Some feedback on possible mortgage loan

[eBayfan]

Hi - could you please help me evaluate how close I may be to applying for a mortgage? My info is below.  Specifically looking for feedback on how long I should wait (some thing are falling off soon), do I need to pay off the others before I qualify, how much I should have saved/put down, etc. Thanks for any input? 

1. Mortgage Credit Scores: Fico 5 is 642.  Trans is 681 (looks like 700 becomes a “C” Do I need to pull anything else? 

2. Credit Negatives:  Husband lost his job during this time period.

HSBC Bank, Charge Off, Unpaid, DOFD 7/2009 Limit 3000/High 3726 Fall off ETA 6/2016

Chase Bank, Charge Off, Unpaid, DOFD 8/2009 Limit 5000/ High 6250 Fall off ETA 6/2016

Chase Bank, Charge Off, Unpaid, DOFD 9/2009 Limit 3000/High 3816 Fall off ETA 7/2016

Credit One, Charge off, Unpaid, DOFD 2/2010 Limit 1250/High 1776 Fall off ETA 12/2016

HSBC Bank, Charge Off, Unpaid, DOFD 3/2010 Limit 1100/High 1337 Fall off ETA 1/2017

GM Financial, Charge Off/Car Surrender, Unpaid DOFD 6/2010 16238 Fall off ETA 5/2017

Barclays Bank, Charge off, Unpaid, DOFD: 2/2011 Limit 900/Charged off 865, Fall off ETA 1/2018 (tried to resume payments, original DOFD was 1/2010)

3. Income and Source:  Still working on taxes, but my YTD 62962 (includes annual bonus of 15708, and OT).  Base salary 113k. plus 10% annual bonus

4. Monthly debt payments. 

Car 1: $35974, $720 (new purchase-few months old)

Car 2 $15769, $482 (This car can be sold for what I owe if I need to reduce debt)

I have 3 credit cards all from Capital One.  Limits are 3500 (owe 2700), 2800 (owe 2000), 750 (owe 200).  Minimum monthly payments are about $110.

5. Employment (for those who are employed). 

Type of employment: W2

How long have you been on the job – 2 years in June

How long have you been in the industry/career field.  25 years

6. Assets/Reserves. This is to determine how much you could potentially have as a down payment and also as reserves to help qualify (for example if your debt to income ratio is high this could help qualify you anyway).

Savings, 4k

Checking 4k

Stocks – approximately 10k worth of sellable stock

Collectible assets to liquidate:  approx. $10k

6. Location:  Currently lives in the South Bay, but family would move to the Sacramento area and I would commute/work remotely.

State CA

County(s ) Placer County

City or zip(s) 95648

7. Property Description:         Looking to purchase Single family home between 350-425k, primary residence, 4 occupants

8.  Transaction Type.  First time Purchase

Notes: Married but would like to purchase on my own since husband recently started a business after being a stay at home dad, so no income to claim.

[BrianB_The_Loan_Professor]

You should be able to qualify on your own - You will probably need 5% down as conventional may be your best option - 

You could also look at FHA sincce the loan limits in that area are high enough - the downside would be in CA we are a community property state so your husbands debts (if he has any in his name only) would also have to be included in your debt to income calculations

As long as you can put the 5% together you may be able to get the seller to offer a credit to cover the closing costs - if that doesnt happen plan on another 3% or so for costs associated with the purchase loan -  this also includes things like your first years insurance - money to establish the impound acct etc

Good Luck

BrianB

[eBayfan]

Thanks so much for the prompt reply! Do you think I would I have to clean up the bad debt before applying?

[Anonymous]

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@eBayfan wrote:

Hi - could you please help me evaluate how close I may be to applying for a mortgage? My info is below.  Specifically looking for feedback on how long I should wait (some thing are falling off soon), do I need to pay off the others before I qualify, how much I should have saved/put down, etc. Thanks for any input? 

1. Mortgage Credit Scores: Fico 5 is 642.  Trans is 681 (looks like 700 becomes a “C” Do I need to pull anything else? 

2. Credit Negatives:  Husband lost his job during this time period.

HSBC Bank, Charge Off, Unpaid, DOFD 7/2009 Limit 3000/High 3726 Fall off ETA 6/2016

Chase Bank, Charge Off, Unpaid, DOFD 8/2009 Limit 5000/ High 6250 Fall off ETA 6/2016

Chase Bank, Charge Off, Unpaid, DOFD 9/2009 Limit 3000/High 3816 Fall off ETA 7/2016

Credit One, Charge off, Unpaid, DOFD 2/2010 Limit 1250/High 1776 Fall off ETA 12/2016

HSBC Bank, Charge Off, Unpaid, DOFD 3/2010 Limit 1100/High 1337 Fall off ETA 1/2017

GM Financial, Charge Off/Car Surrender, Unpaid DOFD 6/2010 16238 Fall off ETA 5/2017

Barclays Bank, Charge off, Unpaid, DOFD: 2/2011 Limit 900/Charged off 865, Fall off ETA 1/2018 (tried to resume payments, original DOFD was 1/2010)

3. Income and Source:  Still working on taxes, but my YTD 62962 (includes annual bonus of 15708, and OT).  Base salary 113k. plus 10% annual bonus

4. Monthly debt payments. 

Car 1: $35974, $720 (new purchase-few months old)

Car 2 $15769, $482 (This car can be sold for what I owe if I need to reduce debt)

I have 3 credit cards all from Capital One.  Limits are 3500 (owe 2700), 2800 (owe 2000), 750 (owe 200).  Minimum monthly payments are about $110.

5. Employment (for those who are employed). 

Type of employment: W2

How long have you been on the job – 2 years in June

How long have you been in the industry/career field.  25 years

6. Assets/Reserves. This is to determine how much you could potentially have as a down payment and also as reserves to help qualify (for example if your debt to income ratio is high this could help qualify you anyway).

Savings, 4k

Checking 4k

Stocks – approximately 10k worth of sellable stock

Collectible assets to liquidate:  approx. $10k

6. Location:  Currently lives in the South Bay, but family would move to the Sacramento area and I would commute/work remotely.

State CA

County(s ) Placer County

City or zip(s) 95648

7. Property Description:         Looking to purchase Single family home between 350-425k, primary residence, 4 occupants

8.  Transaction Type.  First time Purchase

Notes: Married but would like to purchase on my own since husband recently started a business after being a stay at home dad, so no income to claim.

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Based on your income and debts, you should easily qualify for the loan amount you are looking for. How the charge offs need to be handled would be based on the results of automated underwriting (AUS) and any lender overlays. If you are able to get an AUS approval and your lender doesn't have any overlays pertaining to the derogs, you may be okay to move forward before they fall off without having to pay them.

Piggybacking off of what Brian said about CA being a community property state, you may still be able to go FHA if your husband debts + your debts + the mortgage still fit within the allowable debt-to-income ratios. With your income, there's a good chance you may have the option of going FHA (which will likely have lower payments for you).

When there are a handful of derogs or other tricky aspects, I like to send the file to underwriting during the pre-approval stage as a "mock file" to ensure an approval once the client goes into contract on a live deal.

[BrianB_The_Loan_Professor]

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@eBayfan wrote:

Thanks so much for the prompt reply! Do you think I would I have to clean up the bad debt before applying?

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I misread and thought those were your husbands - I see not it was his job loss that caused this - 

That is a large total when adding them all up - there is no way to know until you try - you may want to wait for some of them to fall off -

The first step is to see what the automated system says - if that approves you it will help - as dp - said above this will still need to be approved by a human underwriter and it would be best to send it in first - 

If you document that they are outside the statues of limitations - (CA is 4 years) it will help an underwriter to look past things - 

In my experience most UW's wont look at this aspect unless you make it clear to them - it can be as simple as circkling the dates on the debts and sending in a web page that states what the law is - 

Good Luck

BrianB

[eBayfan]

Thanks. What do you mean by:


If you document that they are outside the statues of limitations - (CA is 4 years) it will help an underwriter to look past things -

We are not in a rush. Half of them fall off by end of July. Worst case scenario everything will be done in a year. Thanks again!

[cmony787]

To help clean up the file a bit, you should contact the CRA(s) for those charge offs due to fall off in the summer and request an Early Exemption.

The SOL comment refers to preparing an LOE for those other charge offs....since they fall outside the CA 4yr limit you can not be sued for payment and therefore some underwriters may take that into consideration.

[_NERD]

Early Exclusion worked for DW on her two remaining baddies a couple months ago. They were set to fall off in August and sooner than August. We went to the online dispute portals of the two CRAs that those baddies were on, selected Other (or similar option) as the reason for the dispute. In the box where you will type in the explanation for disputing the item, we typed in:

"I am NOT disputing this item. I am requesting Early Exclusion. Please and thank you."

24 hours later, DW was notified by email to check the dispute portals online to view the results of the investigation. They were deleted by the CRAs, and she was provided copies of her updated credit files without the baddies on them. The process of deleting the baddies through Early Exclusion took one business day for the CRAs to complete, and no more than 10 minutes of our time. YEMV. 

Ta-da!