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FHA DU Approve/Eligible.....?denied

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Ok, so my FHA app went through the DU and came back Approve/eligible. I am terrified that I am going to get to the end and be denied. How often are they denied?? My credit scores are about 673 mid score- I have 3 medical collections ($200 total for all 3) and one old charge off from 6+ yrs ago. Also there are late payments reporting on my student loans from about a yr ago. I have 2 credit cards that I have had for about 6 months (paid in full each month) and I have had 2 personal loans in the past 2 yrs (PIF). Otherwise I dont have much history. My broker had me print the last yr of rent payments to add to the credit profile. My question is...how often are they approve/eligible and then denied in the end?? I am freaking out. I am told not to stress but I cant help it. I am so close and yet so very far away! Thanks

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The approval is very subjective & relies a lot of data integrity the LO input. Without a strong credit history the underwriter might ask for more verifications of things you have paid on time the rent history is the strongest. I have had AUS approved loans that didn't close due to underwriter not comfortable with the loan. Most of the time the AUS approval will be good enough. You don't mention if you have a home under contract.I always recommend borrowers do a credit only underwrite. That way the stress & worry for the LO & the client are gone because the loan is actually approved and you just have to have a good appraisal to plug into the equation to close. Credit only underwrite is good when the file is not super strong and you want to make sure you can buy a home. If you haven't already done so be prepared to write good letters of explanation for all the derogs you mentioned in your post. Also, writing a letter to introduce yourself to the underwriter never hurts. In the letter you are sellig the underwriter on why they should approve the loan.

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lender guidelines overlays = guidelines lenders add to FHA's guidelines.

 

AU underwrites to FHA.... lenders can add to that. Like cash reserves or # of 12+ month old tradelines, ect.

 

if the LO is decent, then you will be ok.

 

#1 deal killer after du approval? tax returns. LOs forget to ask enough questions.... some people have side businesses that lose money.... happens a lot.

 

other killers... downgraded to manual underwrite because some required docs cannot be produced(w-2s for example)

manual uw is more strict. have to verify rent and debt ratios are tighter

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1 can be approved eligible at anytime, if you dont get a "clear to close" then you dont get approved...Nothing is guaranteed, I have heard stories where people went to close, they closed and FUNDS was never transferred soo anything is possible..

 

I wouldn't worry to much about the medical collections, they only factor 5% of the that debt (collections) as a monthy "projected" payment assuming you NOT are paying it thats why they calculate 5%...

 

Make sure you have your tax returns, if not then get Tax transcripts from the IRS, cause the bank will surely ask you anyways to sign a release for that.. I know cause i JUST did 1......

 

And you must keep in mind that the BANK has its own rules ON TOP of FHA USDA ETC....its called "investor overlays" aka moms rules plus dads rules...some cases they just over lap each other, some other cases 1 requests more than the other..

 

And dont worry, aslong as you have your stuff in order and the HOME appraises out you should be good..

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Hang in, home loans are very stress full, I just closed friday on my 2nd fha home on a sales contract I owed 72k on the home and my apprasal came back at 187k my score was 629 an had a chargeoff from a car repo that I co-signed for that they paid upon closing. My income is 101k there were a lot of back an forth emails an calls but I did it! So can you.

Edited by indianaguy

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Id say that 98% of the time if the system approved and you can document everything on the application AND you dont hold any info back, the loan goes through - it does take a lot of back and forth - remember this is a very large sum of money and not your regular credit application - they will want everything and some things twice when it comes to documents LOL

 

Usually if I have an approve eligible and the loan gets denied there is an issue with the property..........

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