Need some Advice

[professor_g]

Okay, so here's my situation.  In Mid May I refinanced my car with my CU and at that point the Asst Manager told me I should look into buying a house given the $ I had in the bank, my credit score and the current low rates.  I scheduled an appointment with the LO at the CU to discuss the mortgage process.   Come time for the appt I didn't anticipate actually trying to get pre-approved becasue I had just opened a few new CC's: a Chase Southwest RR (to earn points for reimbursable work travel), an Amex BCE, a Discover IT and CITI TYP (Both of these cards were to split costs of a necessary surgery not covered by my insurance I had most of the cash to cover the insurance costs but didn't want to wipe out my savings and figured I'd pay them off in a year and hold on to my emergency funds).  At the appointment with the LO he looked at my recently pulled score and report and told me I qualified for a conventional loan with the option to put 3 or 5% down.  My new CC's had yet to report, I walked out of the place pre-approved but didn't mention the new accounts because I really didn't plan on looking as I was having surgery and wouldn't be able to look either way.  Fast forward to August and my cousin who is a real estate agent found a foreclosure that is a new construction, in my neighborhood and is a steal.  I made an offer and the bank accepted. Now I'm worried that my CU will no longer finance me because of my new accounts.  I have paid down half of the surgery costs and my total CC util is below or around 20%, I've pulled my CRs and my fico scores are all around 711 and 710  (my original score (middle score) at pre-approval being 739).  

Do I wait for the CU to pull my CR again and explain things then, or let my LO know now and see what he thinks?  My concern is more about the new accounts jeopardizing my financing rather than CC util.  My parents are gifting me the money for the downpayment and I have more than enough money to cover closing costs and reserves needed to close on the house.  

I know that one is not supposed to open new accounts after pre-approval but I honestly didn't plan to buy this summer.  I wanted to save I had intended on waiting until this time next year to buy a house, knowing I would be taking the full year to fully pay off the debt from surgery, but now I've found this house that I love at a steal of a price and with the opportunity to lock in an amazing rate.  

If things fall through with the CU is it unfeasable to find an alternative lender in short amount of time? 

Suggestions? Insight?  

[HoldingOntoHope]

As long as the payments on the new accounts don't put your debt to income ratios out of the necessary range for the financing you should be fine. A letter of explanation will probably be necessary for the new accounts but that is an easy matter. Just put down that you used the cards to avoid draining your emergency funds and as a means of debt management in the short term. If the scores you pulled are with the new accounts reporting you are definitely OK. One of the other concerns is if your opening scores are marginal then the new account dings can put you below the threshold.

I would alert your loan officer right now about the new account activity. Being proactive will make it easier and not cause a slowdown in the process later to complete any new paperwork. But I wouldn't sweat the deal not going through.

[professor_g]

Thanks for your imput! I appreciate the advice - def going to talk with LO tomorrow.  Also the recent 711 scores are with the new accounts - so thanks for putting my mind at ease.  I'll be sure to update as the process progresses! 

[frugalQ]

You should be ok with providing a LOE to the lender.  You should first disclose everything to him/her and let them tell you what is needed.

Keep this in mind......if you go with the 3% conventional loan, your mid-score has to be 740+ if the downpayment is gifted to you.  If you use your own funds for the downpayment in this program, the mid-score only has to be 680+.

I wanted to point this out since you said your parents are gifting you the downpayment, and your scores are currently lower than what they were when you originally were pre-approved.  Here's a good FAQ about the 3% down program.

http://themortgagereports.com/12603/conventional-97-mortgage-loan-guidelines-plus-mortgage-rates

[professor_g]

@frugalQ  Thanks for this info, the link was very informative.  I guess to be more specific about the situation.  I am putting 5% down, I have the money in the bank to cover 3% down with closing costs and my folks are chipping in for the extra 2%.  Putting 5% down gave me access to a better rate and lowered the PMI payments by almost half.  So would those rules still apply?  I will talk to my Loan guy on monday but you imput is appreciated as well. 

Thanks! 

[frugalQ]

Those rules are specifically for the 3% down program. I dont believe there are any credit score rules for 5% down.

I think it's just the normal 'gifted funds will have to sourced' rules that will apply.