Need expert FHA advice!~

[Anonymous]

Thanks for reading I have a few FHA specific questions.  I will start with my background info.

 -FICO Scores are T644 Ex 640 Eq 633 I hope I can get above 660 on all of them by 7-09

- I am looking to purchase in July 09 (madison county IL)

-I have no BK's, foreclosures, repos or tax problems

- By 7-09 I will have no lates for over 24 months

- 1 Collection that will be 18 months old (paid for $156)

  1 Collection (unpaid) that is 36 months old for $143

-2 pd charge-offs that will be over 2 years old

- I have no revolving debt, car payments or student loans

- The only debt I have is my first mortgage 60,000 and a second mortgage 5,000.  House value est between 95,000-115,000 (It's hard to say in this market!)

My salary is $55,000/yr with bonus around 5,000 (my past 2 w-2s will show 58,000-60,000)

I am looking to buy a $300,000 house my cash savings will be around $10,000 and equity when I sell my house will be around 30,000-50,000 leaving me with a downpayment around 40,000-50,000.  I wish I could get to the $60,000 mark to get 20% down...but that's not gonna happen

Here are my questions

DTI-I've read that max housing 29%.  With my income can I qualify for the $300,000 house?  Will they allow me a higher housing % since I have no other debt?

Do they include taxes and insurance when figuring out housing DTI?

I will be getting married in June 09.   Will they need her information too or can I apply for the house myself?  Her credit is about the same as mine or a little worse.  Can or will they add her income in with mine to lower the housing DTI?

Loan limits in Madison County IL are around 280,000.  I assume the is the limit of the loan not a limit on the cost of the house.  (meaning I can buy a house over the 280,000 is I have have cash to cover the overage)

I applied in May 08 but was turned down from Wells Fargo(FHA) and Citimortgage (Conv).  At the time had no savings, and unpaid collection that was 8 months old, a few other baddies less than two years old and an overdraft on my checking in the past 60 days.  I imagine those were the reasons for the denial.

With the info given....do you think I can get approved for the $300,000 house?

Thanks in advance for any help offered!

-

[ShanetheMortgageMan]

Your credit should be fine to qualify for FHA and should be fine for conventional too.  How much are the property taxes in Madison County?  Your debt to income ratio is a bit borderline so the property taxes will be important.

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@Anonymous wrote:

*snip*

My salary is $55,000/yr with bonus around 5,000 (my past 2 w-2s will show 58,000-60,000) - underwriting will use your current $55k/year salary and a 2 year average of any bonus income

I am looking to buy a $300,000 house my cash savings will be around $10,000 and equity when I sell my house will be around 30,000-50,000 leaving me with a downpayment around 40,000-50,000.  I wish I could get to the $60,000 mark to get 20% down...but that's not gonna happen - let's just assume you have $30 to put down and the $10k you'll save up to use as reserves to help you qualify.  Having reserves after closing can help offset a high debt to income ratio, same with putting 5-10% or more down.

Here are my questions

DTI-I've read that max housing 29%.  With my income can I qualify for the $300,000 house?  Will they allow me a higher housing % since I have no other debt? - would need to know property taxes, but the answer to your 2nd question is that since you have no other debt that will be looked favorable and will allow a little more leeway with your debt to income ratio.

Do they include taxes and insurance when figuring out housing DTI? - yes, and mortgage insurance & homeowners association fees too.

I will be getting married in June 09.   Will they need her information too or can I apply for the house myself?  Her credit is about the same as mine or a little worse.  Can or will they add her income in with mine to lower the housing DTI? - You never are required to apply with your spouse, but in community property states (which Illinois is not) then you need to include the spouses debts in the DTI even if they won't be on the loan.  The only way to add her income in is to have her on the loan, so if she makes money and doesn't have a lot of debts, that would be one way to help out your DTI.

Loan limits in Madison County IL are around 280,000.  I assume the is the limit of the loan not a limit on the cost of the house.  (meaning I can buy a house over the 280,000 is I have have cash to cover the overage) - that is correct, just the loan limit, but with 10% down, if you can get your scores to a 680, then conventional financing would be something to look into as well.

I applied in May 08 but was turned down from Wells Fargo(FHA) and Citimortgage (Conv).  At the time had no savings, and unpaid collection that was 8 months old, a few other baddies less than two years old and an overdraft on my checking in the past 60 days.  I imagine those were the reasons for the denial. - You are probably correct, no savings, collection in the last 12 months, and a high DTI usually doesn't work well.

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[damnedanddetermined]

ok, we are kind of in the same boat. We have an ARM set to adjust in January. We have shopped around, and have decided to go with FHA to refinance. Our scores are between 620-630

FHA has sent us the "truth in lending" statements, and the clsoing cost are around 8500.00

Does this seem reasonable to anyone? I thought it to be alittle high. Our loan amount is 185,000

We are only refinancing because of the (1) ARM adjusting (2) paying off debt to eliminate DTI ratios (3) to raise credit scores.

Does anyone have any comments about the high closing costs or if we should refinance at all?

Thanks for all of your help my fico friends!

[Anonymous]

Thanks so much Shane,

My future wife makes about $30,000/year  that would bring our total income to 85-90k.  The only debt she has is student loans around $180/month

I think my taxes would be around 6500/year.  I found this site on the web... did I calculate right?  Do you think I could still qualify with this new info?

Thanks again

[Anonymous]

Oh ya, I don't think my FICO scores are going to go 680+ with the CO's and Collections...I hope they will...but doubt it

[Anonymous]

Have you tried sending GW letters...for the paid collection to be removed???...or doing a PFD on the unpaid collection???...that may give you some points....especially the newer one...who is the CAs???...

[Anonymous]

I have GW'd every account that has a baddie.  I've PFD the open collection account at least 6 times (Calvalry Portfolio Services)  All they do is ignore me.  The paid collection account is West Asset Management. West Asset Management is probably the most unethical company I've ever run across.  I paid the OC and West Asset Management change the status to paid collection.

The paid charge offs are AMEX (a true corp account but they refuse to budge) and BOA, they won't budge either! 

I'm kinda at a loss on what else to do. Any other advice?

[damnedanddetermined]

Shane or Dallas...could you please chime in?  :-)

[ShanetheMortgageMan]

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@damnedanddetermined wrote:
Shane or Dallas...could you please chime in?  :-)

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It's probably best to make a brand new thread so we don't have multiple people's situations being discussed simultaneously - keeps it hard to keep track of and get things straight.

[ShanetheMortgageMan]

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@Anonymous wrote:

Thanks so much Shane,

My future wife makes about $30,000/year  that would bring our total income to 85-90k.  The only debt she has is student loans around $180/month

I think my taxes would be around 6500/year.  I found this site on the web... did I calculate right?  Do you think I could still qualify with this new info?

Thanks again

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Adding your fiance, or then wife, to the loan would help out quite a bit.  I'm not sure what the property taxes are in Madison County, the correct way to go about it would be to go to http://www.co.madison.il.us/Treasurer/Treasurer.shtml, call up the treasurer, and ask if you purchased a home for X amount how much would the property taxes be and how is that calculated.  If they are $6,500 a year for the sales price you are looking at, your housing debt to income ratio would be a bit on the high side - over 45% (close to 50%), and that usually has a tough time getting approved through automated underwriting.  With your wife though it drops to below 40% so that should do the trick to getting you guys approved.  Was there any reason you didn't want to add your wife from the get go?

Message Edited by ShanetheMortgageMan on 11-04-2008 12:15 PM