Can I get a mortgage with bad credit with the following circumstances.?

December 12, 2008 by · 5 Comments
Filed under: Blog 

Here are my circumstances:

Transunion: 567, Esperian: 537, Equifax: 582

Annual income before taxes: 39,000, I have worked for a year

I own a home: $479 a month taxes included
I have had 8- 30 day late payments in 2 years

I have no other debt monthly, making my debt to income ratio 85/15 (I'm pretty sure)

I paid off my car, no late payments last two years.

I paid off my Providian credit card no late payments past 2 years

I have college loans in deferment until 2008, I'm currently working on my MBA

Now the bad news:

I have had 3 derogatory accounts, that I have just currently paid off, 2 were credit cards, one was a medical bill that never made it to collections I don't think, so they haven't been factored into my credit score yet as being settled.

I dont have any credit cards and all I pay a month is $479 on my house that I have owned for about 3-4 years.

First the bad news. Your scores are way low and what really hurts more than anything is the late payments on your mortgage. So even with the low scores, the late payments on the mortgage hurts you the most. The other thing that could hurt you also, is when you paid off your credit cards, you closed the accounts as well. If you paid them off and kept them open, this is a good sign.

Now the slightly good news. Even with your scores you could possibly get a home mortgage, but only with a subprime lender and you would get very high rates. Now if you are buying another home and keeping your current home you will have to put down at least 10-20%, but only if they allow you to buy another home. And even if you are going to sell your current home in order to buy another home, with your scores, you will have to put money down anyway.

But the best advice I have is wait a year so you can have 12 months of on time payments; this will raise your scores. Also if you closed those credit card accounts, see if they will reopen them and if they do, use them and pay them off every month; this will also raise your scores.

Lenders want to lend their money, but they don't want to lend to people who are late on any secured loans, especially HOME loans. Most people will tell you to wait at least 3 years or more to get your credit scores up. But being that I worked in the mortgage business before I was pregnant (which was last year) and I helped people to raise their credit scores, you only really need one year of on time payments to get a subprime loan. But if you're going for a prime loan, wait at least 3-4 years of on time payments and please stay on your job as well. The more job time with the same employer, the better. It shows stability!

Right now your middles score is a 567
So here are some Credit Score Goals below.

SubPrime: 580 middle score
Prime: 680 middle score
Best Interest Rates: Over 720 middle score

Hope this helps!

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