All Forum Posts by: John Burke

It's important to look at which scoring model was used by Credit Karma. More than likely it was Fico 8. When you apply for a mortgage, each bureau (Equifax, Experian & TransUnion) uses a different model.

FICO® Score 2, or Experian/Fair Isaac Risk Model v2

FICO® Score 5, or Equifax Beacon 5

FICO® Score 4, or TransUnion FICO Risk Score 04

A no score response from the credit bureaus means you do not have enough open & active accounts to generate a score. This why the lender told you to get a Capital One Secured card.

For optimal scoring, you want to carry a balance on just credit card at 9% of the limit. For example: If your credit limit is $500, you want to carry a balance of $45.00.

With this $45 balance would you never pay it off? And would that lead to paying interest?

Depends on how long it takes to reach your desired credit score. Yes, it will lead to paying interest but you're talking about a pretty insignificant amount based on a $45 balance.
You need the balance to report over a period of time so the bureaus have something to score. Unfortunately, there's no real way to tell how long it will take. The lender could try running a what if simulator.

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I would calculate your break even point. Take the difference between 10% and 20% and divide by the difference between the 2 payments. For example: Using $500,000 as the purchase price, the difference in your DP is $50,000. Ball parking the monthly PIPMI payment @10% down and the PI payment @ 20%, you're looking at a difference in your monthly payment of $551.84. Divide $50,000 by $551.84 and you get a break even point of 90.60 months or 7.55 years.

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Philadelphia, Pennsylvania

FICO® Score 2, or Experian/Fair Isaac Risk Model v2

FICO® Score 5, or Equifax Beacon 5

FICO® Score 4, or TransUnion FICO Risk Score 04

A no score response from the credit bureaus means you do not have enough open & active accounts to generate a score. This why the lender told you to get a Capital One Secured card.

For optimal scoring, you want to carry a balance on just credit card at 9% of the limit. For example: If your credit limit is $500, you want to carry a balance of $45.00.

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Quote from @Michelle Chevalier:

I am trying to purchase a second SFH investment property. I have one SFH rental that I purchased in 2021 using FHA (it was my primary residence at the time). I am trying to get a conventional loan this time around for the second rental property. My front end DTI is 26% and my back end would be 39% with the second mortgage. my credit score is around 710-760 depending on the reporting agency. I make $131k, including the rental income. Budget is $200,000 and I plan to put down 20% that is a gift from my mother.

I talked to a mortgage broker with Edge Home Finance and submitted an application for pre-approval. The broker told me that he couldn't make a conventional work because I'd have to purchase 4 points and that would be outside of compliant pricing. He recommended a DSCR loan instead but the fees seem high ($55,500 to close). I haven't seen a fee breakdown yet but something feels off here. Would the 39% DTI really disqualify me for the conventional loan?

As someone else already mentioned, you cannot use gift funds for the down payment on a conventional investment property purchase. I checked rates and your scenario can be done with 3 discount points so that leads me to believe the broker has set their comp a little too high. That could also explain why the costs were so much higher on the DSCR estimated you received.

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Quote from @Elon Kotlar:

Does anyone have advice on whether the following scenario is feasible and/or how to make it possible.

My 18 year old is working part time and soon starting college. I want to buy him a home (1-4 unit) which would be his primary residence. I know that there are low down payment loans for primary residence. Is there a way for me to get a loan for him so that it’s a low down payment but using my income/credit to qualify?

Thanks in advance for ahh my advice

We should be able to go FHA or conventional with you as a non-occupying co-borrower.

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Quote from @James Thompson:

Anyone has experience with this loan? Secondly can it be used for a child going to college in another city or not? Thanks!

As Sasha said, it's only an option if your child is disabled. With that said, you could run it with you as a non-occupying co-borrower and go either FHA or conventional.
Here's the FNMA guidelines for the HOM.

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Athens, Georgia

Quote from @Aldo Gonzalez:

Hey, my question is simple. I'm 19 years old and have little debt to my name except some credit cards for over a year now. As of right now my credit score is around 720, would this be sufficient to get approved for a FHA loan? I work as a teller at a bank and some of the bankers have recommended me to take out an auto loan in order to have a better credit history and higher chances. What is your opinion on this? Thank you!

Congrats on taking your first step to becoming a homeowner. Taking out a car loan will do more harm than good at this point & it's simply not needed. You'll take a hit to your scores for the inquiries and for opening a new account. Your scores are fine for FHA or conventional. I'd be happy to walk through some options with you.

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Miami, Florida

Unfortunately, you should have negotiated to have the account deleted when you paid it off.

The only way to increase your score quickly, is to get the account deleted. At this point, they shouldn't be reporting the account every month which will allow your scores to rebound but a very slow pace. I would contact the collection agency and ask for courtesy delete and, if that doesn't work, dispute it.

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All Forum Posts by: John Burke

John Burke has started 0 posts and replied 79 times.

Post: Looking for a good national lender/credit union for Mortgage

Post: Advice on raising credit score

Post: Mortgage Lender tells me to not pay full credit card balance?

Post: 10%, 15%, or 20% down on Triplex

Post: Mortgage Lender tells me to not pay full credit card balance?

Post: Confused about conventional versus DSCR

Post: Adult child and low down payment primary resident loans

Post: Family Opportunity Mortgage

Post: Getting Approved For A Mortgage Loan

Post: Remove Collections from credit report

John Burke has started 0 posts and replied 79 times.

Biggerpockets Logo Post: Looking for a good national lender/credit union for Mortgage

Biggerpockets Logo Post: Advice on raising credit score

Biggerpockets Logo Post: Mortgage Lender tells me to not pay full credit card balance?

Biggerpockets Logo Post: 10%, 15%, or 20% down on Triplex

Biggerpockets Logo Post: Mortgage Lender tells me to not pay full credit card balance?

Biggerpockets Logo Post: Confused about conventional versus DSCR

Biggerpockets Logo Post: Adult child and low down payment primary resident loans

Biggerpockets Logo Post: Family Opportunity Mortgage

Biggerpockets Logo Post: Getting Approved For A Mortgage Loan

Biggerpockets Logo Post: Remove Collections from credit report

Post: Looking for a good national lender/credit union for Mortgage

Post: Advice on raising credit score

Post: Mortgage Lender tells me to not pay full credit card balance?

Post: 10%, 15%, or 20% down on Triplex

Post: Mortgage Lender tells me to not pay full credit card balance?

Post: Confused about conventional versus DSCR

Post: Adult child and low down payment primary resident loans

Post: Family Opportunity Mortgage

Post: Getting Approved For A Mortgage Loan

Post: Remove Collections from credit report