we already got approved for a 270,000 but the broker said because of our score we DID qualify for the government loan BUT the payment will be over 2000. i didnt question him but if we paid our debt off next week (ill be running into owed money) then how long should we wait before we apply? we were hoping to try and get a mortgage that would be between 1800-1950 nothing more. ALSO do all brokers try the same loans, in other owrds should we try a different broker or its not the broker its ONLY our score? How do brokers work? with all the same companies or different ones?
Try going to this site, they have lots of information about this sort of material.
If the payments are too much you are buying outside you means find a less expensive house. Equipment happen with homeownership that cost money and if a payment alone puts you WAY over the edge you will lose the home.
Right now if you have lousy credit it is very hard to sell the loan these days.
It sounds like your broker is saying that becuase of your credit score — you are in a higher interest rate category. Example if you have a 580 middle FICO your best rate may be 8.5% or if you have a 680 FICO your rate may be 6.5% — This is what will determine the monthly payment.
Your debt to income ratio will improve if you payoff your debts, this too may help to qualify you for more lenders and a lessed rate if you are currently at a 50% debt to income ratio and when paid you would be at let’s say 36% you may qualify for additonal lending programs that have lower rates.
The major impression of paying off your debts before qualifying for a mortgage will be your FICO score will rise a few points when the payments are recorded with the bureaus because your ratio of unused open credit will be greater, i.e. you have three credit cards with $3k limits and currently owe $2900. on each, this lowers your score. But if you have $3k available and have balances that are 25-50% of the available credit limit this increases your score. It shows restraint and reliable use of credit.
All mortgage brokers are not made equally, but they are all generally motivated to earn their commission so will work hard to find you a loan if your situation is not too time consuming.
When you apply for the loan you should wait until middle of the next month after you make your payments to your creditors, so it has an chance to show up on your credit file. Most credit companies report this info once a month at the beginning of the month.
Hope this helps, best wishes.
The broker should have full you with a Excellent Faith Estimate (GFE) and at the bottom of the page is your estimated monthly payment JUST for the mortgage. IF that map is where you feel comfortable, then you are in the range you want.
NOT all brokers are alike. Each broker decides what banks / lenders to work with. Some brokers are not FHA or VA qualified so they can not ‘sell’ or write that loan type.
I always recommend a borrower to work with a lender or broker that they like AND trust. Most lenders are rate competitive and will be about the same rate – check your lender fees (broker fees) as well.
Most mortgage programs are a combination of Credit, Guarantee (Loan to Value) and Capacity (debt ratios). Your mortgage professional should be able to clarify how you fall into a program and IF you can improve one area (in your case debt ratios) and if that will improve your Credit Scores.
Your credit profile is simplified ONCE per month. If you recently paid down debt, you either wait until the first week of the month and repull or PAY to have your profile simplified and RESCORE – this is generally a cost the credit bureaus charge lenders and will be passed on to you. If you have the time, wait until next month.
If your scores improve enough you may be qualified for a slightly better rate, less points or higher loan to value – or all. Depends on what program you are going with.
IF your mortgage professional is NOT walking you through these steps, look for a more seasoned professional that will spend the time to inform you about your choices. A mortgage is a financial tool that ‘manages’ our largest debt and our largest asset – be knowledgeable about your choices. Know your options.
Hope this helps and Excellent Luck =)
There are different levels of licensing when it comes to brokers, in that there are lenders that won’t approve certain types of brokers. Correspondent Lenders and Licensed Lenders will generally have more options. Rates are competitive from lender to lender so will fall about the same from broker to broker. With the mortgage market in the state it is currently in, it would be best to get a rate locked Straight away with a broker you trust. Program guidelines are changing daily, in which case you could qualify today but not tomorrow, because the lender has dropped the program that you qualified under. With rates going up it may be time to **** it up, get whatever loan you can get, and take a few less trips through the drive thru (if you stopped going to Starbucks you could save some money, if you don’t go already don’t start). You can always refinance when the market corrects itself, and lower your payment then.
Except I can see your credit and financial situation, it’s hard to tell why a broker would say you are approved and then say that you aren’t approved… sounds like a terrible broker.
Even though most banks and brokers have access to the same mortgage programs, most of them are too bone idle to educate themselves. My guess is that your guy quoted you information before he got a complete application or knew what he was doing. When in doubt find a new guy.
I’d be more than pleased to set you straight if you’d like to call or email me. or caseycasperson.com. I’m licensed nationally.