your income, we are all just guessing.

I am floating on air right now. I just locked a 30 year fixed at 4 3/8 -no points, and 2400 ins closing. It will pay off in 7 months. Poor PHH is gonna have to find another escrow account to screw up 4 years in a row.

call Buarny Fuank or Chris Dodd

or just put on the application that your illegal..

Its all about your debt ratio. They have to include your current mtg as well as your new mtg. Everything is pretty much automated these days. Your total debt ratio generally speaking needs to be under 50%. All of your cc on your credit report, current mtg, mtg to be vs your gross monthly income. I deal with all the lenders and the only one i reallly stay away from is B or A. They have great rates but the process is too much to put clients through. Really, the only way to not count your current mortgage in the debt ratio if that is what s holding you back is to rent it out. The rules have changed and they make you show them a rental agreement, proof of rental deposit etc. Not sure what your credit card situation is but if you have credit cards that have high balances use a little of your line to pay them off to bring your DR down. If all else fails, save yourself a lot of stress and wait until your house is sold before buying a new one.

I was a mortgage broker for 5 years and manager of their office here in central Iowa and would be more than happy to help you out if you PM me. I can say that you need at least a 680 score to get a purchase loan and a 720 or higher to get a decent loan. I can tell you how to increase your credit score in 90 days by quite a bit. PM me if interested.

Thank you for all of the great replies. I was dealing with WF- I was actually referred to the person. I have gotten rid of all my CC's in the last 3 years - just AMEX and paid off on time all time. I do not have a ton of accessible cash on hand - which I think may be hurting me. I currently have a mortgage with a Credit Union (in good standing with only 6 yrs left)- so I have to contact them. The current house we are looking at we will be putting down about 35% (proceeds from sale when my current house sells) also leaving myself a little on the side for negotiations and extras. We are not making a huge leap - we are looking to spend another 75k on the new home. My wife and I combined are over 300k so I thought this process was going to go a lot smoother. I will contact the people mentioned in the replies above.
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Not to de-rail but the opposite can affect you too. Say that same credit card has zero balance and 5K limit. The lenders are worried that you have that much available credit and you could go out and quickly run that thing up. I used to think oh man, I have 3 credit cards with up to 40K in credit limit with zero balances! Thats good! WRONG! You cant win! ;?

Thought the same thing several years ago until I was talking with one of my clients that is a banker. He told me to close all CC's that I did not use(Lowes,Home Depot, etc) and to call and have my credit limit reduced on the others.

I like you thought it was ok they were increasing my limit but he told too much available credit hurts your score as well.

Every year I sit down and review my two major cc(visa and Discover) and make them keep my limit fairly low.

It is amazing how hard it can be to get them to lower your credit limit sometimes;?;?

tprice you were told WRONG that can and will negativly impact your credit score.

http://www.americanchronicle.com/articles/view/15599

What makes up a credit score? A credit score is made up of five components. Payment history (35%), balances carried (30%), credit history (15%), mix of accounts (10%), and inquiries (10%).

Balances carried is rated based on the balance to limit ratio. Being that this component makes up 30% of the credit score, it is best to keep the balance to limit ratio low. Let’s take a look at an example.

Let’s say a borrower has two credit card accounts, one Visa with Citibank and one Visa with Bank of America, and both accounts have credit limits of $10,000 but, one is maxed out and the other has a zero balance.

If the credit accounts are left as is, it will result in a lower credit score because balance to credit limit ratio is 100%.

On the other hand, if the borrower spread the balance between the two accounts and owed $5,000 on each, the balance to credit limit ratio would only be 50% resulting in a positive affect to the credit score and would create a higher credit score.

Credit history simply means the longer the account has been open the higher the credit score. However, to achieve the higher credit score the accounts need to be paid as agreed.

Additionally, many people have been advised to close accounts that they never use. Not the case! This can actually have a negative impact on the credit score. Never close old credit accounts, especially if the accounts have a long history.

Mix of accounts. The ideal credit score is made up of both installment and revolving accounts and looks like this:

Mortgage Loan

Auto Loan

3-5 Credit Cards (Or More)

Here are five simple steps to raise your credit score 100 points in forty-five days. 1) Pay past due accounts, 2) get rid of late payments, 3) have credit limits increased, 4) become an authorized user, and 5) do not close old accounts. Let’s take a look at each.

Increasing your credit limits can increase your credit score. Every six months or so call each creditor and request that each increase your credit limit. Be sure to request that the increase be made based on your great credit history. If the creditor insists that a credit report must be pulled, think twice before you agree as this will count as an inquiry and will have a negative impact on your credit report.

Slide 15 – Do not close accounts even if you have heard that old accounts that you no longer use should be closed. Keep accounts open and use accounts that have become inactive periodically. However, if you charge on the account be sure and pay the balance in full as soon as the bill arrives. Purchasing a tank of gas and paying it off will activate inactive accounts and report them current and in good standing. Closing accounts can actually lower your credit score, especially if the account has a long credit history.

Keep the balance to limit ratio low; do not max out credit cards. If you have to use credit cards, be sure to spread it over several accounts.

For a quick boost to your credit score, when a creditor removes a late and provides a letter, request a credit rescore. For a fee, in just a few days, your credit score will increase and this could help you obtain a better interest rate.

Never payoff a judgment or collection when applying for a mortgage loan. Try to negotiate that the account will be paid in escrow.

I have personally helped many people rais their credit scores well over 100 points within a 90 day or less period by doing the above as well as a few other things that are listed in that article. It works and is no real magic it is just how the credit reporting agencies work.

Secondly don't go to a bank for a Mortgage unless you have perfect credit and I'm talking 750 with good cash reserves. Go find a good local Mortgage broker to work for you. They get paid on a per loan basis and will work hard to get your loan thru at the lowest possible rate. Mortgage brokers deal with several Lenders and at different times these lenders have specials to boost their money output. In addition the mortgage broker will only have to pull your credit one time and will send that to multiple lenders to get you pre-qualified with a particular lender.

Bob I sent you a PM back with my cell phone number give me a call later today after you have had a chance to read the above link.

David

DavidKuhlmann: Thanks for posting, that is very valueable information !!

John you are quite welcome. As a broker it was in my best interest to help people increase their credit scores to help get better loans this did several things for me. Not only did it get them better interest rates but they were more inclined to send me their family and friends for financing. I did quite well in the industry but got sick of seeing some of the mess that was approaching.

FNMA approved a loan for a guy that had a score of 686 at 100% and only had one trade line of a car loan that was less than a year old, no cash reserves and worked at a coffee shop in a grocery store. This guy was 19 and while in the process of doing this loan (took 2 months due to issues with property) this guy didn't make two payments on his one and only loan and his credit score dropped down to a 503. Well FNMA still closed on this at 100% on an 80/20 with PMI.

Anyway I'll be more than happy to help out anyone that has questions about mortgage financing and credit building all you have to do is PM me.

David,

Funny this is coming up right now. I just sat down with a broker, and he told me an interesting tidbit. I got a 30 year fixed at i think is a great rate (no points and real fair fees). I asked why it was lower then what I was seeing posted, and he told me that this particular lender was in a little TARP trouble (squirrling away government money, not lending it). Someone put the screws to them, and they where pushing money out the door. Does this track for you?


I do find it interesting that in the mortgage business, adding the middle man (broker) tends to work out better for the consumer. Not the norm in many cases.

I'm a correspondent lender with Brayden Capital and we still lend money down to a 620 credit score with as little as 3.5% down. I wish I could help the OP but I can only do loans in GA. I've been in the business 6 years and have been with the big banks (BoA) and it was miserable. We could barely close a door over there. That's the main reason I left and went with a correspondent lender. We have our own lines to draw money from but we also have the ability to use the big banks for wholesale funding and close loans fast. I'd be happy to answer any questions you have. I think most of the guys on here have pretty much nailed the credit score do/dont's. Typically lenders want to see a clean 12 month credit history with no judgments, tax liens or recent collections. 1 or 2 lates on a credit card or student loan is usually explanable to an underwriter and can be worked around. 650 is definately a usuable score. Look into a 30 yr FHA mortgage. I did one today at 4.625% and there score was in the 660-670 range. FHA loans dont "hit" you for rate adjustments due to credit scores. Good luck with it!

These guys have all good information. Did you apply jointly with your wife or alone - you only mentioned one credit score. Determine your overall debt to income ration, take all of your monthly debt and divide it by your total monthly income, if the ratio is more than 40% you will struggle. In the past they would accept up to 50% in some cases not all. Another way you may be able to skin the cat would be to go to your local bank and see if they can do a bridge loan for you where they encumber your existing property plus the one being purchased. When the existing one sells the additional proceeds or a portion of them will be used to reduce the new mortgage. You will also be put on an interest only repayment program until the exisitng house sells which will keep your monthly payments a bit lower. This route usually provides the bank a lower LTV and depending on how much cash comes out the sale the lender can back into a mortgage amount that will work with your ratios. Some of the home lenders have these types of products but sometimes it is easier if you bank with a smaller community bank that knows you.

David, first of all, thanks for your offer...and of course I'll take you up on telling us how to improve our credit scores....mine's a mess.

About every few years I get a free score and see the same crap every time: Length of time accounts have been established....and lack of recent installment loan information.

Screw the score...it's around 800 FWIW...I want to know whatinthehell they mean by those references? Haven't had a new account in years...and lack of installment information...Please explain that to me. Does that mean that because we don't have credit cards that roll over...or we haven't opened new accounts in years, we get dinged?

A few years ago I went and cancelled a bunch of cards just because of ID theft concerns...but it didn't stop the credit score guys from writing their things about our score.

No, I'm not worried about it because I couldn't get a loan for any reason....showing negative income for the past ten years...but what about our regular readers that get those goofy messages on their reports?

LOL Rick you have an 800 credit score and you say it is a mess ;? It only can get to 850 :thumbsup:

I'll answer the rest of this later tonight don't have time this morning.

LOL Rick you have an 800 credit score and you say it is a mess ;? It only can get to 850 :thumbsup:


...well, there ya' go...800 isn't 850, and the admiral pays all the bills...but comes to me with dumb questions that demand a considered answer like, "....@&$^&!!!, why do I do everything as good as I can and they take points away for these silly things?"

David, she just hates it when I don't have a good answer for her, so whatever light you can shed would make me look good to her...and that pays dividends!! :grin:

Rick if I knew how to get from 800 to 850 I WOULD BE THERE ;?