Mortgage for new LPR with limited credit history
 

Hey folks,

I was wondering if anyone might have some recommendations. My wife and I moved out to the SF Bay Area several years ago and ran the visa gauntlet for many years and finally got our green cards last year.

Now we're more settled we're considering buying a home here. I'm an entrepreneur and as such don't have much income or a spotless credit score but I do have some savings to put toward a 20% deposit. My wife however is much more responsible so we make a great team!

She applied for a mortgage with BOA who she had an existing relationship with and got declined on the basis of only having 2/3 credit cards with at least 1 year payment history, so much for loyalty! Otherwise her credit is spotless and a ~740 credit score.

We applied through a local broker and got an approval but it's at a much higher rate on a shorter term fix.

Wondering if anyone has any recommendations having been in this kind of situation? Are there any brokers or banks that seem to be particularly friendly in this kind of situation? Of course we can wait until she has more credit history but the market might have moved.

Cheers!

Re: Mortgage for new LPR with limited credit history
 

We bought our house about three years in and had to mortgage through a broker that had experience with ex-pats and the like. We also wanted a 203K mortgage which lends > 100% of the house value with the extra being spent on renovations.

We then refinanced another two years in to a regular mortgage. In the end we went through the same broker as they offered a much better deal now we had a couple of years of solid mortgage payments behind us (plus the renos had increased the value of the house).

Re: Mortgage for new LPR with limited credit history
 

I suspect that your lack of regular, documented income is a bigger issue than your credit score or the length of your credit history. The usual mitigation for credit history deficiencies is greater down payment - and 20% is only the standard down payment for a regular mortgage in the US.

Re: Mortgage for new LPR with limited credit history
 

Thanks guys,

There is actually a 4+ year history of regular uninterrupted income on her side that satisfies the affordability criteria. So it definitely seems the lack of long standing credit lines is the main issue - any banks/credit unions/etc that take UK credit history in to consideration in these kind of circumstances?

Cheers!

Re: Mortgage for new LPR with limited credit history
 

I was thinking about the OP as I read the following article
US Household Debt Rose To $12.6 Trillion In 2016: Biggest Jump In A Decade | Zero Hedge

Whether you like this blog or not, this post is based on actual figures released by the feds.

This part is relevant to the OP I think.
"Yet despite the seeming bank generosity, it is worth noting that credit standards have continued to tighten in 2016: the distribution of the credit scores of newly originating mortgage loan borrowers tightened a bit, with the median score
for originating borrowers for mortgages increasing to 763; about 58% of new mortgages went to borrowers with the top credit scores, or over 760 during 2016, compared with an average of 54% in 2015, as banks seemed to focus on the most credit-worthy borrowers."

Most of us that got mortgages fairly soon after arriving had our pre-USA finances evaluated very thoroughly. Obviously the mortgage lenders know how to figure out the people who would have high credit scores had they lived in the USA for longer.

For the OP though, you're kind of caught in the no-man's land of being here for too long to have your pre-USA finances to be still relevant but not long enough to get the kind of credit score that allows for a good mortgage rate.

I don't think there is much else to be done other than really doing whatever you can to build up your wife's credit score. It looks like you should be aiming for 750+. It's not really a question of loyalty to you, it's the banks doing what they have to do to avoid another 2007 disaster.

I know it seems counter-intuitive but it sounds like you might need to borrow some money to buy a car or lease a car or buy some furniture on credit just to get that score up. Our mortgage guy told us that 4 lines of credit is regarded as the optimum.

Re: Mortgage for new LPR with limited credit history
 

I would recommend going to a couple of broker. Standard deposit is 20%, but you can probably get FHA loan with 5% plus mortgage insurance. You may be able to speak to a broker without them running a hard credit check against you. To get a pre approval letter, most will want to run a credit check.

Re: Mortgage for new LPR with limited credit history
 

If you have been in the US for "several years" (per post #1), your UK credit history is stale and won't do you much good. Four years of credit history should be plenty to qualify you for a mortgage.

Re: Mortgage for new LPR with limited credit history
 

OP Have you updated your social security account ( ie your card) with your new LPR status? Unless you go to the office and do this, as far as they are aware you are still temporary resident. I was told last week at Wells Fargo that this temp resident status will show up on credit applications done by the bank until it is changed at the social security office.

Re: Mortgage for new LPR with limited credit history
 

petitefrancaise - no we haven't, that's interesting and will go in to the social security office on Monday to sort this out! Thanks for the heads up.

Re: Mortgage for new LPR with limited credit history
 

Whilst you should update your status with the social security office, the assertion that immigration status appears on ones credit report is a nonsensical myth that PF keeps pushing despite those knowing better telling her otherwise.

Re: Mortgage for new LPR with limited credit history
 

No where in DF's post did she say "credit report".

Banks have a plethora of information to hand, not just a typical credit report provided by some corporate credit bureau.

Re: Mortgage for new LPR with limited credit history
 

As I told you earlier, on the other active thread, and Tom said above, you have made a connection that isn't there! Your visa status isn't on your credit report, but we already know that - credit reports are based on only five things: payment history, debt utilization, mix/diversity, length of credit history, and searches for new credit. Nobody has suggested that your credit score/ file has anything regarding your visa type in there; nobody!

Re: Mortgage for new LPR with limited credit history
 

PF is linking a person's immigration status at the social security office with a credit application.

"When you apply for credit, they run your social security number through the system [1] and if you haven't updated it, it will show you as being temporary resident and this affects how your credit application is dealt with. Wish I'd known that one earlier."

"I was told last week at Wells Fargo that this temp resident status will show up on credit applications done by the bank until it is changed at the social security office."

That is absolutely not true. PF needs to STOP spreading this misinformation.

[1] Through which 'system'? I'd love to know which system they have that is allowed to query the SSO database.

Re: Mortgage for new LPR with limited credit history
 

From PF's own hand:

"I was told last week at Wells Fargo that this temp resident status will show up on credit applications done by the bank until it is changed at the social security office."

Are either of you reading what PF is writing?

Re: Mortgage for new LPR with limited credit history
 

Do you know what a "credit application" is? ..... It isn't a frickin' credit report! :frown:

Personally I wouldn't have phrased it quite like PF did, but when you make an application for a loan, credit card, mortgage, etc. AKA "a credit application", the bank's due diligence on you and your application will include checking your citizenship/ nationality, and visa status, if applicable.