FHA Mortgage with AMEX credit card debt?

[west99999]

I am in the proccess of the underwriter from Wells Fargo reveiwing my loan. They put my loan in suspend status wanting more info about my AMEX charges. The credit report didnt show a monthly payment and they wanted statements. I sent a statement in and they freaked out because I am setup as pay in full on most of the charges which was about $3800 that month ( this month was higher than normal usually about 2500-3000) so they wanted another statement and it was about $2800 due on it. I have not heard anything back yet this was 5-6 days ago. I have read where pay in full charges were not to be counted in debt/income ratio. Has anyone got experience with this? I saw other post online about people having issues with this same card and having really high minimum payments shown. If I don't use the card at all for the month then the minimum payment is only interest plus 1% which right now I have about a $17000 balance on it so payment minimum would be like $300. Anything I can do to make them not use the total pay in full charges?

[frugalQ]

is this a charge card?  if so, are you saying that you have a 17k balance on it?

i have an amex charge card.  When i spoke to a LO, she told me that they normally calculate 5% of the balance reported as the monthly payment and add that to DTI calculation. 

This is the #1 reason I do not let my charge card balance report to the CB....even though it's not counted as a part of revolving debt for FICO scoring purposes  When we start building in October, I don't want my charge card expenses to come into question.

[west99999]

Yes it is an American Express Credit card with No limit. I paid it in full for years and just over the past year have had some significant charges on it and expecting to buy a home have let some of the charges go to my pay over time side of the card. I have the option to do both pay in full and pay over time. If payed in full then no interest accrues monthly with my balance being so high right now obviously I don't want to pay it in full although if the underwriters requires it I can do so just have about 20k in the bank right now and don't want to do that because the FHA loan im doing requires 3.5% that would put me needing cash for down payment. The seller has agreed to pay 5K in closing and Im under contract at 175K right now with a close set for August 1st. It doesnt look like we are going to make that date. Any suggestions?

[frugalQ]

I don't think the 5% calculation is a hard rule....i don't think there are any general rules around how to handle charge card balances  How charge cards are included in DTI is lender specific. 

I recommend you discuss with your LO how to handle.  If your DTI is not too far over, maybe you can pay only a portion of the balance to bring the calc down to where your DTI is within guidelines.

Good Luck!

[tunseeker1]

Here are a few questions.

1. Where did the money in the bank come from?

2. Were the charges you have let go to the pay monthly side abnormal charges or normal charges you would pay off?

The underwriter may look at the balance on AMEX and the money in the bank and question the change in PIF monthly.

It looks to me like you normally pay $4,000 a month and because you are buying a house you decided to keep your cash for 4 months and let the AMEX ride. If this is what you did the underwriter is going to look at the money in the bank like the procedes of a loan, and it might not be counted as money able to be used for  down payment.

[gary4872]

I just went through this with a different bank. They ended up doing a credit supplement, with the credit company doing a conference call with Amex. Amex confirmed the minimum monthly payment that would be due on the "Pay Over Time" portion of the account and that is what was factored into my DTI. The Amex rep said they get those calls all the time, so it wasn't an issue and they knew what to do.

[west99999]

Well just got conditional approval today. They didn't need anything else from the AMEX just needed to see that I was paying in full every month for the past 2 months all the charges. The balance was built up over several months but this was 7-8 months ago recently I have been paying all charges in full every month and even some extra to get balance down. The only conditions were a letter from my work stating I was transferring without any pay decrease (done) and they want last 12 months worth of canceled checks for my rent (also done). WooHoo!!! Thansk for everyone posting replys.