Fha approval questions

[Anonymous]

     I have read alot of the guidlines on fha.gov pertaining to the loan i am seeking (the prospective home i would be interested in is a post 1976 manufactured home conforming to all foundation requirements) total loan amount would only be 25k ish.   I have ample amounts of liquid accounts (cash, checking etc) to meet down payment requirements, closing/appraisal costs, and extra in my accounts to show ability to pay for several x amount of months worth of the monthly mortgage amount.  I am not so worried about the interest rates and down payments amount n blah blah blah, as I am about getting approved,  as just being approved I will be paying far less (even with sky high interest rates) than I am now renting a crappy apartment which is just throwing money out the window as I could be building equity in the manufactured home and own it one day as an asset, whereas I will never own the apartment.

     Now the catch,  I have a 'thin' file and the bank said I do not have a fico score,  I pulled my own experian report (554)  with 2 derogs and equifax shows the same 2 derogs 2+ years old, but also one recent derog  4-5 months old.  I have no judgements, but i have never had a credit card before in my life,  now i just was approved for some secured credit cards.  I will not make any late payments from here on out cc or non-traditional obviously and util only 1-9 percent per cc account as well. 

     I recently took a ride to the e.r. in an ambulance,  what is the bare minimum I can do to stop them from sending that account to collections one day?  pay 5$ a month, talk to their collections dept to work something out?  I really dont want any more collections on my CR.   but i want to keep saving up for a home as well to get out of this stupid rent throwing my cash out the window,  (seriously my mortgage would be less than half of rent, with even 11%apr)

    What else should I do in preparation for this type of loan in the next (12-18 months is my goal)?

    Are the underwriters of the bank originating the FHA loan going to have extra "hoops" beyond the FHA guidelines?  (my DTI ratio is low i have no auto or installment loans:  with the mortgage it would only be 20%)

    Thanks in advance for your advice and time                                  

                                                                                                                                                                                                             Best Regards,     James

[ShanetheMortgageMan]

Sounds like you'll need to generate some scores, which shouldn't be terribly long, could be about the time your recent derog gets to be 12 months old.  Keep the non-traditional trade lines going, as even though you may not have a lot of traditional credit that is 12 months old by the time you apply, as long you have scores, a lot of lenders will allow you to use the non-traditional trade lines to meet the minimum trade line requirements (3 trade lines of 12 months each).  Reason you couldn't just proceed without credit scores is because when you have negative credit, and no scores, most lenders will not permit non-traditional credit to meet the minimum trade line requirements (non-traditional credit cannot be used to offset negative credit).

As far as dealing with the ER & ambulance bill, read the archives at Recovering from Medical Debt to find tips/tricks on how to avoid it going to collection and HIPAA laws, or if it does go to collection, Why you may be able to remove it, but you can't Chat with others there, it's reading previous posters letters only.

If 12-18 months is your goal then I really think you should be able to get some scores, probably half-way decent scores, and be able to purchase a manufactured home with FHA financing.  The only other item you may or may not thought of could be an issue is the minimum loan amount, $25k is pretty low and often is below what lenders minimum requirement is (which is typically $40-50k)... however there are lenders out there who will do it, but just don't expect every FHA manufactured home lender to be willing to do a loan amount that low.  Your best luck may be with FHA manufactured home lenders in the area, as if $25k is a typical manufactured home (with land) price then there is bound to be local financing for them.  There definitely can be lender "overlay" guidelines on top of FHA's, such as one lender I know of won't do manufacutred homes on over 2 acres, another one won't do them if there is a dirt road as the public road access, etc.  It's fine to ask lenders for their guidelines in writing so you know not to waste your time with them, or making offers on certain properties if you plan on using that bank.

[Anonymous]

               Masterful answers yet again!   Thanks!   I am so glad I found this site, you guys are so helpful!!

Another quick question for you if you are up for it! 

               I had a checking account go negative due to neglect on my part(I quit using it and didn't keep high visibility so auto insurance kept collecting on a car i had already scrapped and a policy that was cancelled; long story short the insurance company took off their fradulent charges, but since it took the account negative the overdraft and late fees, w/e else there was stuck, and I recently found out trying to get another checking account that the bank(wells fargo) had reported the account to 'chexsystems' so the other banks denied me a new checking account for the next 5 years

               My question is:  do banks usually report negative checking accounts to chexsystem and send stuff to collections/ and/or report to CRA's?    Or if they don't send to collections or report to CRA will the banks that are originating the fha loan search chexsystem and deny me because of it?  How big of an issue has a negative checking account been everyone's experiences with fha loan approval processes?

  Thanks again all!  for your time and help!!                 -james-

[ShanetheMortgageMan]

You are welcome.  ChexSystems doesn't report to the bureaus as far as I know, but if you rack up enough NSF, etc. fees the bank may send it to collections if you don't pay them.