Mortgage Discussion for the Panhandle area

I sit in my office daily and hear how a realtor had a potential customer to buy that home they were trying to move yet the credit score of the buyer was not up to minimum standards set by their preferred lending company. Most all banks and mortgage companies have a minimum score requirement and I have heard 620, 660, 680 and even 700 is the lowest score they will take. In this market that may be viewed as responsible lending yet how many customers do we see that have good credit but not the credit score to match? This happens when the customers have a "lite" (not many tradelines) credit file or a couple of past delinquent debts and no active tradeline to bring the score back up. My Blog for today is to explain these customers still have a chance of acquiring a good mortgage. FHA, VA and U.S.D.A (Rural Development) do not have minimum credit scores at all. Problem here is, they do not make the loans themselves they just insure or guarantee them. The banks and mortgage lenders make the loans and thus make their own requirements for self protection.

Now before I tell you that we will close these loans with below a 620 credit score, let me discuss the "nay sayers". It is very true that closing 100% loans for people with bad credit got us into this mess to begin with, so with that said let us look at an example. I met with a elderly customer this week who had 4 items on his credit file. An old mortgage, a car loan and a credit card all paid off with a perfect rating. This gentleman had some medical issues in 2007 and through an extended stay in the hospital ended up with a medical collection in his credit profile. The collection was placed there before he was released from the hospital from a contractor of the hospital. Basically he had no chance of paying it before he left and his Tri Care insurance did not pay the bills until they were totaled when he was released. The insurance company paid the debt but the customer was left with a 602 credit score. three local banks and credit unions told him "no" and he almost gave up. Thankfully, he did not and the listing realtor had him call me with the permission of his agent. We approved him for the loan.

Credit score is not always a clear picture of a persons worthiness to get a loan. We can close these credit score short deals but you need to know they are not the irresponsible lending practices of the past. They are just a real look into the individuals credit report without paying attention to the score aspect. Here are some rules that may help a customer with a low credit score know if they can qualify.

The general rules are good credit in the past twelve months, no lates after any previous bankruptcy (two years), no lates after any previous foreclosures (three years). You must also have good reestablished credit after bankruptcy or foreclosure. All collections, liens or charge off accounts must be paid. I know that is a lot and may be a little confusing but any customer meeting these simple rules should be able to get a mortgage up to 100%.

I hope this may help clarify some misunderstanding and allow you to help us close more loans. Please call if I can further explain or help with any of your needs.