myFICO- 618 - Ohio - Mortgage expert advice requested

johnh · Joined: 01 Aug 2005 Posts: 3

First Time Home Buyer
myFICO (EQF) : 618 ( as on July 31st 2005)
Annual Salary : $ 81K
Professional working in the same job more than 2 years , same field more than 8 years
Assets : $ 40k in 401K retirement fund and less than $ 10k in savings
Full documentation
State : Ohio

I have some old chargeoffs ( for $8500)which may fall off from my report next year. Their SOL is
already passed.

Right now I am looking for a mortgage but I didn't contact any banker/broker yet as I am worried about the impact of my credit score and those chargeoffs on the mortgage loan.

I would like to know if at all I qualify for a loan , at what rate it will be and for what amount ? Any expert advice will be greatly appreciated
I am mainly looking for 7/1 ARM or 5/1 ARM

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

There are a lot of 'it depends on...' but at a glance with the info provided you would easily qualify for 100%. It would really all depend on what you are looking to do though.

So you're looking to purchase. Are you putting any money down? How much is the loan? What's the avg cost of homes in your area? What's the median income in your area? It is possible that you could be looking at a conventional rate/scenario, but it all depends on how your credit has looked the last few years and some other 'program specific' requirements.

I've done a lot of talking lately. Anyone else want to fill in some more specifics?

johnh · Joined: 01 Aug 2005 Posts: 3

Thank You Haplo , Thanks for the info.

Range of the houses : 250k to 350 K , It is in Cincinnati neighborhood
I can put down about 5%

In this scenario , what interest rate I can expect . Could any expert give some insight on interest rate or provide some range on the interest rate.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

John I'll try to get back to this a bit later today if someone hasn't beat me to it.

chow · Posted: Wed Aug 03, 2005 2:47 pm Post subject:

Sorry for the absence my friend Haplo. Had a few commercial loans to process, and it's the domino affect. One seller is waiting for funds for this sale to buy something, else. (only that nightmare of...I want to buy this property, but I have to sell my property, and hope the buyer of mine can close....so I can close.)

How did you get your score? If you ordered your own score on line, that is a different score than what we get in the mortgage world. Even car loans get scored a little different. What is going to affect you is the charge off's for how much, and when they actually fall off. If the original charge off started at one collection agency, and then was sold to another agency-you could be looking at the same bill-twice. That's double jeopardy now. You can only be dinged on your credit for the same bill once. They need to review the whole picture.

The only way to know, is go talk to someone who does mortgage loans for a living- full time. Face to face-or at least some conversation on the phone until you're comfortable. There may be issues on the credit report that you might be able to dispute, and your score could go higher. Talking to one Loan officer who is well educated on credit, and having them take a look at it-will not impact your score.

This credit score issue is a 2 day discussion, with reading material attached. Your time is better served by working with a well educated LO. Haplo can do Ohio loans. Just talk to him. He has my seal of approval! :wink:

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

I of course would be happy to speak to you if you would like to speak to someone over the phone. Especially in your circumstance it may be easier to understand if you're able to sit down and read over it with someone, it all depends on how you process information.

If you want to speak to me, send me a PM and I'll send you my contact information.

chow · Posted: Wed Aug 03, 2005 3:07 pm Post subject:

:lol: :lol: :lol:

(Someday, Haplo will buy me dinner for all the good press I give him!)

XOXO!

First time home buying is a little scary. But, most of it is because you have never dealt with the issue before. It's not rocket science once you set down with a few forms, and talk them over. You can email any of us, and we will answer questions. I don't do Ohio, and I really don't care to do residential right now-unless I'm forced too. I need to keep up to speed on it so I know how it affects my business loans.

johnh · Joined: 01 Aug 2005 Posts: 3

Thank you Chow & Haplo for the information. I will contact Haplo fo find my best options.

Could you guys post what will be the interest rate looks like in this scenario.
It wll help other viewers also if you put some numbers.

m2c · Joined: 03 Aug 2005 Posts: 937

You do need to sit down with a broker to review your situation. It’s like chicken soup == “can’t hurt”. Well, actually in can in your area. Cincinnati has been the site of a number of fraud investigations and prosecutions. Do some research and a google search to see various schemes that have been played. Maybe that part of Ohio has cleaned up their act but what was common was that type of fraud that hurts the borrower -- not the more common type of borrower-initiated fraud wherein the borrower is seeking to satisfy exaggerate expectations.

TransUnion in Ohio tends to be the more “restrictive” bureau. BEFORE seeing a broker I’d run the other two bureaus. Yes these will NOT be “mortgage model” FICOs but won’t impact your score. Www.annualcreditreport.com is your least expense method and PAY THE $5.00 for the FICO scores. Remember the representative score will be the middle of the three scores. Pay attention to the “reason codes”. The charge offs are likely important but there may be more important reasons your score is where it is.

“Normal” rates for a 5/1 IO are in the low 5’s but rates are rising. I’ve got doubts whether you’re going to sneak through on a conforming basis and even if you do the mortgage insurance is going to be a killer with a representative FICO as low as your indicate. Expanded level conforming is a distinct possibility but again there is the MI cost issue. In any case, there will be a nonconforming loan that fits – it just a cost consideration.

Where is this 5% coming from? 5% of $350,000 is $17,500 and there are closing costs on top of that. You’ve got $10K in the bank. 401K loans are OK.

At $82K per year your debt ratios are going to “be up there”. Hopefully you have no “other debt” – car loans, credit card balances not PIF at end of month, etc. Perhaps you’re right out of college with big raises ahead but then the 401K balance doesn’t make sense. Of hand I suspect you’re overbuying. At $385,00 you may be living for your house rather than enjoying your home. With only 5% and limited liquid assets, you will have limited assets you will have limited options if things go bad in a mildly appreciating market.

THERE IS A LOAN FOR YOU. My guess is that it may be suggested you may you fraud. It will not be put this way but you’ll know what is being suggested. This would make things “easier” but the potential penalties are severe, 18USC1001. Do NOT believe a broker who might tell you “oh, they expect you to lie”. In fact, it would be best to dump that broker ASAP. Ignoring ethics and from a strictly risk-reward perspective, there is little downside for a borrower on an isolated owner-occupied purchase. For some strange reason prosecutors tend to ignore the borrower in this type of fraud scheme and focus on the broker. This is not to say in the future it might occur to some enlightened prosecutor that it takes two to tango but that’s not the current environment. If the broker suggests the fraud scheme, I’d walk; there would be something sleazy about the broker and you may be brought down with the broker if the FBI or local prosecutor gets wise.

One way to mitigate the MI issue is through My Ohio Mortgage (see http://www.ohiohome.org/homebuyer/default.htm) but your sales price and/or income will likely throw you out.

This is a pretty negative post but I think you need to sit with a broker and, perhaps, get a reality check. Quite frankly, we can make a lot of money off situations like this but I would be hesitant to take your application based on the very limited information supplied so far.

Sorry for such a negative post but I think you may be overreaching.