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03-26-2012 09:13 AM - edited 03-26-2012 09:17 AM
I recently joined MyFico because I am attempting to purchase a new construction home via Blandford in Gilbert, Arizona. To be honest, I wasn't planning on trying to purchase for another year because of my financial history but my wife and I looked at some new construction on a whim and we fell in love with a particular model/floorplan and community (Power Ranch in Gilbert).
I walked away from a Mortgage (as part of my divorce), in August of 2009, and I was under the impression I would need to have perfect credit history for three years after the foreclosure before I would be eligible for another home loan. I have had good credit history with four credit accounts but I have had a few late payments on auto loans in the last three years.
However, I have been dealing with Blandford's "preferred lender", ONQ Financial, and the mortgage consultant there insists that the late payments will not be an issue as long as my middle credit score is 620 or above. She had me turn in a bunch of documents to her including W2, Divorce Decree, etc. as part of their pre-approval process.
I recently paid my credit cards down to a total balance of about $500 out of $2650 available and had ONQ pull my credit on the 13th of this month: my scores were:
Trans Union: 601 (I believe it may not be updated with my latest credit card balances)
I was pre-approved for an FHA mortgage of $200,000. My income is about $72,000 a year all via my job (hourly), and I've worked there for 12 years so I believe my job history and income is solid. I have a $500 a month car payment but no other debt I'm currently paying on (I pay $1000 a month in Spousal Support but that ends in August). I am looking to close in September so the foreclosure will be 3 years old at time of closing. I've been renting an apartment for $700 a month since August and I have had no late payments on rent (before that I was living with parents). My wife will not be on the loan because she has no income and a very thin credit file.
Quick summary of adverse credit:
Foreclosure in August of 2009 (divorce related - my divorce was final in November of 2009).
I had a bankruptcy in October of 2005.
I've had three late payments on my Auto Loan June 2009, August 2009, and August of 2011.
I had one collection (paid) of $721, in October 2009.
The reason for my concern is that I signed the paperwork for the new home this weekend and unlike my previous mortgage, Blandford will keep my down payment if I fail to obtain financing come closing time. I am borrowing about $8,000 for downpayment and closing costs from my 401K (I have about $30K in my 401K), and they want $5000 within 30 days that will essentially be earnest money.
I wanted to get a second opinion to see if the scores are more important than my late payments, etc.. Am I really a slam dunk for an FHA mortgage if my credit stays the same between now and September? I was told to get a few thousand dollars in the bank between now and then so I have some reserves to show the banks but that shouldn't be a problem.
Thanks for taking the time to read this and offer your professional opinion.
03-26-2012 06:57 PM
Couple of pieces to your puzzle:
1) Having your 401k may count towards "available liquid assets," but not sure if it still counts after you take a 401k loan out.
2) Your 401k loan payment might count towards your back-end ratio (as well as your credit card payments). May or may not make a difference.
3) As for your bankrupcy and foreclosure, not sure on those (others will help, I'm sure)
4) If their preferred lender has given pre-approval, you may be in ok shape, but it may not hurt to apply with another lender, if nothing else than for comfort, but at best to shop rates maybe.
Nothing's stopping you from doing this, but $5k in earnest money is a good chunk of change... I'd definitely sleep on it for a while. A lot of things can happen in a month, two months, six months...
09-19-2012 02:36 PM
I was approved for the loan but I did have to write several explanation letters for the late payments, my bankruptcy from 6 years ago, and for my foreclosure three years ago. However, I closed on the 30th, the deed recorded, and I just received my first payment info - my loan is through Wells Fargo financial.
09-29-2012 07:11 AM
Congrats,but what happened with the approval with ONQ Financial?
09-30-2012 12:35 PM
Your story sounds almost identical to ours with the exception of the foreclosure.We had 2 auto loans and expect to pay off the last one in 9 months.We trying to pay down our credit cards.It will be 4 months since our last late was reported it was on the auto.No lates reported on any credit cards.Like you,my husband will bethe only one applying.In August we rented an apartment for one year,while we get things together.You must have written some great letters of explanation.I thought about Wells,but as luck would have it,I think we included them on our bk.We will apply for a mortgage aound next June or July.I 'm happy to hear that things worked out well for you and your wife.Enjoy the new house!