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rbryant

Loan Approval Help Needed

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Hi..this is my first post so here goes. Our situation is this, my wife and I make a combined 58,000 annual. Debt to income ratio is pretty good, she has a car pmt with the balance at 6,000, my truck has 1900 left. Two credit cards in her name with a combined balance of 1600. I have student loans at 5,200. Credit scores are good for her, so so for me. My wife has a median credit score of 700, mine is 643. We went in to prospective lender a week ago, he pulled the credit report. A few things showed up on my credit. First, a Cingular phone bill that was sent to collections still showed up as unpaid ($1400). I called the collection agency handling the account and they promised to change the status to paid. Second, I have two charge offs on my report, the first was with Dell. I paid this account off back in 2004, and the credit report reflects this. The second charge off was for $423 from national tire and battery. This charge off remains unpaid. The broker checked out the report and felt like as long as we could prove the Cingular collection was paid, a loan should be no problem. This all sounds good, but I'm nervous that the underwriter will note these and decide otherwise. I guess my big question is how much of the decison is driven by score alone. Second, should i let a sleeping dog lie with the $423 chargeoff? I've read that attempting to pay the collection now will restart the date of last activity and therefore drop my score. BTW, the chargeoff's last activity was 2004. Another thing to mention, when asked by our realtor to provide a letter of commitment, our lender had no problem providing one. Is this a good indication that we are good to go? I'm hoping you guys and gals with experience will give me some good pointers and advice here.

One more thing...a little more info.....we are financing probably 125,000. Nothing down, we are using a VA backed loan.

 

Thanks

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How is your job situation? Have you had the same employment for 2+ years?

 

If so you should have NO problem getting a loan. I would also recommend checking with other mortgages (NOT VA). VA loans carry PMI which can get very, very expensive.

 

You want to find a mortgage broker that closes at least 20 loans per month by themselves (not the whole office). Most will probably close just a couple per month but a good one closes a LOT.

 

DON'T PAY PMI!!

 

GOOD LUCK

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Thanks frogger for your input. To answer your question, I've been at the same job for two years (will be two years actually this October). I was on active duty for four years prior to that. Also, what do you think about the 423 chargeoff from NTB, should I leave it alone for now or be ready to make settlement during our closing?

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I have a Va loan that was done almost two years ago, and we did not have to pay PMI, Is this something new with Va loans. There are pro's and con's to Va, the pro for us was no PMI.

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I do not know what PMI is but I can tell you this. We just got a VA loan in the amount of $459,066.00 with a credit score of 523 and 3 years post BK Ch. 7 with an interest rate of 5% and NO MONEY DOWN. We closed just at the end of last month.

 

It can be done. The stipulations were that the money we paid for our upgrades on the house (which subsequently have to be paid in cash since this is new construction) that we would have normally gotten back in the closing of the home went towards paying off all open credit card debt. It only amounted to about $5000 in debt total.

 

So if your lender is even giving you the slightest inkling that they cannot get this loan done, I would say find another lender. One who closes more loans independantly. It really helps to have someone who knows what they are doing working for you.

 

Roxie

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congrats on your home its very pretty! My credit scores arent great, I do have a few CO one that I just PFD, one more that I am in the process of doing a PFD, a few medical/dental that are in dispute and i had been told mortgage companys dont look at medical, a repo from 1/2000 that is now showing on my reports as owing 6000, im going after them with the repo letter from WhyChat, it wasnt done correctly so im hoping that willfall off...and a cap 1 that is settled for less than owed BUt i am also writing ExRelat. this weekend to see if that can be taken care of, its old also. I think my median score is 582 but should be higher with my one CO off anyday now...I made 80K+(just my income) last year, owe 25k on one car loan, 7k on another, approx 1k in CC debt...How does my loan situation look? I was thinking of a IO loan for 2 years then refinancing. By then my reports will look much better and my DH job will be earning more that can be used to pay down loan...any thoughts would be appreciated! sorry for hijacking the thread... <_<

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rbryant,

 

First, you should ask your loan officer if the underwriter will have an issue with the charge-offs. There are underwriting guidelines for just about every loan program out there, the credit section of the guidelines usually spell out how much/what type of derogatory credit is allowed. If your loan officer isn't familiar with the credit guidelines that could be a cause for concern, however if they submitted the loan to a particular lender the odds are that they probably did some research to make sure this lender would OK your credit.

 

Has your wife been self-employed or employed in the same industry for 2 years?

 

Does she have any late payments, unpaid or paid derogs?

 

If it does turn out that your credit is a problem and your wifes credit is clean, you have the option to do a "no ratio" or "stated income" document type with just her on the application. 700 scores can obtain 100% financing rather easily with those document types. That way you could avoid paying the NTB charge-off altogether if that is what you wish. If you do want to be on the loan and there is a condition to pay off the NTB charge off at closing, I'd try to negotiate a pay for delete before the check is cut from title. Lastly, there are a few sub-prime lenders that don't require unpaid charge-offs or collections to be paid if they don't exceed a certain aggregate amount or are far enough in the past.

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thanks liverichly..To answer your questions, yes my wife has worked at the same company for 12 years. Since we are considering a lower monthly payment, i dont think subprime is for us. Also, we are both wanting to be on the loan, so stated income is out as well. I'm thinking that the lender would have pointed out any dicrepancies before giving any kind of approval. The only concern he had was the Cingular bill that was noted as unpaid in collections. I had the collections company update the account to paid, as it was paid off back in 2003. If there are any issues with the NTB, I think we definitely would be willing to cut a $423 settlement at closing in order to obtain a good interest rate with this mortgage.

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thanks liverichly..To answer your questions, yes my wife has worked at the same company for 12 years.  Since we are considering a lower monthly payment, i dont think subprime is for us.  Also, we are both wanting to be on the loan, so stated income is out as well.  I'm thinking that the lender would have pointed out any dicrepancies before giving any kind of approval. The only concern he had was the Cingular bill that was noted as unpaid in collections.  I had the collections company update the account to paid, as it was paid off back in 2003.  If there are any issues with the NTB, I think we definitely would be willing to cut a $423 settlement at closing in order to obtain a good interest rate with this mortgage.

 

You should definitely get a VA loan quote. No, there is not any PMI. There is a VA funding Fee of 2.15% that is required for this loan. You can finance it into the loan or pay it up front or include it in the seller's concessions. VA enables 100% financing and the rates for government loans run about .25 lower. The seller can pay up to 4% in concessions (some limits as to which charges). You may be required to settle up the 423.00 collection.

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thanks liverichly..To answer your questions, yes my wife has worked at the same company for 12 years.  Since we are considering a lower monthly payment, i dont think subprime is for us.  Also, we are both wanting to be on the loan, so stated income is out as well.  I'm thinking that the lender would have pointed out any dicrepancies before giving any kind of approval. The only concern he had was the Cingular bill that was noted as unpaid in collections.  I had the collections company update the account to paid, as it was paid off back in 2003.  If there are any issues with the NTB, I think we definitely would be willing to cut a $423 settlement at closing in order to obtain a good interest rate with this mortgage.

 

You should definitely get a VA loan quote. No, there is not any PMI. There is a VA funding Fee of 2.15% that is required for this loan. You can finance it into the loan or pay it up front or include it in the seller's concessions. VA enables 100% financing and the rates for government loans run about .25 lower. The seller can pay up to 4% in concessions (some limits as to which charges). You may be required to settle up the 423.00 collection.

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