Can I get a mortgage with bad credit with the following circumstances.?

Deal Score0

Here are my circumstances:

Transunion: 567, Esperian: 537, Equifax: 582

Annual income before taxes: 39,000, I have worked for a year

I own a home: $ 479 a month taxes included
I have had 8- 30 day late payments in 2 years

I have no other debt monthly, making my debt to income ratio 85/15 (I’m pretty sure)

I paid off my car, no late payments last two years.

I paid off my Providian credit card no late payments past 2 years

I have college loans in deferment until 2008, I’m currently working on my MBA

Now the bad news:

I have had 3 derogatory accounts, that I have just currently paid off, 2 were credit cards, one was a medical bill that never made it to collections I don’t think, so they haven’t been factored into my credit score yet as being settled.

I dont have any credit cards and all I pay a month is $ 479 on my house that I have owned for about 3-4 years.

  1. Reply
    February 19, 2011 at 2:43 am

    You might be able to find a lender but I would wait. Ineveitably, any lender you find will be exploitative and offer you miserable rates. If you do find something reasonable the payments will jump unreasonably after a few years, and in 2009 you’ll find yourself liable for increased monthly payments PLUS college loans PLUS MBA payments PLUS the stress of trying to find a good job PLUS a car that’s depreciated etc. etc.

    Why not wait a few years? You can save some money, build some equity in your current home, build your credit, finish your MBA and basically be in a much more secure position financially. The housing bubble is bursting and mortgage prices/ rates will probably be a lot more reasonable. Plus, you may be able to leverage your one year of work experience and find something else that pays more.

    ALso, congratulations on paying off your credit cards but I would use them for small things and pay them off meticulously each month. You don’t get too many points for letting them remain dormant.

  2. Reply
    New Mom35
    February 19, 2011 at 3:25 am

    First the bad news. Your scores are way low and what really hurts more than anything is the late payments on your mortgage. So even with the low scores, the late payments on the mortgage hurts you the most. The other thing that could hurt you also, is when you paid off your credit cards, you closed the accounts as well. If you paid them off and kept them open, this is a good sign.

    Now the slightly good news. Even with your scores you could possibly get a home mortgage, but only with a subprime lender and you would get very high rates. Now if you are buying another home and keeping your current home you will have to put down at least 10-20%, but only if they allow you to buy another home. And even if you are going to sell your current home in order to buy another home, with your scores, you will have to put money down anyway.

    But the best advice I have is wait a year so you can have 12 months of on time payments; this will raise your scores. Also if you closed those credit card accounts, see if they will reopen them and if they do, use them and pay them off every month; this will also raise your scores.

    Lenders want to lend their money, but they don’t want to lend to people who are late on any secured loans, especially HOME loans. Most people will tell you to wait at least 3 years or more to get your credit scores up. But being that I worked in the mortgage business before I was pregnant (which was last year) and I helped people to raise their credit scores, you only really need one year of on time payments to get a subprime loan. But if you’re going for a prime loan, wait at least 3-4 years of on time payments and please stay on your job as well. The more job time with the same employer, the better. It shows stability!

    Right now your middles score is a 567
    So here are some Credit Score Goals below.

    SubPrime: 580 middle score
    Prime: 680 middle score
    Best Interest Rates: Over 720 middle score

    Hope this helps!

  3. Reply
    February 19, 2011 at 3:58 am

    Years ago, I found myself in the same situation. I had debt from school credit cards, medical bills, and some other bills that I just neglected to pay because I thought they would just go away. The answer to that question is in most cases, TIME. There are ways, however to have those negative items removed. Seek a credit counselor to have items removed. You have to be creative in your approach. In one situation, I negotiated with the creditor that the only way I was going to pay the amount was to remove the item after I paid. Be creative, and give it time. Good luck.

  4. Reply
    February 19, 2011 at 4:30 am

    I can think of a few companies that will loan 90% of your home’s value right off the top of my head, but you can’t just walk in and get a loan through them. You have to apply through a mortgage broker (make sure it’s a reputable one with a good BBB record).

    As long as they know what they’re doing, you should have no problems.

  5. Reply
    G H
    February 19, 2011 at 5:12 am

    Deny everything… Order your credit reports and do a search for credit repair
    Check out
    Depending on the type of debt and how old it is you can get rid of it by sending the collection agency or reporting agency a letter by certified mail.
    And it really works.I had over 20K in collection agancy credit card that I had removed from my report . I also recieved 2K in a lawsuit by suing one of the collection agancies for not following federal law

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