[Vindian]

With our Credit Scores at 635 and 659, is using a prime lender out?

I'm being quoted rates from subs for a refi at around 9% rate and having to buy 3+ points to get our rate to the high 7's.


When we first purchased our home, we had poor credit. My score was 570 and my wifes was 630. We got into a 80/20 2 years ago and the rates were 7.875 and 10% respectively. We took the gamble that our credit score would go up, which it did and now going for a 30yr or 40 yr fixed it seems we are being thrown under the bus.

We do not have any other debt. The only debt we have is the mortgage.

Thanks,
Vindian

[Hedwig]

Do you have any other accounts, like credit cards? If not, that's your problem. You scores seem OK, but it's the middle score of the three that they consider, not the high.

But other things are taken into account like the number of cards, percentage of utilization, etc. Believe it or not, zero is not a good number for utilization. You need a major card or two, and probably a store card as well. Small balances, but balances. You can pay in full and avoid the interest, but there will be a balance when the statement is sent and it reports.

[lostnjax]

Have you tried going the FHA route if not that's always an option. From what I understand FHA mtg's have prime or close to prime rates but there are a lot of nickel and dime fees involved but very little money down. There is also a program called "my community" that would help you in this situation both you can get into with midscores as low as 600 at a decent rate

or

you may want to try to use a mortgage broker that does "manual underwriting" . That is where the lender looks at the big picture as opposed to just a score. I believe these are referred to as "conforming conventional loans"

hope this helps and good luck

[jlynn]

I haven't checked rates lately, but the story I have always been told was that if your mid score was a 620 you shouldn't have to pay subprime rates.

Are these real FICO scores, or one of the numerous FAKOs for sale?

You say you were quoted rates from subs...did no primes take the bait? Might be time to shop for a different mortgage person - they are not all equal.

[lostnjax]

Jlynn is absolutely correct not all mtg brokers are created equal. Look for an independent broker that has been in the business for a while (preferably 5 yrs or more) and deals with several lenders and understands the business.

[Vindian]

Originally Posted by jlynn

I haven't checked rates lately, but the story I have always been told was that if your mid score was a 620 you shouldn't have to pay subprime rates.

Are these real FICO scores, or one of the numerous FAKOs for sale?

You say you were quoted rates from subs...did no primes take the bait? Might be time to shop for a different mortgage person - they are not all equal.

I pulled our Credit Reports from Experian. I pulled the major 3 and the Experian Score.

We don't have any credit cards nor do we want or plan to get any. The way the "Rules" are written these days, you fart once and they jack your rate up. They can kiss my ass. If I don't have cash for the things I want, I save it.

As far as FHA, yes, they nickle and dime ya and tell you to paint your house. My cousin went FHA and the inspector told her she had to throw some paint on the house.

After the refi, we are planning on taking a car loan to help the credit a little more. As well a small personal loan to help with home improvments. Yes I could take out some equity for this, but it would only show as a mortgage payment.

I have not tried to "bait" any prime lenders. I just figured our scores weren't good enough. I didn't want a bunch of needless hard pulls on our reports. But if what jlynn is correct about the 620, I should test the waters in the prime pool.

Thanks for the input guys!

Vindian

[Hedwig]

You really need to have a credit card. Use it for things you would pay cash for and set the cash aside as if you used it for the purchase. Then pay the bill in full when it comes.

If it's a prime card, you shouldn't pay any interest if you pay the balance in full. So what difference does it make what the rate is--you won't pay it.

[Qtip]

Vindian,

You are so right, cards are out there to empty our pockets, long term I agree with Hedwig. Fico likes to see a mixture of different types of credit, that I guess is not as important to you at this time. However if you are going to use any type of non conventional mortgage, every point counts!

This was the way my mortgage broker painted the picture for me two years ago;

620 and above FHA, same rate regarding of score over 620.

670 and above for interest only and no doc loans.

720 and above for prime lender on interest only and no doc loans.

[Vindian]

Originally Posted by Hedwig

If it's a prime card, you shouldn't pay any interest if you pay the balance in full. So what difference does it make what the rate is--you won't pay it.

Good Point

Originally Posted by Qtip

Fico likes to see a mixture of different types of credit, that I guess is not as important to you at this time. However if you are going to use any type of non conventional mortgage, every point counts!

You are correct, it isn't important for me at this time to have revolving accounts. I would rather concentrate on my mortgage payments and keep them green dots growing on my credit reports under my mortgage accounts.

In time, I'm sure we'll take the plunge into the world of revolving accounts but one step at a time in this credit rebuilding process.

On that note, we were approved for a refi mortgage since my last post
I called Citizens Bank and they gave me an interest rate of 7% on a 30yr fixed which is better than I expected. They ran down all the numbers for me and we are very satisfied!
He is overnighting the docs and we should have them tomorrow!

Vindian

[Hedwig]

Congratulations!!

[Qtip]

Originally Posted by Vindian

Good Point



You are correct, it isn't important for me at this time to have revolving accounts. I would rather concentrate on my mortgage payments and keep them green dots growing on my credit reports under my mortgage accounts.

In time, I'm sure we'll take the plunge into the world of revolving accounts but one step at a time in this credit rebuilding process.

On that note, we were approved for a refi mortgage since my last post
I called Citizens Bank and they gave me an interest rate of 7% on a 30yr fixed which is better than I expected. They ran down all the numbers for me and we are very satisfied!
He is overnighting the docs and we should have them tomorrow!

Vindian

Congratulations! Great to hear things worked out for you!!!!

[lostnjax]

Originally Posted by Vindian

On that note, we were approved for a refi mortgage since my last post
I called Citizens Bank and they gave me an interest rate of 7% on a 30yr fixed which is better than I expected. They ran down all the numbers for me and we are very satisfied!
He is overnighting the docs and we should have them tomorrow!
Vindian

Congrats on your Refi,

I agree with you guys about having at least one revolving account reporting for a better mix and score. But here is a question I thought the OP was alluding to.

If you had no debt and paid for everything in cash, what would be the need for a credit score? I tried going that route but realized quickly that I'm addicted to debt.

[roybean]

That's great news! A house is next on my list of things to do. I hope I am as lucky.

[Hedwig]

Originally Posted by lostnjax

Congrats on your Refi,

I agree with you guys about having at least one revolving account reporting for a better mix and score. But here is a question I thought the OP was alluding to.

If you had no debt and paid for everything in cash, what would be the need for a credit score? I tried going that route but realized quickly that I'm addicted to debt.

Someday you'll need to finance something, like a house or car.

I had a neighbor when I was growing up who paid cash for everything. He had inherited his house and always paid cash for everything, including cars.

When one of his children got old enough to drive he decided to buy another car. He decided that since he'd have college expenses coming up soon, he would finance the car. Imagine his surprise when he couldn't get a car loan. He had never had credit, and he was in his 40s. When he told them that the fact that he had always saved to buy what he wanted should prove something, they told him yes--it proved that there was no precedence showing that he could handle payments.

It's the same way with the revolving accounts. It shows that you can really handle credit and that you're not on the brink of disaster. People who pay cash for everything often can't handle paying payments.