Compensating factors?

[Anonymous]

How much weight do they carry?  My credit score is 688, Chapter 7 two years ago.  LO said my issue is DTI, it is too high at 45%, (manual UW due to chapter 7).  DTI is strecthed because hubby's income is is not counted, but his debts of course are.  Could the fact that he will be paying half the mortgage be used as a compensating factor?  We have always split rent, and could easily show proof of that, as he writes me a check for his half every month.  Could this along with two months reserves be approved?  In addition, our mortgage will be the same as our monthly rent give or take $50, depending on interest rates at the time of closing.

Any info. is appreciated.

Bunny

[Anonymous]

It is a compensating factor, don't know if it's enough to overcome your Ch7 and high DTI though. Only your LO can answer that question for you. Have you brought it him to him?

[Anonymous]

yes, uncounted income can be a compensating factore, but with high DTI and a fairly recent BK, they are going to be looking more for high reserves/down payment for strong compensating factors.  The current rent price being similiar is a plus but the more recent BK may show the UW that your recent rental history is above your ability to pay as well since a BK was involved.  It all depends upon the UW, credit history since BK, re-establishment of positive credit lines, etc.  I would be concerned because high DTI and a BK are both big issues and manual UW has less leeway than AU for high DTI approval.

[Anonymous]

Thanks for the info.  I am sooo nervous....I have told LO everything and faxed him pretty much everything except the babies I am so bummed.  It is frustrating becasue we would have had way more reserves/downpayment if it wasn't for us sending the IRS close to $8,000 in the past two years because our incomes are in the higher brackets and hardly having any write offs.  Owning a home is clearly the best way to go for us tax wise, and we are in no way over extending ourselves, we are just wanting a small, modest home at this time.

I guess we just have to wait and see...

[Anonymous]

Oh, and another thing; Since my LO isn't sure it will be approved I am also having my neighbor try to approve me.  She said that because she works for a direct lender and is in the same office as the UW, she may have a better chance because she can directly explain our situation to the UW.  Is it true that a direct lender would have more flexibility that a broker?

[Anonymous]

It is possible thata direct lender may be able to sway the UW a bit more than at a large company.  That said, alot of time smaller or direct lenders can at times have stricter general policies.