What credit score is required to be a co-borrower for a mortgage?

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I was wondering what credit score is required to access a mortgage with a co-borrower. I used to be at least 500, but that the world was old mortgage. In the market dried up today, requiring FICO ist.Und if that person more money than the borrower to Fico, the score will be used for the loan are not, or can it only for customer benefits into account? Thank you in advance many thanks for your answers. Maybe I did not word correctly. The borrower FICO is 622, but not with sufficient income to qualify. So they have a co-borrower, credit score is required by the co-borrower for them as income to increase the purchasing power of borrowers are.
Also what the best loan for a mortgage? Fixed? Flexible? I do not understand? She did not know you could? * Giggle *

12 Comments
  1. Reply
    CreditAlignment.com
    January 20, 2011 at 5:56 am

    Doesnt matter who’s on the mortgage they use the lower credit score. Doesnt matter who makes more money either.

    if you have 680 700 720…they will use your middle score 700
    if your spouse has 650 620 680 they will use 650.
    If you’re both on the loan they will use the 650

  2. Reply
    William
    January 20, 2011 at 6:53 am

    Well the primary borrower will have his FICO score reviewed and in this case obviously since he needs a co-signer he doesn’t qualify for income or FICO score. 500 is a very low score so I doubt that the bank would be happy with a co-signer with that low a score. You need close to 700 to get a good loan rate.

  3. Reply
    Jennifer
    January 20, 2011 at 7:20 am

    That’s something that varies from lender to lender. I can tell you that 500 is an extremely poor credit score and will probably keep you from renting an apartment and buying a car, let alone qualifying for a mortgage. In today’s market lenders are more cautious than ever, so a good credit score is even more important. FYI, a decent credit score is about 650, and over 700 and closer to 800 is ideal.

    You’re going to have to shop around for lenders and get the answers from them. Good luck.

  4. Reply
    ii7-V7
    January 20, 2011 at 8:11 am

    It depends on the loan program, lender, etc. Typically on subprime mortgages the co-borrower needs at least a 500 FICO. With most prime loans they lender will take the lowest credit score…so a 500 won’t work. Likewise, Prime lenders usually don’t care who makes the most money. FHA loans aren’t credit score driven so that may be an outlet, but even though FHA loans are credit score dependent that doesn’t mean that you can get away with having horrible credit!

    The mortgage world is too complicated to have one set of rules. For a question like this there are several answers and they all depend on circumstances that we couldn’t guess at.

  5. Reply
    Millionster.com
    January 20, 2011 at 8:18 am

    As you may or may not know it is very difficult to buy a house now for people with low credit scores (less than 700.) The stock markets are falling and companies are failing because they lent money to people who were not creditworthy at ridiculous rates they could not afford. So to be blunt you don’t have a lot of opportunity now as it stands, but that’s not to say there isn’t hope. First let me say that for you it may be cheaper and more financially sound for you to rent until you either get a better credit score or the housing economy improves again (which can take years). Fixing your credit score though won’t take as long so focus on that for now.

    Hope this helps. 700 is at least what you should aim for!

  6. Reply
    Jackson
    January 20, 2011 at 8:55 am

    Adjustable Rate Mortgage – to be avoided when regular mort. rates are low.

    Fixed is usually best, as you lock in your rate. No unpleasant surprises later when rates shoot up due to things like, say, oil embargoes.

  7. Reply
    Mohit Madaan
    January 20, 2011 at 9:44 am

    ARM = Adjustable Rate Mortgage, this should be avoided when you know that you are going to live in the same house for more than 5 years. ARM mortgage can be 3,5 or 7 yr ARM. In these first 3,5 or 7 yrs are generally fixed and then for rest of the term it is Adjustable.
    Fixed rates are best these days if you can get a rate less than 6.75%. If you want to go for adjustable rate make sure there is a cap and it should not go more than 7% otherwise some times the interest payment can go higher than the principle. I am sure you don’t want that.
    Good Luck with your Mortgage

  8. Reply
    BBQDBANTHA
    January 20, 2011 at 10:27 am

    Adjustable-Rate-Mortgage

    A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARM’s are tied to indexes.

  9. Reply
    eternal_Self
    January 20, 2011 at 11:15 am

    It stands for Adjustable-Rate Mortgage.
    Initial Interest adjustable-rate mortgages offer you new opportunities to power up your origination volume and add more flexibility to your product line.

    Initial Interest ARMs allow your borrowers who receive a LP Accept assessment to make only interest payments for an initial interest-only period, freeing income to use toward other financial investments or providing additional tax advantages.

  10. Reply
    brnzdbeauty
    January 20, 2011 at 11:48 am

    An ARM is an Adjustable Rate Mortgage. And the best thing for you to do when taking out a loan for a home is to take out a 30 year (fixed rate) loan and refinance down the road. If your credit is good then your interest rate should be around par which is between 6 and 7 percent (it varies weekly) anything higher then that… you should just wait for it to go down. If your credit sucks then just shoot for anything under 9%

  11. Reply
    dcgirl
    January 20, 2011 at 12:06 pm

    An ARM is an adjustable rate mortgage, which means your rates are adusted every 3-6 months depending on the contract you sign, and can go up or down based on what the market is doing. Since rates are rising right now, and have been for a while, I would not recommend an ARM— your payments will keep going up as long as the prime lending rate does!

    I also really do NOT recommend an “interest only” loan unless you are only planning on staying in the home for 3-5 years and then selling it. These loans are popular because your initial monthly payment is lower. The way it works is, in a traditional mortgage, you pay a portion of your payment to interest and a portion goes to principal (the money you borrowed in the first place) and over time, the principal goes down. The “interest only” loan is calculated differently where each month you pay only the interest on the money you have borrowed. It’s more complicated than that— in a traditional mortgage you’re paying mostly interest in the first 5-7 years anyway— but that is the basics. The reason this is not a good option if you plan on staying in your home for a while is, after your “interest only” period is up (usually 5 years), your mortgage converts from an interest only to a traditional but the time to pay the balance is not extended. So where you have 30 years to pay that bucket off in a traditional mortgage, you only get 25 once your interest only period is over. Long story short, once your interest only period is up, your payments go WAY up.

  12. Reply
    Kevin B
    January 20, 2011 at 12:49 pm

    I’ve got to stand up for the ARM.

    The ARM is a program designed to give you a discount on the rate. There are different variations on the ARM now. They have an Interest Only ARM, a Pay Option ARM, and the traditional ARM.

    The rate on a “traditional” ARM is LOCKED for a period that you choose (usually 3,5,7,10 years). So, if you choose a 3-year ARM, you get a lower rate than a fixed but it’s only for those first three years. Then your rate will go variable and will follow an index, usually the LIBOR that most credit cards are tied to.

    I agree that if you qualify for an A+ loan and you plan to make this house your home forever you should take your 6.5% and lock it in for 30 years. There are a number of circumstances where the ARM makes sense:

    Your credit is aweful and the best rate you can qualify for is 8.0% or something like that. This is a subprime loan which means that this IS the ARM rate. To make it a fixed 30-year loan you would have to add 1.0% to that. Well, you can take the ARM for 2 or 3 years. If you’re making your payments on time and keeping everything else in line on your credit, you should have no problem qualifying for the best rates available in 2009, whatever they happen to be. My boss likes to call it the “band-aid loan”.

    The ARM also makes sense if you feel that this may be a short-term loan. The average American homeowner refinances every 3 years (can’t remember where I read that).

    If you’re in a high-rate economy (which I would not say that we are) these programs will be very popular because of the discount that you get by choosing this loan. You can take the lower ARM rate and ride it out. After the ARM term is up you can refinance into a fixed if rates are better or another ARM if they aren’t. Keep in mind that you have costs each time you refinance and figure that into your decision as well.

    The Interest Only ARM is also a good loan in certain circumstances. I wouldn’t offer this loan to someone I didn’t feel was savy enough to truly understand what they are doing. You could pay this loan for 5 years and never pay a dime of principal. This is great for investors who have no plan of holding onto a property that long.

    If you’re a teacher or some other profession where salary increases are expected over time, this program is great. You can keep your house expenses down for now until you have that increased income. Then you can start making larger payments or even refinance to a 20 or 15-year term to pay it off even quicker.

    The Pay Option ARM is ONLY for savy investors. You can pay a regular 30-year payment, an interest only payment, or a less-than-interest payment. This makes it so you actually owe more than when you started the loan. It is normally a very short fixed-rate period so that the rate is usually variable. It’s a plan for investors that want to keep very little money from escaping their wallets. It works well for that purpose, but that’s about it.

    So if you plan to stay and can get a good rate, I’d say to lock in for 30. If that’s not the case for any reason, the ARM is at least worth looking into.

    I’d highly suggest you learn as much as you can about the loan process. This is a blog I started to educate people about how a loan decision is made: http://explaintome.blogspot.com

    If my ramblings helped, you’ll love my blog.

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