Mortgage With Marginal Credit Scores

Applying for mortgage with marginal credit scores can be extremely risky. Every mortgage loan program has minimum credit score requirements and most mortgage lenders have mortgage lender overlays where their credit score requirements may be higher than the minimum federal mortgage lending guidelines. For example, to qualify for a 3.5% down payment FHA mortgage home loan, FHA requires that the mortgage loan borrower has a minimum credit score of 580 FICO. If you get a mortgage loan pre-approval letter by a mortgage loan originator when your credit scores are at 580 FICO and are shopping for a home and some time later you find a home that you like to place an offer on and when you formally apply and your credit scores fall below 580 FICO credit scores, you will no longer qualify for a FHA Loan. Borrowers who are pre-approved for mortgage with marginal credit scores need to start working on trying to improve their credit scores as soon as possible and take precautions of making sure that their credit scores do not drop after the mortgage loan pre-approval and during the mortgage loan application and mortgage loan approval process.  Borrowers who are applying for mortgage with marginal credit scores should not be alarmed or paranoid. With proper precautions, they should not have any issues and can close on their home loan. We will discuss advice and tips for borrowers who are seeking mortgage with marginal credit scores on this blog.

How Credit Scores Play Role In Mortgage Process

Borrowers who are applying for mortgage with marginal credit scores run the risk of a potential mortgage loan denial if their credit scores drop below the minimum credit score requirements prior to their mortgage loan submission or in the event if the mortgage loan underwriter requests a new credit report during the mortgage loan process . Credit scores play an extremely important role. Minimum credit score requirements for FHA Loans are 580 FICO, minimum credit score requirements for conventional loans are 620 FICO, minimum credit score requirements for USDA Loans are 640, minimum credit score requirements for VA Loans is generally 620 FICO, and minimum credit score requirements for Jumbo Mortgages are 700 FICO.  Prior to issuing a pre-approval letter, a mortgage loan originator will pull a mortgage loan applicant’s credit report and make sure that the mortgage loan borrower meets the minimum credit score requirements. Getting a mortgage with marginal credit scores is risky because in the event if the mortgage loan originator needs to repull the mortgage loan applicant’s credit report and their credit scores drop below the minimum credit score required, the mortgage loan borrower will no longer qualify for the mortgage loan and needs to wait until he or she can get their credit scores back up.

Credit Report And Credit Report Used In Mortgage Process

Credit scores can change throughout the mortgage process. However, mortgage lenders will use the credit report and credit score pulled when the loan officer submits with the mortgage loan application to the mortgage processing and underwriting department. The credit report and credit scores used when submitting the mortgage loan application is the credit report and credit scores used throughout the mortgage loan process. The credit scores can drop during the mortgage process but the mortgage loan borrower will still be safe because the original credit scores submitted is valid for a period of 120 days. In the event if the credit report is longer than 120 days, then this is when a mortgage with marginal credit scores can be a deal breaker because the mortgage lender needs to pull a new credit report and the new credit scores that shows up is the credit scores that will now be used because the older credit report and credit scores are no longer valid.

Cases Where New Credit Report Needs To Be Re-Pulled During Mortgage Process

Borrowers applying for mortgage with marginal credit scores run into a major risk of getting their loan application and loan approval denied if the mortgage lender needs to re-pull their credit report during the mortgage loan process and use the new credit scores from the new credit report. Even though the original credit report and credit scores submitted with the original mortgage loan application is valid for 120 days, there are times when a brand new credit report needs to be pulled when the borrower needs to add a co-borrower or co-borrowers or if there are an error made on the mortgage loan credit application. If the borrower has applied for mortgage with marginal credit scores and needs a new credit report pulled during the mortgage process and their marginal credit scores have dropped, they will experience a delay in getting their mortgage loan approval and clear to close until they can get their credit scores back up so they can meet the minimum credit score requirements.

If you need mortgage with marginal credit scores, you have come to the right place. We specialize in helping borrowers get mortgage with marginal credit scores. Please contact Gustan Cho Associates at 1-262-716-8151 or email us at gcho@gustancho.com.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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