I agree with you that OP should ask for the condition to be waived or go elsewhere. I'm curious to know if this conditional approval
was manually reviewed or automated. It has been 100 years since I was an UW and there are factors that might not allow this condition to be waived on conventional loans. If this conditions is based on a disqualification after manual review then OPs choices are limited for conventional loans. OP should still try ESP if his credit history does not show a propensity of high usage on his CL's, seasoned accounts (24 mos) and stable income.
if OP just paid off a large chunk of debt to qualify, less than 24 mos of credit history, assets and stable income- it's harder to override a decision.
This is from FannieMae's UW Manual:
Underwriting Borrowers
Chapter 6, Liability Assessment
Payoff or Paydown of Debt for Qualification
Payoff or paydown of debt solely to qualify must be carefully evaluated and considered in the overall loan analysis. The borrower’s history of credit use should be a factor in determining whether the appropriate approach is to include or exclude debt for qualification. Generally
• Installment loans that are being paid off or paid down to 10 or fewer remaining monthly payments do not need to be included in the borrower’s long-term debt.
• If a revolving account is to be paid off and closed, a monthly payment on the current outstanding balance does not need to be included in the borrower's long-term debt, i.e., not included in the debt-to-income ratio.
• If a revolving debt is to be paid off but not closed, a monthly payment on the current outstanding balance should be considered as long-term debt.
was manually reviewed or automated. It has been 100 years since I was an UW and there are factors that might not allow this condition to be waived on conventional loans. If this conditions is based on a disqualification after manual review then OPs choices are limited for conventional loans. OP should still try ESP if his credit history does not show a propensity of high usage on his CL's, seasoned accounts (24 mos) and stable income.
if OP just paid off a large chunk of debt to qualify, less than 24 mos of credit history, assets and stable income- it's harder to override a decision.
This is from FannieMae's UW Manual:
Underwriting Borrowers
Chapter 6, Liability Assessment
Payoff or Paydown of Debt for Qualification
Payoff or paydown of debt solely to qualify must be carefully evaluated and considered in the overall loan analysis. The borrower’s history of credit use should be a factor in determining whether the appropriate approach is to include or exclude debt for qualification. Generally
• Installment loans that are being paid off or paid down to 10 or fewer remaining monthly payments do not need to be included in the borrower’s long-term debt.
• If a revolving account is to be paid off and closed, a monthly payment on the current outstanding balance does not need to be included in the borrower's long-term debt, i.e., not included in the debt-to-income ratio.
• If a revolving debt is to be paid off but not closed, a monthly payment on the current outstanding balance should be considered as long-term debt.
Do they recommend closing CC accts. because they are afraid that you might not be able to make the monthly payments?
EDIT: typo
Discover IT $2,600- First Premier MasterCard $1,000- Dillards Store Card $300- Fingerhut Advantage $200
It sounds like that with the minimum pyt on ccs OP would not qualify for the loan.
Great pickup from the FNMA Uw manual, Lexie. If this indeed becomes a DTI issue on the borrower's CC payment, further pay down of CC balances will bring the monthly payments down and bring the OP closer to the approval criteria the lender is using, but the existence of the tradeline using the industry standards quote above fails to correct the issue.
Without knowing OPs front/back end - its hard to say if going elsewhere will change the condition. If OP is close to 45% with the mtg pyt, I can't see them changing their mind.
What will be your util after your closed accounts hit your CR's?