In underwriting for FHA loan, have increase in CC debt - pay or not?

[jevoyager]

Ok so my loan recently went to underwriting (FHA loan).  I know I'm "close" to my max DTI according to my LO but I am under the max. My LO has driven me nuts about this, I didn't borrow the max they said I could as far as I know (of course she wasn't even clear on that, one minute I can borrow X, then it changes, then it goes back, ugh) and has been clear as mud about where I stand.  And she's the assistant branch manager ::facepalm:: Actually, I just remembered her assistant is dealing with stuff this week, I may give her a call and see if she can give me a straight answer...

Anyways, had to unexpectedly take my dog to the vet this past weekend and put the bill on my CC, figuring I'd just take the money of my savings and pay it off before it could really affect my balance. Except I didn't take into account that my damn statement cut before I could do this (I know I know, I should have done it soon as I got back home). So now I show a few hundred more due on my CC totals, and I worry even if I go pay that off, it won't show up on my credit report before my closing (July 6th) when they repull it. Should I go ahead and pay it off anyways, and if they say something I can show that my total balance has been paid down?  The other thing I thought about is if they want another bank statement before closing, will withdrawing a couple hundred from my savings raise any red flags?  (I have no clue how they count my savings toward anything, other than having money to pay closing costs). I'm questioning now if I should just leave things be, or what to do.  Part of me thinks a few hundred shouldn't make a difference (and if it does my LO should have been more clear where I stood with my DTI, and I'd gotten my second choice house which was 10K less).

I guess if I really want to know when I call my LO's assistant I should ask her, but I appreciate anyone's input here. I've had so many things go wrong with this whole process that I'm paranoid it just won't work out. From having to change realtors, now getting stuck with my realtor's idiotic lazy son (who didn't even get my contract to my LO til a week later), to switching LOs due to getting stuck with a smart ass, dealing with an uncooperative seller, and only finding out a few weeks ago about the whole FHA/student loan mess and the stress now that if this doesn't work I probably won't be able to buy a house anytime soon. </rant> So I'm frazzled and haven't slept well in weeks, and just worried this will be the final kink to ruin it.

[Anonymous]

Your LO should be able to answer these questions for you on exactly where you stand. And if they can't be up front with you about exactly what you need to do and still aren't being clear you should go to another lender (I don't know how long you have to close or if you are under contract on a house).

My guess is that the few hundred extra dollars isn't going to affect your minimum monthly payment on the CC (which is all the underwriters care about in terms of DTI). The extra hundred on your CC will probably raise your utilization % and may lower your credit scores slightly. So I don't know if that will affect you. They are likely to repull your credit scores just before closing.

I wouldn't worry too much. This seems like a very minor change that most underwriters won't worry about. You didn't open a new tradeline or anything like that and it shouldn't affect your score that much if your util went up. As long as paying down the CC balances won't cut into your cash to close, your worst case scenario should be you can pay down the CC balances and ask for a rapid rescore if its a deal breaker for the underwriters.

Good Luck!

[StartingOver10]

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@jevoyager wrote:

Ok so my loan recently went to underwriting (FHA loan).  I know I'm "close" to my max DTI according to my LO but I am under the max. My LO has driven me nuts about this, I didn't borrow the max they said I could as far as I know (of course she wasn't even clear on that, one minute I can borrow X, then it changes, then it goes back, ugh) and has been clear as mud about where I stand.  And she's the assistant branch manager ::facepalm:: Actually, I just remembered her assistant is dealing with stuff this week, I may give her a call and see if she can give me a straight answer...

Anyways, had to unexpectedly take my dog to the vet this past weekend and put the bill on my CC, figuring I'd just take the money of my savings and pay it off before it could really affect my balance. Except I didn't take into account that my damn statement cut before I could do this (I know I know, I should have done it soon as I got back home). So now I show a few hundred more due on my CC totals, and I worry even if I go pay that off, it won't show up on my credit report before my closing (July 6th) when they repull it. Should I go ahead and pay it off anyways, and if they say something I can show that my total balance has been paid down?  The other thing I thought about is if they want another bank statement before closing, will withdrawing a couple hundred from my savings raise any red flags?  (I have no clue how they count my savings toward anything, other than having money to pay closing costs). I'm questioning now if I should just leave things be, or what to do.  Part of me thinks a few hundred shouldn't make a difference (and if it does my LO should have been more clear where I stood with my DTI, and I'd gotten my second choice house which was 10K less).

I guess if I really want to know when I call my LO's assistant I should ask her, but I appreciate anyone's input here. I've had so many things go wrong with this whole process that I'm paranoid it just won't work out. From having to change realtors, now getting stuck with my realtor's idiotic lazy son (who didn't even get my contract to my LO til a week later), to switching LOs due to getting stuck with a smart ass, dealing with an uncooperative seller, and only finding out a few weeks ago about the whole FHA/student loan mess and the stress now that if this doesn't work I probably won't be able to buy a house anytime soon. </rant> So I'm frazzled and haven't slept well in weeks, and just worried this will be the final kink to ruin it.

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Most of your questions and concerns are DTI related.  Your LO should be able to tell you exactly what your DTI is now and if the couple of hundred dollars will make a difference o your ratios.

Assume they will want another bank statement. Lenders want the paperwork to be less than 30 days old at closing and it is normal for the lender to request an updated bank statement at the end just before closing.

Note:  just because your purchase was $10k less, it doesn't mean that your corresponding mortgage payment will be less.  It depends on all the factors including real estate taxes and homeowners insurance.  Maybe you are in an area where the real estate taxes are simlar from home to home within a similar price range. I am in an area where the taxes vary all over the board depending upon the seller's homestead exemption (if any) and when the homestead exemption was put into place.  So the best thing to do is speak to your LO about your DTI and the delimma you face (pay the cc bill now or wait until it is due)

[jevoyager]

Thanks, I'll bring it up with my LO's assistant/processor and see what she says - she's been good about going over stuff in detail.  I actually did check into a few other lenders a few wks ago because of the runaround, but everyone else has went ahead with the new rules re FHA/student loans and the 1% thing, and this is the only lender not implementing it until July 1st that I could find, so I'm kinda stuck with them. The company is actually supposed to be one of the best around here, I guess I've gotten stuck with the duds of the group

As far as my 2nd choice house, it actually would've been cheaper both cost wise and tax wise. Part of me still thinks I should have gone for that one since it would've meant I could save more $ each month. It's just not really big enough (not enough bedrooms), but I could've made do. But oh well, I'll see what happens.