I say "hopefully" because there are some "unique" pieces to my situation that we are trying to work around. Long story short and drama-free, I moved myself and my kids 1,000 miles away from my marital home a few years back for an internship that became a real job. I'm tired of paying a boatload of rent and utilities for where I am living and decided to try for a USDA Guaranteed loan September 2011 (when I foolishly thought my scores were in the low-600s). I had a wake-up call at 568 and 586, discovered MyFICO and started to work on my credit.
I was able to get a bunch of junk off through GW letters and some help from HIPPO minus the PO, plus an AA. In the middle of the credit work, my EQ score went to around 638, so I felt safe to start looking at builders. I found the houseplans that were perfect for us in the right neighborhood, plunked down $500 deposit, and signed on the dotted line in March 2012. Continued hammering away until the only stuff left is consequences of poor decisions and I have to live with it. Happily, my credit scores are now 715, 701, and 682, plenty good for USDA Guaranteed.
This is where it gets hairy. My DTI ratios are fine unless everything goes against me in UW. I'm on a mortgage on a marital home which was given to "ex" in a separation agreement. We are not divorcing. I can only prove 4 months of payments from his personal account, they are asking for 12, only, we didn't KNOW it had to be 12 months to be excluded, besides, we only officially separated in December 2011. I also receive child support in the separation agreement, but since it is not a divorce, not sure if they will count it. Finally, I have student loans that are in the process of being consolidated (since early March, what the HECK is taking so long???) and put into the IBR plan which will help the DTI.
I was asked to submit so far:
2 months of bank statements along with explanations for all non-direct deposits over $100
2 months of retirement account
4 weeks of paystubs
Last 2 W-2s
Last 2 tax returns
Driver's License and SS Card
Copies of checks for the child support and promissory note on the marital home
Rental lease and copies of checks for the last year
LOE for why I'm not getting divorced and why I moved
LOE for any late payments on my credit report (2007 and some from early 2011, all over a year past)
Had a chat with the mortgage person today and she finished up my file as much as she could without the stinkin' student loan reporting correctly. That's the big piece we are waiting for. She is going to talk to the UW about the marital home mortgage and the child support to see what, if anything, can be done there. She did say we could NOT do a "settlement at closing" on the marital home which was something I was hoping for. I have $5K currently tied up in earnest money on the new house and since I'm doing USDA, will get all of it back, so could easily pay off the other mortgage with it if I could do it that way.
So I continue to wait...
May I ask who your lender is?
It's FBC Mortgage.
So, she sent the builder the "pre-qual now" (whatever that is) and told me the conditional approval will take about 3 weeks. I have no idea what that means or where we are in the process. I like checkboxes and orderly information. I don't think they are used to dealing with people who are as involved (controlling? LOL!) as I like to be. I have a limited window of opportunity to move into the new house this fall and I think we might be cutting it very close. The builder rep keeps telling me that my "timeline looks good", but I'm not so sure at this point. I need ground to break by the middle of July if I'm going to get it done on time.
I went ahead and sent the IBR request to the current student loan lender, even though the loans have an "origination" date of 6/22 (again, whatever that means). I'm hoping I can get that done as it's pretty much the only major hangup right now. I'm trying to convince them that since I've qualified for IBR from one lender, I will qualify for the other and it's just a matter of doing the math. Don't have answers yet around that.
I'm still chapped about the divorce requirement for child support to count as income. It's in a legal, binding agreement. I'm hoping the UW can make it work somehow.
Just got an email that I was approved through GUS! One step forward, now for the 2 steps back. Apparently, even though I am legally on paper and 1,000 miles separated from my spouse, they need his income to qualify me. He's self-employed. I can get the 2010 tax return, but after that could be dicey. Not sure where it goes from here.
I just went through the whole IBR drama thing too and the best advice I can give on that one is keep a close eye on your accounts with your student loan servicers (if you have more than one and it sounds like you do - I do too). I'm with ACS and Great Lakes... Great Lakes has been a total pain and is still reporting my one loan as "in-school" status - thanks to my graduate school reporting that I'm still enrolled - argh! ACS has been easier to deal with and got all my IBR requests processed within their 7-10 day window. If you're with Nelnet or one of the others, I couldn't say how quickly they will move but I'm betting that it will be similar timing.
The biggest thing is to be sure that your loans are in a status that allows for IBR - either forebearance or repayment (I believe). If they are in-school or grace, they won't process the IBR request. I ended up doing the consolidation to get the majority OUT of grace so I could get the darned IBR payments set up.
I'm sorry to hear that they're requiring you to include your separated-husband's income. I'll be crossing my fingers that it all works out for you!
As someone who works the vampire shift, not a fan of cryptic emails: "I talked to the UW today. When is a good time to talk?"
Oy. Why can't she just say, "hey, it's good/bad news" and then tell me what it is??? or even just the good or bad news part. I'm a control freak worry wort. I get it, but this has already been a long, difficult journey and my poor stomach can't take much more stress by being uninformed.
USDA is a no-go for me. They are asking for income documentation from my estranged husband that I simply cannot get (profit/loss statements). He is self-employed and does not keep books like a normal person would which is one of the reasons we are "estranged". Whatever, moving on to FHA. I have the 3.5% downpayment, in fact, it's what the builder required for earnest money. Now I have to find out if they are going to want MORE than that (I wouldn't know why they would, but then again, not very much has made sense in this process).
They are also going to hit me not only with the mortgage on the marital home, but 1/2 of the insurance/taxes on it as well. They are NOT going to include child support as it's only a separation agreeement and not a divorce. Both of these are also impacted by the "12 months of payment" rule. We only filed the separation in December and I didn't know about the 12 month thing then.
I am still waiting to finish up the IBR business on the student loans as that's kind of a biggie for the UW.
She ran it again through automated underwriting and still got an approval which is great news.
So, again, 1 step forward, 2 steps back. I'm bummed about the $5K downpayment as I'd hoped to use that to outfit the kitchen with the appliances I want. Guess I just have to pray for a good Lowe's CL when I apply after closing.
Did some math tonight. My front end DTI is 28.5%. Back end DTI would be right at 50.75%. There just isn't anything more to cut at this point. Adding the 1/2 of the insurance/property taxes is pushing me over. Seems like I should only be held liable for 1/2 the mortgage payment on the marital home. Even so, the FHA mortgage payment is still less than what I pay in rent and is a smaller, energy efficient home which should make up for something, I hope.
Do you have credit cards that would be paid off within 6-10 payments? If so, they can exclude the debt and that would help with DTI. When you get closer to closing, find out what they are estimating for homeowner's insurance on your new home. If you can get a premium well under what they're estimating, that will also help your DTI.
I have one CC that is showing a $10/mo payment, everything else is paid off. She wants that one to report to maximize score. Insurance is tricky here (I'm in FL) and I understand that she's got that trimmed pretty much as far as it will go.
She told me yesterday that she thinks I'll still be OK since I also have good "compensating factors" and my front end DTI is well within range.
I understand why they are so strict after the bubble burst, but at the same time, it's very frustrating. Right now, all I can do is wait for the student loan to settle into IBR and document that and we can move forward from there.
My tenacity continues to be challenged.
She talked to the UW today about switching from USDA to FHA and now they can no longer include my promissory note as income. After trimming every possible thing, I am $27 over the max back end the UW would sign off on for FHA. Front end is still well within the ratio.
She said I have 3 options:
Pay off the marital home somehow
I'm going to my CU in the morning to see what, if anything, they can do to help me out.