Trying to understand options

DaSchpiel · Joined: 11 Aug 2008 Posts: 5

Our story is quite sad. We had some baddies on our credit report from 2006 due to a credit counseling account failing to pay on time (many lates are now on credit reports). Unfortunately, due to spouse job transfer we were forced to move approx 60 miles - 1-1/2 hr commute.

We found out about our credit issues at this time. We went ahead and paid off all remaining balances associated with CC (Dec 2007), yet the damage was done. Since we had to sell our house and we knew it would take time for scores to rebound we decided to do a new construction (builder financed) where we would have 8 - 10 months prior to needing to secure loan. However, we did make a $25K NR deposit.

As reference, scores were initially found to be mid around 580 for one and 615 for other (all lates were for cc's with both of us as auth users). We pulled scores in July and one mid was 658 and other was 697 (we had done alot of work over the 7 months to fix this)

Our lender has jumbo (house price is 560K) with 10% down, yet scores needed to be 660 +. We decided to wait until August to see if the low mid would go up the 2 pts to meet this, UNFORTUNATELY, the paying off of our original mortgage was done in July and as a result our credit scores have both dropped by 20+ points making low mid 624 and 630 something.

Our house is scheduled for completion late September and builder has agreed in contract to allow additional month for purchase (November).

My concern is our credit scores may not recover from the last hit as we have paid nearly all of our debt (excluding two installment loans - $900 / month)

Our DTI (without mortgage is <10%) as we earn 220K+ (Gross)annually as one of us is salaried sales with commission this varies) - 2007 income. was 225 or so.

Conforming loan limits in our area are set at $428,750, yet our 10% down will not get us there. Now, I dont mind paying the PMI, yet I am really concerned that we will not qualify for any jumbo program at this point.

Are there any ideas as to what we could possibly do to insure we can get our "dream" home, there has been a great deal of sweat put into this construction project (literally, as our builder has allowed us to do some work along the way to keep some costs down)

Are their any programs out there that would help us get to that magical $428K loan amount (i.e. 1st and 2nd loans), or maybe that allows lower FICO scores as the 660 may be impossible within the next two months.

Any suggestions would be greatly appreciated

David · Joined: 19 May 2004 Posts: 703

Do you still have a lot of debt to pay off?
Do you easily qualify for the house from an income standpoint?

DaSchpiel · Joined: 11 Aug 2008 Posts: 5

Well affordability is what is in question at this time. Should we be able to secure a loan with a reasonable interest rate, not get completely screwed over by the PMI company, then yes. However, if the only loan program is something with an 8+ interest rate and PMI is charged at 300 - 500 a month than not really. We knew going in that a 4K monthly payment was possible, however, if we can get 20% we can save the PMI, yet does not help us getting out of jumbo programs. If we can get to the FHA limit (428,750 in our area) then we can look at FHA and considerably lower interest rates. We are talking about 1,500 / month or so less.

Our net income is 10K - 11K monthly (Gross is 16,600 / mo) with only a two debts outstanding (one no interest car loan at 2yrs old, and another installment loan - boat with $20K remaining) total payments are approx 900$ / mo.

Steve Ching

I know we have great thirty year fixed programs available for your credit and down payment and income. I do need to know a bit more about the consumer credit service though. Can you call me?

CreditGuy · Joined: 19 Aug 2008 Posts: 3

You said you you paid the debt off that Consumer Credit Counseling messed up, did you check for re-aging of accounts?

The settlement of the home loan in July would only create that much of a drop if there was no positive credit behind it. IF you need help looking at that, let me know.

Credit is a very fluid concept.

Robert Scroggins
CMA Financial Corp
469-375-4500
robert@cmafincorp.com

DaSchpiel · Joined: 11 Aug 2008 Posts: 5

What do you mean by re-aging. The way revolving accounts covered by the CC showed lates during the first 6-10 months of payments on each of the accounts covered (think that there were 4 total). Due to failure of covering initial minimum amount due, excess due amounts were carried over each month, thus showing lates up to 90 days (I am sure that this really hurt the most).

The accounts were caught up by the CC after that period and began showing as on time payments. If we only knew what was going on we would have paid any remaining balances when this all started. Was probably less than $50 on each account or so.

As for aging, the last lates were 3/2007, these accounts show as pays account as agreed and have been closed by the creditor (stipulation of the CC agreement I guess)

Not sure if this helps, but if there something else we can do that would be helpful.

Unfortunately, it seems as our only real option is to get enough DP to bring loan amount to <$417K and try FHA I guess. Conforming loans are all requiring 680+ scores for consideration

CreditGuy · Joined: 19 Aug 2008 Posts: 3

You answered my question in regards to "re-aging of accounts". As long as the acocunt shows paid as agreed/was 90 days late or something to that extent, then without a little more management, then that is all you can do.

However, without looking at the overal report, then it is hard to say what is actually keeping you from being able to reach your target score. There are laws that govern CCCS and various other non-protifit credit companies and how they manage the account.

If you would like me to look at it with you and truly give you your options, then call me directly. 469-375-4500 or email me at robert@cmafincorp.com

Your situation does not sound that bleak, but looking at all your options would definelty benefit you.