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I have 2 charge-offs in early 2012 because of lack of employment. I have since bounced back in the employment sector and would like to apply for an FHA mortgage around the early quarter of the year. How are the charges-offs taken into account when applying for a loan? Do they need to be paid or should I apply and see what the lender says to do about them first?
I work in education and been in the field for 6 years with college, I just worked part-time last year than was a substitute teacher for 2 years prior to fall 2012. Both charge-offs are barely a year from taking place. I'm not sure if I should even apply with these both on my record or if they will be over looked since it will be over year once I do apply some time in February or March.
New guidelines for FHA make it harder today than last month and prior. Here are the specific guidelines so you don't have to trust a mortgage lender's opinion: http://portal.hud.gov/huddoc/13-24ml.pdf. If the lender is with a big bank or call center, you might not want to trust the opinion since they are often not well trained.
Scott Drescher
@anca21bi wrote:I have 2 charge-offs in early 2012 because of lack of employment. I have since bounced back in the employment sector and would like to apply for an FHA mortgage around the early quarter of the year. How are the charges-offs taken into account when applying for a loan? Do they need to be paid or should I apply and see what the lender says to do about them first?
the recency of the charge-offs add a layer of risk to the loan.... other layers of risk could be employment history.....
bottom line, if the automated underwriting system accepts you, you will be fine. if not, and the deal is manually underwritten.... expect some scrutiny.
just apply.