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Long time lurker, third time poster.
So my mortgage journey started in late May with a call to a LO to explain my complicated situation:
Married stay at home mom (no income)
Husband makes $60k a year
Husband has 2 year old foreclosure and can't be on the loan
Wanting FHA loan
My scores were in the 580's - high credit usage and 2 month old 120+ late payment on credit card account closed by creditor with $8,000 balance, otherwise spotless credit history
In-laws offered to gift down payment and cosign on the mortgage
LO tells me to bring deliquent credit card account current, pay down other credit card below 30% and she will repull credit in a month (first week of July)
We find the most wonderful house for $135k.
Did everything she asked and middle FICO went from 580 to 625 by first week of July. She says, we're ready to go. We get a same day pre-approval. We make an offer, offer accepted. Inspection uncovers some minor issues, paint and wood rot. Seller agrees to cover repairs.
In-laws have 800+ credit scores, no debt besides current mortgage for $1,200/ mo and a store card with $25/mo payment. Together they gross about $10k/month, have two new-ish cars that are paid off and have enough in retirement savings to pay off the purchase price of the house and then some.
DTI comes in at around 30% even after taking into account 2% of my $50k student loan, my three car payments and two credit cards.
In-laws gift us almost 3 times the amount needed for closing. Still, seller agrees to cover half.
We get a 3.5% rate lock on a 30 year fixed with no points based on the July 625 pull.
My middle FICO has gone from 625 to 645+ since start of escrow. We are on a roll.
House appraised for $10k over purchase price. Sweet!
Received and signed closing disclosure on Wednesday. LO says we're good to go and to pick up the cashier's check tomorrow.
Could this really be happening??!!
Wow! What a feat indeed! So basically you were able to purchase a home with "no income" lol. That's awesome. Even though your husband was not on the loan, did they use his income as basis for repayment? Or did they combine his and your in laws?
Can you explain why did they use 2% of your student loans? Regarding your mortgage fico, how did you monitor it during the process? I realized that they dont update it on myfico unless you pay for one each time which is ridiculous. It needs to be included in the monthly monitoring fee. Buti digress. You are an inspiration because you accomplished a lot in such a short amount of time.
Hi!
Thanks for responding.
To answer your questions...
Even though your husband was not on the loan, did they use his income as basis for repayment? Or did they combine his and your in laws?
They did not use his income at all. They didn't ask for his pay stubs, W2s or the like. They did, however request our last year's joint return. I had worked half the year (registered nurse) but was pregnant and had our daughter last July. I've been a stay at home mom since. Our combined income with me working only half the year was $97k.
They did also ask for income particulars from my in-laws.
Can you explain why did they use 2% of your student loans?
Because I have IBR and my income is zero, my payment is zero but with the new FHA student loan DTI requirements they take a percentage of the total because it is not amortizing with a $0 monthly payment. I thought the guideline was 1% and asked my LO about it. She insisted that the guideline was 2% and I didn't argue because we still met DTI requirements regardless.
Fortunately I work in the non-profit, public service industry and I only need 3 more years of full time employment to apply and hopefully qualify for loan forgiveness.
Regarding your mortgage fico, how did you monitor it during the process?
I went ahead and paid the money to get updates. Three in total: before calling to LO just to see where I stood, again when she pulled in July just to see how my results compared to hers, and the final time after we cleared UW just to make sure there wouldn't be any surprises before closing.
Yeah that was an interesting explaination she gave you for the 2%. In all of my readings, it says 1%. Good thing it didnt matter in your case. Hopefully it doesnt effect someone else though. One last question..what state are you in that you were able to find a wonderful home for 135k?
Congrats again!
Kansas.
It's a 136 year old, beautifully remodled victorian farmhouse. 3/2 with a screened in porch and a barn in the back.
@Anonymous wrote:Yeah that was an interesting explaination she gave you for the 2%. In all of my readings, it says 1%. Good thing it didnt matter in your case. Hopefully it doesnt effect someone else though. One last question..what state are you in that you were able to find a wonderful home for 135k?
Congrats again!
The FHA requirement used to be 2%. In June 2016, it was cut in half to 1%.
Her LO was probably unaware of the change. Or maybe her lender still uses 2%. FHA sets minimum requirements, but each lender can use a more strict rule.
What an awesome story - congratulations and enjoy your new home!