FHA 203k

[tcovington]

Good Morning and Happy Monday all!

I'm currently trying to get an approval to buy my dads home with a 203k loan. When I reached out to New American in January my mortgage score had dropped to mid to high 400's. So embarrassing as I thought they were at least a hundred points higher. But anyway, I rejoined MyFico to keep watch and make changes. The issue I've seen is that with my paying down and off my mortgage scores actually dropped and are now rebounding. I got my regular fico back closer to 600, but since I can only see my mortgage score when I recheck monthly. My question, after all that rambling (sorry), is that since my regular fico scores jumped about 40 points in the last 2-3 weeks, would my mortgage scores have done the same? *My loan officer has me working with uqual to dispute things, but I've been paying off and down on my own.

[ShanetheMortgageMan]

The mortgage scores won't increase the exact same as your "regular" FICO scores (I assume you are referring to the FICO 8's), as they are weighted differently.  However, your mortgage scores will likely have also increased.  I've found in most situations that someone's FICO 8 scores are higher than their mortgage scores, from as little as 10 points higher to a 70 point differences between the two.

Does your dad live in the home you are trying to buy?

[tcovington]

That's my fear, that the mortgage scores won't increase in a major way. I have a timeline I'm trying to adhere to and this was a major bump to it. 
Yes, he currently lives in the house. The whole family currently lives here. 

[VAMortgageGuy]

You should probably get a second opinion from another lender regarding your credit and how to improve your scores.

Disputing accounts is not something lenders will generally suggest for a number of reasons.

1) FHA hits you for disputed accounts. I've post the FHA guidelines below.

2) Disputing accounts will give you a quick score boost but that's only during the investigation period. If the creditor validates the info being reported, the scores will drop.

3) I have seen multiple instances where a creditor deleted an account that had been disputed only to re-report it once they were able to validate the info.

[tcovington]

So this may be a stupid question, but I just want to confirm my understanding of the guidelines. If it's still in dispute, that's when it's an issue. If it has been resolved, but is still a collection, then yea it's bad, but it's not as much of an issue. I ask because all of my collections are from 2016-2019 except one and that is one I'm actively disputing with the company itself on. But was informed that they didn't fall off because that's not automatic and the actual date might not be the moment it went to collections or was charged off. I admit that it's not something I truly understand. But that's what's hurting my score from my understanding. 

[tcovington]

Also are there any other lenders you'd recommend? I admit I've had what I thought was a great lending officer, considering I've never done this before.

[ShanetheMortgageMan]

What is the total balance for the collections you are disputing?   Are any of them medical, and if so, how much are the balances of the medical collections?

Are you disputing any non-collection/non-charge off accounts?  If so, do any of them have late payments in the past 24 months?  If so, what are the total balances for those accounts?

[tcovington]

I have one late payment that they're disputing in the last 24 months. The balance now is $347. I'm not sure what it was then. 
As far as charge offs, no medical, but I've paid a few of the charge offs. So the total not including the paid off ones is $32,998. That also includes the one I'm discussing with the company. I was told to wait to the end of the month to offer a less than owed balance on some of them, so that's what I'll be doing at the end of the month for what equals to $1879.

[ShanetheMortgageMan]

Due to the cumulative balance being $1k+ then make sure the disputes on the charge-offs have ended when your credit is checked for the pre-approval. 

If the account with the late payment in the past 24 months is still in dispute, and the balance isn't $1k+ at the time credit is checked, then it can remain in dispute without anything further needing to be done with it.

[tcovington]

I don't quite understand manual underwriting. Wouldn't it be better to be manually underwritten?

cool beans. I'm just it paying it down. Might put Hulu or something on it to keep it open  and used. Read that's the best way to do it.