paddingtongreen

It's based primarily, on your "FICO credit score" and to a much lesser extent on the home and the location.

http://en.wikipedia.org/wiki/Credit_...(United_States)

Longy

But does the amount you are putting down not factor into it? For example if you are putting 20% down, but have only a short credit history

paddingtongreen

That might make a difference, the main thing is that they now want to make sure you have a good chance to pay off the mortgage. The fuss is because they didn't care before because they were packaging hundreds of them into a security and selling it. Nobody will buy the security now, so they need to do due diligence.

If you have any credit history here, you probably have a FICO score. The security of your future earnings is important.

Longy

Yeah understand that, I have a FICO, and its not bad - over 700, but as I have discovered when getting a car, that doesn't really represent over 700 as there is no history, so you end up paying a fairly high interest rate still. I imagine to them it is more like mid 600's. I have no idea why they don't factor in a short history to the score so you knew where you stood.

I just wonder if I am going to put down 20%, have a job I have been in for years BUT a short credit history, whether they are going to give me a good rate, or try and push it up like the car loan - a small increase in the mortgage rate is going to make a huge difference to what I can borrow.

Dan725

That makes no sense. History is a (large - 50%) part of the score calculation:

"Your credit report contains FICO scores that have been calculated from various credit data. The data is grouped into five main categories:
35% Payment History
15% Credit Account History
10% New Credit
10% Types of Credit
30% Current Debts"


Although I don't know for sure, I don't think there is any "Ah, I see you have a average 700, but to me, its a 650!!" - sounds like a car dealer trick if you ask me. Very suspicious sounding. If Fatbrit pops along, I'm sure he'll be able to clarify.

Longy

I know what you are saying, but I have less then a years history and have a FICO over 700, some people may just look at the score and be done with, but I think most credit providers will look at the length of history as well.

I know a fair few people who have new credit and have similar problems with various things such as getting apartments even though their scores are OK. But don't know anybody who has got a mortgage with a short history.

The car dealership was Hyundai who are no commission and no haggle so although I can't rule out them trying to make a bit extra I don't think they were. They were trying to convince us to put it through on my missus credit as she is a USC and they said she would get a better rate. This of course is them thinking that her credit would be good, unfortunately this is not the case.

Also I tihnk of that 50%, the 35% is the good or bad payment history - so mine is perfect - the other 15% is probably the length of history, on this factor I am doing badly

Dan725

Do you know for a fact your score is over 700? I'm amazed its so high having been here under a year, did you say? Or credit history under a year? And were exactly did you get that score - one of the credit bureaus scores up to 990 I think, if you just got that sole score it means less than the others. The trick I thought you may have been using would have been to piggy back onto your wifes longstanding credit cards, but if her credit isnt so good, can't see how it would give you an advantage that way.

tonyghiggins

As part of my buying a house process, I got a financial advisor who deals with a) getting a mortgage/good rate, b) Going over available loan types, c) Financial planning (future stuff) and d) Credit improvements.

I'd suggest getting with a finacial advisor that will pull your credit and advise you on how to improve your score, they may say wait a couple months to get a longer history or may say its ok now.

The key is a good honest trustworthy finacial advisor will be able to help you out with it all. There is an Nice English gal on here that deals with it all.

Longy

That is from MyFico, and was also the score the dealership quoted me - when they first saw that they said you should be eligible for the best rate, but then they looked at the report in full and saw very little on it.

I have separately got all 3 scores from TripleAdvantage which is a FAKO I know, but all 3 scores were almost identical to the MyFico score, so I am fairly certain they are all in the same ball park.

Dan725

Fair enough, just sounds very weird to me. Especially as car dealers usually want to move units quick sharp, I'd have thought for them a high score is a tick in the box, get the loan sorted and out the door thanks very much. Best thing to try, haggle or not, would've been tell them you want the good rate or you're off elsewhere.

Longy

That may have worked, I am not sure where the boundaries of the no haggle were, but to be honest I didn't really care, I just wanted it on my credit so I had more then a couple of credit cards on there - I am going to pay the bulk of it off quickly and just leave a small amount on it to pay off over the next 6-12 months.

paddingtongreen

The car dealer can make money on the loan. They get a piece of paper from you that says you will pay $xx per month, they then sell that to the bank for a lump sum that is worth that monthly payment to the bank. If they can get you to sign for 10% and the bank is working on 8%, they make money right away.

Watch out that they don't slip life insurance to protect the loan into the monthly payment, as well.

MsElui

if you look at this site http://www.reaffiliates.com/listings/ so any search and select a property. once the details come up then there is a rough mortgage calculator on the bottom of the page. you can change the downpayment and loan size around and see what difference it makes.

Longy

Yeah know they can do this, but I don't think Hyundai do cause they finance it themselves, and as I said they wanted to get the best rate by using the missus credit rather then mine. I am not ruling out any of this, but as I said I was not that bothered as I was going to pay it back quickly, and the way I understand the whole no haggle thing they don't do this.

scotch03

FICO is normally the primary concern, and that is closley followed by your LTV
http://en.wikipedia.org/wiki/Loan_to_value

Link explains better than I can.