Bad Credit

Obtain mortgage when credit rating is very low

Question:
How difficult is it to obtain mortgage when credit rating is very low? Spouse with bankruptcy & foreclosure, wife paying off credit cards via Consumer Credit?

Linda
St. Petersburg, Florida

Answer:
If you have the income to support the payments and are willing to pay the price you can often get financing through a lender that specializes in your situation. When you need bad credit mortgage refinance, the rate will be significantly higher and you might have to deal with a prepayment penalty, but if you can tough it out for two years, make all the payments on time then you can REFInance and get a lower rate. Often the B & C lenders understand this and only have a prepayment penalty for two years.

Cosigned credit

Question:
My husband and his brother have a car in both names. Can we take this off our debt with canceled checks for the last 12 months showing that his brother is solely responsible for the car? (even if my husband is the primary on it?)

Cindy
Greenville, South Carolina

Answer:
Yes, typically lenders will except copies of both sides of canceled checks from the responsible party as proof they are making the payment. You will not actually be able to take if off your debt with out contacting the beneficiary of the car loan, but the lenders will not count it against you with the canceled checks.
Repairing Credit

Question:
How do I go about repairing my credit to get a home loan?
M.L.
Philadelphia, PA

Answer:
Often credit can be cleaned up, however it will take time. First you will need a copy of your credit report. If you have ever applied for a loan and been turned down due to the condition of your credit report you are entitled to a copy of your credit report. Next you need to contact the creditor who is reporting the delinquency and confirm the reported information. If you are disputing, you must do all correspondence with them in writing and they are obligated to do so in return in a timely manner. Also, utilize your good credit, establish new credit and keep it clean so the good will out number the bad. Lenders are really looking for at the past 24 months, so keep it clean.

Judgments

Question:
Can someone with a judgment get approved for a mortgage loan?

Micci
Norco, Louisiana

Answer:
Often you can get the loan approved but almost all lenders will require that the judgment be paid off prior to or at close of escrow. Some may or may not allow you to get cash out on a REFI to pay off the judgment.

How to resolve credit problems.

Question:
How long does it take for a credit agency to change the status on a collected account and will proof of letter from that collected account company act as a solution for the lender until the credit agency report is changed?

Sue S.
Tampa, Florida

Answer:
It can take 30-60 days for a correction to reflect on your credit report. It will not necessarily change your FICO score immediately either. Yes, a letter from the creditor stating they are making a change to correct your account will help. The lender will usually take this. Be sure to follow up on it though and make sure your credit is corrected so you won’t have to go through this again in the future.

Late payment letter

Question:
How do I write a late payment explanation letter

R. Mays
Savannah, Georgia

Answer:
Be honest, detailed and sincere. Give the underwriter a very detailed letter. Most of us don’t pay a payment just because we had a bad hair day. If you were out of town, forgot to sign the check or what ever the reason explain it in detail, give the dates involved, really make an effort and tell what corrections you have made so it won’t happen again. The more details and facts of the situation you provide the better it will be understood. Don’t just write.

Out of BK, now what?

Question:
My husband filed a Chapter 13 prior to our marriage 6 years ago. Since that time everything has been in my name. These past several years have been tough and I have less than perfect credit myself now. He has been discharged and we are finally caught up with all of our bills but we are concerned lenders won’t give us the time of day. Are we out of luck? Where should we try first?

Clark
Johnson City, Tennessee

Answer:
Yes, there are plenty of lenders that can help you. The downside is you won’t get a the lowest rate. They do want to see that you have managed your funds good since the BK. Often a lender will put you into a higher rate loan that has a prepayment penalty for the first two years. Usually if you keep your credit good for that two years you can then REFInance to a better rate and loan terms. Lenders really like to see a good solid two years of good credit and money management.

Mortgage?