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Please tell me there is hope for us..

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Anonymous
Not applicable

Please tell me there is hope for us..

I am so frustrated over the home buying process and I just feel like it is not going to happen. Hoping someone can give us some hope that there is a chance we will actually close on this home! Last June, we sold our small 2bd/1ba home with the intentions of buying a larger home. We didn't seek out a new loan until we were already under contract (house was only on the market for 1 day) and come to find out, we had really crappy credit. Yeah, we probably should have checked that first but hind sight is 20/20. We had a period of late payments in 2013 after my son's 3rd open heart surgery; we are a single income family and just got behind because he has unexpected complications and was in the hospital longer than expected. Bank of America didn't care that we were struggling and offerred no help. As a result, we had about 5 late mortgage payments and credit card payments in 2013. We worked really, really hard to get caught up on our own and our last late payment was Dec 2013. We made a profit of $32,000 when we sold our home and paid off all of our debt  (cars, credit cards) and closed all accounts. We briefly moved in with family until we figured out we could not qualify for a mortgage because of the late payments less than a year out and then rented a home in Oct 2014. Now that it has been over a year since our last late payments, we decided to look at homes again. 45 days ago we signed the contract on a brand new home with DR Horton. We had to use their mortgage company, DHI, to get all of our closing costs paid. We immediately sent in all of the request documents (pay stubs, tax returns, etc). We waited, and waited, and waited. Finally they started requesting more documents. We needed a manual underwrite because of the past late payments. Wrote out several letters of explanations, sent more documents, etc etc. Today, 45 days after originally applying, we get a letter stating the underwriter has reviewed our file but a deicison could not be made at this time. They requested 11 more documents, including: 

1. 3 alternate trade lines of credit 

2. Evidence to support adverse credit

3. Landlord contact information

4. LOE for deragotary credit

5. Copy of check used to pay earnest money deposit and bank statement showing it cleared the account 

6. HUD settlement from selling our house last year

7. Letter explaining a previous address from 2011 

8. Bank Statement including the web URL on the bottom of the page

9. Letter explaining credit inquiries 

10. Wife's paystub or LOE if unemployed 

11. Provide retirement document and terms and conditions of withdrawl. 

 

Oh and they wanted all of that immediately. The biggest problem, which we didn't find out until today, is that there are 4 accounts that have been CLOSED since July 2014 showing recent late payments!!!! We used Care One to consolidate our 3 credit cards and one shows late payment in Oct 2014 and two show late payment in Feb 2015. WHAT?! Luckily Care One was quick to send us a statement showing we paid all the accounts in full in July and they were all closed, but I am still so worried over this. And the other account, Bank of America, shows we made a late mortgage payment in August 2014, we sold our house in JUNE! I am SO FRUSTRATED!! I am very worried that the underwriter is just going to say "These people are crazy thinking they can get a loan!!!" 

 

Another issue.. We only have two alternate trade lines, auto insurance and netflix/hulu. Everything else is less than 12 months old or not in my husband's name. Please, someone tell me what else I can include?? AT&T and our internet provider has already told us they "dont provide statements like that". 

 

I feel like we are being punished for getting out of debt. We worked really hard to pay off everything we owed and were successful, but now it is hurting us to not be in debt. My husband's car died right after we paid everything off so we had to buy a vehicle, but the payment is only $175/mo. His yearly income is $58k and the car is the only credit payment we have. Our DTI is super, super low and the home we are trying to purcahse is $214k. Our front end is 28%, back end is like 31%. We are going with a USDA loan instead of FHA because of the PMI. 

 

Someone, please, save me from my misery. Is there any chance we are going to get this loan? Or should I just give up and start crying in the corner and stuff my face with chocolate? 

Message 1 of 13
12 REPLIES 12
Anonymous
Not applicable

Re: Please tell me there is hope for us..

Also wanted to include that my husband has been at his current job for 10 years and has a part time job for 2 years. 

Message 2 of 13
Lemmus
Established Contributor

Re: Please tell me there is hope for us..

...ok, go get some good chocolate and calm down a bit, nothing in the uw requests are out of line or abnormal for those in your credit circumstances ...it may suck but it is what it is, eh

 

...no idea why they want your bank url but uw's are strange people and known to ask for strange things ...just give it to them

 

...ask your uw if a copy of 12 mts worth of statements from your alternative credit sources attached to your LOE will work for them ...almost certainly will as long as they are verifiable.

 

...are you absolutely certain that ALL of YOUR closing costs are being paid by the builder? ...that's unusual, especially if its a govt backed loan ...normally the sales pitch is that they will pay $xxxx toward the closing costs and the fine print reveals that they are including normally seller paid closing costs and not so much of the buyer closing costs as you're led to believe ...look at the lender's scenario worksheet/GFE/HUD1 etc to determine who is actually paying what ...you don't want to get the closing notice with a note to bring $x,ooo in cash with you. OOPS!

 

...I don't see anything in what you've presented that will prevent you getting a loan ...the 2014 negs are a concern but you appear to have them covered ...the mortgage process can be like time in Torquemada's torture chamber ...but its actually pretty normal for the uw to seek the type of docs hes asking for ...so take a few deep breaths and give him what he wants ...hth  


Helpful Links: Do I Qualify? | Mortgage Calculator | USDA Mortgages | Opt Out | FICO Versions
Last HP: 11/04/15 | myFico 3B Jun 10 '15:FICO8 EQ - 752 | TU - 763 | EX - 750
Message 3 of 13
Anonymous
Not applicable

Re: Please tell me there is hope for us..

I agree with Uncle Lemmus, there is a good chance they can get this file through.  You are not being punished for being out of debt, but they brought out the mircroscope because of late payments etc.


@Lemmus wrote:

...ok, go get some good chocolate and calm down a bit, nothing in the uw requests are out of line or abnormal for those in your credit circumstances ...it may suck but it is what it is, eh

 

...no idea why they want your bank url but uw's are strange people and known to ask for strange things ...just give it to them

 

...ask your uw if a copy of 12 mts worth of statements from your alternative credit sources attached to your LOE will work for them ...almost certainly will as long as they are verifiable.

 

...are you absolutely certain that ALL of YOUR closing costs are being paid by the builder? ...that's unusual, especially if its a govt backed loan ...normally the sales pitch is that they will pay $xxxx toward the closing costs and the fine print reveals that they are including normally seller paid closing costs and not so much of the buyer closing costs as you're led to believe ...look at the lender's scenario worksheet/GFE/HUD1 etc to determine who is actually paying what ...you don't want to get the closing notice with a note to bring $x,ooo in cash with you. OOPS!

 

...I don't see anything in what you've presented that will prevent you getting a loan ...the 2014 negs are a concern but you appear to have them covered ...the mortgage process can be like time in Torquemada's torture chamber ...but its actually pretty normal for the uw to seek the type of docs hes asking for ...so take a few deep breaths and give him what he wants ...hth  


 

Message 4 of 13
Anonymous
Not applicable

Re: Please tell me there is hope for us..

Thank you so much for your feedback. I feel a little bit better.

According to the GFE, we need to bring -$900 to closing. The house was one of the last in the neighborhood and we negotiated closing costs and prepaids to be included, up to $9500.
Message 5 of 13
StartingOver10
Moderator Emerita

Re: Please tell me there is hope for us..


@Anonymous wrote:
Thank you so much for your feedback. I feel a little bit better.

According to the GFE, we need to bring -$900 to closing. The house was one of the last in the neighborhood and we negotiated closing costs and prepaids to be included, up to $9500.

As Lemmus suggests, the $9500 probably includes the builders closing costs pushed over to the buyers side so double check with your lender and keep adding to your savings just in case.

 

All the documents the lender asked for are completely normal for any borrower.

 

Your problem came because you paid off and closed your accounts. If you had paid them off and kept them open, then you would have had a better score. Remember, much of the FICO score is from low utilization on cc accounts and timely payments.  If your cc accounts are closed then your utilization is taking a huge hit and its 30% of your score.  Do you have any open cc's now? If so, what is the credit limit and the amount used?

 

BTW,  I understand the reason behind paying and closing the installment loans, but the cc accounts is what affected your scores so much. That is why the u/w is asking for other tradelines. 

Message 6 of 13
Anonymous
Not applicable

Re: Please tell me there is hope for us..

Yes, we know now that we shouldn't have closed all of those accounts BUT that is what we were advised to do by the original mortgage broker we were dealing with. There's nothing we can do about it now so we are just moving forward and doing what we can to keep fixing everything. We have two cards, one secured cc with a $500 limit and $25 charged, and a $900 limit Amazon store card with $50 charged. Neither one is a year old either. I understand why they are asking for alt trade lines, the problem is we can't come up with anything with over 12 months that is still active. Everything is 7-8 months old, with the exception of cell phone (who won't provide a letter of credit) and car insurance, Netflix. I've sent the underwriter everything we have and just pray that there will be some kind of exception but I am pretty sure they will be strict on the 3 trade lines, 12+ months. I just don't know what else we can do, you know? I really wish this would have been discussed with us when we originally applied.
Message 7 of 13
StartingOver10
Moderator Emerita

Re: Please tell me there is hope for us..


@Anonymous wrote:
Yes, we know now that we shouldn't have closed all of those accounts BUT that is what we were advised to do by the original mortgage broker we were dealing with. There's nothing we can do about it now so we are just moving forward and doing what we can to keep fixing everything. We have two cards, one secured cc with a $500 limit and $25 charged, and a $900 limit Amazon store card with $50 charged. Neither one is a year old either. I understand why they are asking for alt trade lines, the problem is we can't come up with anything with over 12 months that is still active. Everything is 7-8 months old, with the exception of cell phone (who won't provide a letter of credit) and car insurance, Netflix. I've sent the underwriter everything we have and just pray that there will be some kind of exception but I am pretty sure they will be strict on the 3 trade lines, 12+ months. I just don't know what else we can do, you know? I really wish this would have been discussed with us when we originally applied.

Oh, so sorry you got bad advice from the mortgage broker. Clearly s/he had zero understanding of how credit works.

 

I see two things you can do right away to help: 

1) on the secured card do you have additional funds to add to the card so your balance is $25 against $1000 instead of $500? Normally you can add to the secured card without having to incur any additional credit pull.

2) Pay off the Amazon card to zero. It makes a difference in your score to have only one balance report rather than two when you only have two open accounts.FICO measures each tradeline cumulatively and individually too.

 

EDIT:  don't pay both accounts to zero. FICO will ding your score if both show a zero balance. You want one cc to show a balance between 1%-9% of its limit and the other to show zero.

 

The car insurance is a good one to provide.

 

Message 8 of 13
Lemmus
Established Contributor

Re: Please tell me there is hope for us..


@Anonymous wrote:
Yes, we know now that we shouldn't have closed all of those accounts BUT that is what we were advised to do by the original mortgage broker we were dealing with. There's nothing we can do about it now so we are just moving forward and doing what we can to keep fixing everything. We have two cards, one secured cc with a $500 limit and $25 charged, and a $900 limit Amazon store card with $50 charged. Neither one is a year old either. I understand why they are asking for alt trade lines, the problem is we can't come up with anything with over 12 months that is still active. Everything is 7-8 months old, with the exception of cell phone (who won't provide a letter of credit) and car insurance, Netflix. I've sent the underwriter everything we have and just pray that there will be some kind of exception but I am pretty sure they will be strict on the 3 trade lines, 12+ months. I just don't know what else we can do, you know? I really wish this would have been discussed with us when we originally applied.

Smiley Mad ...another reason to find a good realtor first and ask them for referrals to mortgage lenders who know what they are doing ...good realtors will, over time, learn which lenders can walk the talk and which too often talk crap ...I was fortunate in that I found myFico forums early in my credit rebuild and long before I ever considered a mortgage ...so I knew ...but way too many people go to the first lender they see and treat them as if they were Moses leading them through the wilderness ...oops, snake bite coming!


Helpful Links: Do I Qualify? | Mortgage Calculator | USDA Mortgages | Opt Out | FICO Versions
Last HP: 11/04/15 | myFico 3B Jun 10 '15:FICO8 EQ - 752 | TU - 763 | EX - 750
Message 9 of 13
Anonymous
Not applicable

Re: Please tell me there is hope for us..

Just a note, AT&T may not provide letters, but, you probably have either checking account statements or credit card statements showing you have paid them on time for over 12 months. That may be enough to provide the extra alternative trade line. And at least with sprint and tmobile you can go back and reprint 2 years of statements, which would certainly show that. I was worried I was going to need alternative lines, and was told statements would be more than sufficient.

Message 10 of 13
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