Questions about USDA loan

[WannaHouse]

We also qualified for both programs, but because we had an unpaid judgement, we can't get the direct. (we are now over the limit anyway)

She told us judgements and collections must be paid and then you have to have a minimum of 12 months of perfect payments. No lates, no new collections, etc.

 If you want to buy now, then Well Fargo or the Gaurantedd program in general is your best shot. Chances of the USDA Direct right now is slim. In a year, yes, it could be your best option. It will make your payments MUCH easier to handle because they will subsidize your payments. ( I do feel this would be the best program for your situation)

The way it helps is this:

Wells Fargo offers a 30 year fixed rate of 6%  (just for our comparison purposes)

Direct offers a 33-38 year fixed rate at 1-6%

By offering the 33-38 years and the lower interest, they can adjust it to match how much they say you can afford comfortably.

Hope that all makes sense.

Message Edited by WannaHouse on 01-09-2009 11:09 AM

[MaryJane197]

It does make sense thank you.  Im just trying to make getting ANY loan this year happen.   I dont want to have to wait until next year.  If i can get a loan to pay my car off then ill have a good shot of getting a Fha.  Wells Fargo is Rural Lender so if i wanted to do a guarentee Usda loan i could do it with them.  I went ahead and sent in my pre qualify papers with Usda just to see what they say.  I want the Fha loan with Wells Fargo.  I really like the agent i have been dealing with there.  I will be on my current job for a year in March.  I will have paid on my car for a year in April.  So im thinking by April i will be able to move forward with my loan process.  I want to try to get the debts off my credit report first before going back to Wells Fargo.

[Anonymous]

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@MaryJane197 wrote:
It does make sense thank you.  Im just trying to make getting ANY loan this year happen.   I dont want to have to wait until next year.  If i can get a loan to pay my car off then ill have a good shot of getting a Fha.  Wells Fargo is Rural Lender so if i wanted to do a guarentee Usda loan i could do it with them.  I went ahead and sent in my pre qualify papers with Usda just to see what they say.  I want the Fha loan with Wells Fargo.  I really like the agent i have been dealing with there.  I will be on my current job for a year in March.  I will have paid on my car for a year in April.

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Maybe I missed this part in another thread or something but, why will refinancing your car help you get a loan? Will you be getting a lower interest rate or something?

[MaryJane197]

Not refinancing it.  Paying it off.  My DTI ratio is to high for a loan.  But my LO told me to pay my loan down to 3k or pay it off so they dont have to count it.

[Anonymous]

"If i can get a loan to pay my car off then ill have a good shot of getting a Fha. "

But if you take out a loan and use the money to pay off your car loan, the new loan payment will still count in your DTI ratio.  You would just be replacing the car loan payment in your DTI ratio with a different one.

[MaryJane197]

But the interest rate on my loan, since i have bad credit is high.  Making my payment high.  365 a month.  If i can get a small loan for say 60-100 a month payment that would be better than the 365, right?

I know it would still count.  But after i figure in my CS payments and the lower payment on the payoff than my DTI ratio should lower considerably.

Message Edited by MaryJane197 on 01-09-2009 04:38 PM

[Anonymous]

Ohhh.. I see. Sort of.  Even if you got a rate of 4%, you would have to drag a $10k loan out for 10 years to get a payment of $100.  I think it would be pretty tricky to find a loan like that.  But I never really looked so hopefully I'm wrong.

Or maybe you're thinking pay off $4k, get a personal loan for $3k and use it to get the car loan down to $3k and then the auto loan wouldn't count but the small $3k personal loan would?   I didn't think of that..

Good luck!  I'm not trying to be a pain, I promise.  Just wanted to make sure you weren't going through efforts that brought the wrong results or something.

[MaryJane197]

Thank you   Your not being a pain, honestly.  Im still mulling over my options in my head as to what i need to do. 

[WannaHouse]

What I suggest you do is go right back to the Wells Fargo officer and have her write down EXACTLY what you need to pay so you do not pay things that will not effect you getting the mortgage. Don't guess. Put anything left over into a savings account and don't spend it. Then, have her show you anything on your credit reports that MUST be paid off.

I do know any judgements MUST be paid before you close.

I think this will be your BEST shot at getting approved.

Good Luck!!

[WannaHouse]

But wait until you hear back from USDA first