Good deal or not? Mortgage questions....Shane?

[tpayne105]

I talked to a company called HMS today in Dallas (I live in Dallas).  My mid range FICO is 581.  I qualified for an FHA Loan in the amount of $125,000.  This company has an in-house mortgage company in which I now can go with them to search out homes. I was told by the loan officer that yes I can indeed do this.  I do have to return some information to them (loan documents and make a statement for a couple of things on my CR).  All that said, the loan officer was very positive and said this is not an issue and if I wanted to, I could go home searching this weekend and put down a contract.

First of all, I am really shocked how easy it was to qualify.  Granted, I have worked really hard on my credit and in the last 9-10 months my scores have come up anywhere from 70-90 points. 

The in-house mortgage company apparently has deals with builders of home communities that apparently will pay for most or all of closing costs.  I know with FHA one is required to put 3% down...

Am I missing anything because this sounds like a great deal?  Or is it?

Thanks to anyone that can help!!!!

Todd

Message Edited by tpayne105 on 01-04-2008 01:40 AM

Message Edited by tpayne105 on 01-04-2008 02:22 AM

[ShanetheMortgageMan]

Hmmm... well if you need to provide a statement on a couple things on your CR then technically you aren't pre-approved yet.  The underwriter would need to review the statement (letter of explanation it's called) to determine if the explanation is sufficient.  If it's not, well then there goes your pre-approval.  It's not to say that they are jumping the gun irresponsibly, as you might've already discussed the explanation and on the surface it could sound like a slam dunk... but I wouldn't count your chickens before they hatch until the explanation letter has been reviewed along with all of the other documents they are asking for.

[tpayne105]

Shane, thank you for answering quickly.  That is what I am thinking as well.  Now the loan officer wanted the letter to mainly explain what happened in 2003-2005, which is when I had issues with credit, etc.  I am also paying down my credit cards as well.

My letter is fairly detailed.  I know you have answered a ton of questions like this but when an underwriter reads these letters of explanation, what is it they are looking for to go ahead and approve.  I do understand that every person is different. 

I am just curious because I have never gotten this far with the loan officer telling me that it is ok to go look for a house this weekend, and if I find something, feel free to put a contract down....but yet not officially approved....

Anyway, just thought I would get the expert's advice!

Thanks

[ShanetheMortgageMan]

Yeah unless you like making an offer without knowing you are fully approved, I wouldn't recommend that you do.  In simple terms, regarding the letter of explanation the underwriter is looking at: what happened, why it happened, and why it won't happen again.  They want to know it was from an extenuating circumstance and your situation has changed so it's not likely to happen again.