FICO score below 720

12 Replies

Hi All:

I've been let down buy 3 lenders now and it just dawned on me - let me check in with the bigger pockets community.

In short, I have two investment properties with interest rates at 7.8% that I have been trying to refinance  for the past 1 year without success. Three different lenders have come very close to helping me refinance only to comeback with saying they can't go any further because my FICO score is not above 720.  One property is a duplex and the other is a fourplex and although they are cash flowing even with this interest rate, I would ideally like to lower it.  I have a total of 9 financed properties.

My FICO score although not excellent, ranges in a modest 698, 715, and 729.  Should I give up on trying to refinance?  Is there a lender out there that I should be talking to?  

Thanks,

Gus

Great!  Will contact you ASAP.

Gus

You need to put together a quality pro forma and sell yourself to local banks until you find one that believes in you.  With 9 cash flowing properties and a 700+ credit score, you should find some good options that will refi you out at 5.5-6%. Be persistent and professional.   They probably won't be looking at your credit score as much as they will be looking at you and your business. 

Hi @Gustavo Gonzalez ,

Are these jumbo loan amounts or something?

If you're just talking about vanilla Fannie Mae loan amounts, this shouldn't have been an issue for you for a long time. Like, 3 guideline updates ago, which translates to six months or so. That 720 FICO thing is from a document dated June 30, 2015 (page 6). The current document is dated October 24, 2016.

Soooo are these jumbo loan amounts, or are you working with folks that don't keep up with guidelines? 

@Chris Mason As I understand it, you need at least a 700 credit score to cash out refi an investment property?

I have lenders that will refI your projects for an average 700 credit score.   PM me to make contact with me.

@Gustavo Gonzalez

Something's not right here.  These are lay ups.  What's missing?  Are you having a debt ratio issue when they review your tax returns because of write off's?  Three turns downs; what does the adverse action say is the reason for the turn downs?  Just curious. I'm sure one of the other lenders on here can help.

Hi Stephanie.  

What I've been told is that Fannie Mae requires a FICO of 720 and unfortunately my score is just below that.  In my credit history I unfortunately have late payments (mortgage and car lease) that extended beyond 30 days.  Theses dings on my credit history go back 2-3 years and since then my accounts have been pristine.  I do have 10 mortgages which (investment properties and my primary combined) - perhaps it is a debt ratio like you mentioned?  Not sure. 

Gustavo

@Gustavo Gonzalez  Hi Gustavo - the reason for needing a 720 or higher is because you have 9 financed properties.  Fannie Mae guidelines for conventional loans says that when you have between 7-10 financed properties, you need a minimum of a 720.  This is a guideline for any lender offering this program.  Conventional loans will really offer the best rates, too.

That rate is quite high, I can see why you'd want to lower it and improve your cash flow.

Fortunately for you, FICO scores do improve over time as those late payments go further into the past.  Also they move a few points when debts are paid off or paid down. 

When was the last time you had your credit pulled?  If I was working with someone in this situation, I  would suggest running a quick analysis to see if there's anything that you can do to get your score up those last 5 points.

Abandon asking the National Banks and find a local, commercial business bank. The typically will refi to 65% LTV and your property performance (aka NOI and DSCR) will be more important than the FICO.

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