Here is a loan without a program for the buyer. How to fix this problem.
The borrower had a 520 credit score. They wanted to put less than 10% down. They had some items on their report that could be cleaned up. It was a purchase.
They have to do something to fix this. In the short term a larger down payment via a gift could work. The interest rates would be very high.
They may lose the opportunity to buy this house with my suggestions, but that shouldn’t be the driving factor.
I suggest they work day and night, literally, to clean up the glaring problem on the report. Give proof it is resolved to the bureaus, and watch the score climb. With the new score in hand, get a pre-approval first, then go find a home. If at this point in time you are close to a year or two years without negative credit marks, expect to get a conventional type of a rate.
The lower the rate, the lower the payment, or the more home you can buy with your credential. It is worth the wait. The market has settled down in many places, even if this means no bubble, it should not mean the market getting away from you. Larry Cragun
Larry, When customers come to me with rejections in hand, I send them to a mortgage officer that adheres to your principles. Even if it takes a year to clear up the credit issues (and many times it doesn’t take that long if they’re committed to the process), they will be in a better position to survive the shift to ownership. There is so much more involved in ownership than just the mortgage that paying for high interest rates is sometimes the ticket to failure. I encourage my clients to make a plan with the mortgage officer to clean up the credit and take baby steps toward their goal to buy a house. Baby steps move you gradually closer to the goal until you’ve arrived without realizing it.