Mortgage in July

[brownee]

Ok, here is my info.I'm really concerned that we won't be able to get a mortgage. We make almost $100k per year between DH and myself. Our only debt is my student loan ($18K left..we pay $350 per month on it) and that's it. We have credit cards, and while they're at about 98% util right now, we are paying them off this week. I have 9 months of history with my two cards (Target and a secured BoA that I am hoping will unsecure soon) and he has about the same with his two cards (First National and a Military Star card). We have a bankruptcy from 1999 that should go away this year and I have a paid judgment on TU and EQ from 2005. I have no collections on my report and he has some (paid and unpaid). By July, we will have about $6k saved and I also have $4k in my 401K. We're wanting to get a VA Loan and are looking at houses between 200K and 250K here in middle TN. The only thing that I think will hold us back is the fact that DH has a 30 day late in January of this year (arghhhh!!) on his First National. Will that TRULY keep us from getting a loan? We've been talking with a Mortgage Banker who works with our Realtor and he knows about the late, but just says we need to pay off of our credit cards, not to worry about the collections, and then by summer we should be okay score-wise. Does this sound right? I've heard and seen on these boards that 12 month clean is mandatory...thoughts?

[Anonymous]

The late is a tough one.

Normally, without strong extenuating circumstances you need 12 months clean credit for manual approval.  If you can get it through automated, 1 late may not matter.  Automated approval will take into consideration reserves, FICO, down payment, and credit history and make a decision.  They will sometimes overlook a late in the last 12 months.

One thing that may be a problme (not sure) is the collections/judgements/late post BK.  the BK was a long time ago, but if they see a history of collections post BK that can kill the deal.  What I don't know in that respect is how long back they want to see that.  I have always heard any lates/collections post BK are really bad for UW, but when you are talking almost 10 years ago on the BK and then 4 years ago on the judgement, and then sporadic collections I am not sure how they handle it.

[brownee]

Thanks, Mickie. I spoke to the Mortgage Banker last night and he said just to get the scores up and we should be fine. No more lates, the BK is more than 2 years ago, and the judgment is satisfied. It's a smaller company, so perhaps they have more lenient rules???

[medicgrrl]

12 months is not mandatory, it just gives a better shot at sealing the deal.  Really it is going to come down to AU.  If the rest of your file is strong, good DTI, no major increase in housing payment, job stability etc then once you get your scores up you should be ok to make application.  You can also try and GW the creditors to see if you can get any lates or collections removed from your credit report.  The less baddies the better

[DallasLoanGuy]

12 months clean history is not mandatory

[brownee]

Thanks, medicgrrl. Currently we have no housing payment as we live with my parents and have for the last 10 years ( I know...for shame..lol). We've both worked at the same company for almost 12 years, and the DTI would be very low. I've tried GW'ing the heck out of First National, but they keep sending back the form letter saying they're reporting correctly.  Another letter goes out in todays' mail! :-)

[brownee]

Thanks, Dallas...i'm feeling better now.  I cannot wait to see what happens to our scores once we pay the cards off. I think i'll wait till June 1 to check, though, as I don't know when they report....

[nathan]

A single 30 days late will not disqualify you for va morgate unless it is a pattern. Per va web site, lo should look at the overall picture; not just isolated derog items. But remember, that is just va guidelines; lenders have discretion to deny you for any reason. If you want to go va, look only for lenders who are va loans friendly and very knowledgeable about the process.

[medicgrrl]

The thing I see the lender questioning in your case is the fact that you are going to have a huge payment shock, have been living rent free, have minimal savings with credit issues and a substantial income.  Are there extenuating circumstances behind the history that you can explain away, if needed?

[brownee]

Payment shock...yeah, I thought about that when I read it yesterday on your post. No, we don't have any extenuating circumstances that would help explain anything...we were just young and dumb and honestly didn't know anything about our credit reports. The first time I ever looked at mine was July of last year and that was only because we decided we wanted to move and so someone, somewhere mentioned this site and the rest is history.

The only thing I could tell a loan person is that my DH was in Afghanistan and Iraq and the money sitch was weird a lot and blah blah blah, but I wouldn't use that because thousands of families go through the same thing every year and they manage just fine, so...

Anyway, we're going to see what things look like in June and go from there. I paid off my credit cards today and DH is doing the same. THAT, at least, feels good even if we do not get a house (which we will!!!).