@Anonymous wrote:
My prequalifaction for a FHA loan was approved with my Loan Officer for $266,000.00. I put $15,000.00 down (deposit in mt checking account) and have $5,000.00 in earnest money.
The house I want is on contract with me for $280,000.00. I was told I close on 04/14/2017. My credit is XPN 645, TU 680, and EFX 644 as of 02/25/2017.
I have cleared CAIVRS and this is suppose to be close week and I was told that FHA is questioning a collection balance of $9588.00 that was reported on my XPN and EFX CBR on 01/2013. I was told to contact the collection agent to pay the balance in full. This is non-medical collection debt from a Creditor that is no longer in business and have since filed a Chapter 11 Bankruptcy.
I would like to know what to do. I can regroup and go Conventional but I will loose my interest rate and possiblly the Seller will not release my Earnest Money if I do not extend the contract.
A collection of that amount will impact your DTI. For non-medical collections that total up to $2k or more then 5% of the balance is included in your DTI, so a $9,588 non-medical collection either needs to be paid in full, a payment plan established, or $479.40/mo will be added as a monthly payment to be included in your DTI. Do you still qualify with an extra $479.40/mo payment? If so, then technically you shouldn't need to pay it. If you don't qualify with that payment, then you can start up a lower monthly payment with the collection agency or you'd need to pay it in full.
Conventional most likely wouldn't require it to be paid nor it would it be included in your DTI (they don't have a "5% of balance" rule). Obviously if you start over with conventional it'll take several more weeks to close, but if the seller is willing to extend then that seems like it could be an option.
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