What else do I need to get FHA Lender Approval?

[ycnan]

I am looking to buy a home in June 2013, until than I must get all my ducks in a row. I have enough to put 20 percent down (or more) on a condo/townhome that I have been viewing and still have 6 months plus in reserves. I am looking for a condo that is about $150,000 or less. But I have a few concerns:

1. My lease does not end until June 2013;

2. I have a credit score that is 522 currently and "will" increase to 580 after I clear up my student loan collections account (on payment plan) by  February 2012;

3. I have no other further blemishes on my credit except for two 30 days late payments in May 2012 (these are isolated late payments and all others are timely) because I was focused on finals at school and had other things to worry about, I had alot of credit card bills to pay and these two just slipped. Also, May 2013 is the one year mark for not having any late payments;

4. I graduated with BA in June 2012, and my student loans start payments in December 2012, $205 per month;

6. I was employed at my previous job as a legal assistant for over 10 years, but I left that company at the end of August 2012 and started a new job at another law firm as a legal assistant on September 4, 2012;

7. I can have my credit card utilization down to 20 percent by May 2013, which hopefully will push my score towards 620; and

8. My final car payment will be March 2012. 

The above are the things I want to clear up before filling out the loan application for a pre approval. My goal is to get approved for an FHA loan with 3.5 percent. I don't want to deal with a short sale. I know many lenders won't even look at my application if I have lower than 620 even though FHA asks for 530-580. I think when I am ready I would try Key Bank and/or First Guaranty. 

I have yet to speak to an agent or broker. I know very little about real estate sales process and loan process. Please let me know if you have any recommendations or ideas in how to help me get approved for an FHA Lender loan by June 2013? Also, I live in the Seattle, WA area, if there any recommended mortgage brokers in the area please let me know.

Thank you,

Ycnan

[asp123]

From my personal experience getting an FHA loan last August, I strongly suggest you ask around and find a mortgage broker who does a lot of FHA loans. I was able to close 30 days after I made the offer on my home. Also, after you apply make sure you contact them every day or at leat every other day to ask if they need anything from you. Make sure you  have any legal, divorce, banking, taxes, student loan documents, leases or rental agreements, landlord contact info- readily available for printing and copying if necessary.  I kept all of my documents in my car with me in case they asked for anything while I was at work I could send it to them via fax immediately. They asked me to provide documentation for a $1300 deposit made to my checking account 9 months prior. Also had to provide copies of my divorce decree and I had been divorced more than 10 years. 

Money-wise make sure you have more than enough money to cover down payment and closing costs sitting quietly as soon as you can. 

[Lasardo]

It's my understanding you need a credit score of 640 for an FHA loan.
It may be in your best interest to use the funds you have to pay down your cards to have a utilization between 1/9% ..that should boost your scores to 640..
Also being added as an AU on someone's card that has perfect history with a low utilization can boost your scores.
You may want to look at the "rebuilding credit" section for more info.

[beb86]

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@Lasardo wrote:
It's my understanding you need a credit score of 640 for an FHA loan.
It may be in your best interest to use the funds you have to pay down your cards to have a utilization between 1/9% ..that should boost your scores to 640..
Also being added as an AU on someone's card that has perfect history with a low utilization can boost your scores.
You may want to look at the "rebuilding credit" section for more info.

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It depends per lender....some require 660, others 640, some 620, I think WF goes to 600, and there are a few more that go down to 580.

[beb86]

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@ycnan wrote:

I am looking to buy a home in June 2013, until than I must get all my ducks in a row. I have enough to put 20 percent down (or more) on a condo/townhome that I have been viewing and still have 6 months plus in reserves. I am looking for a condo that is about $150,000 or less. But I have a few concerns: I looks like you would be better off going the conventional route. Lower interest and fees.

1. My lease does not end until June 2013;

2. I have a credit score that is 522 currently and "will" increase to 580 after I clear up my student loan collections account (on payment plan) by  February 2012; Are you in rehab? or are they private?

3. I have no other further blemishes on my credit except for two 30 days late payments in May 2012 (these are isolated late payments and all others are timely) because I was focused on finals at school and had other things to worry about, I had alot of credit card bills to pay and these two just slipped. Also, May 2013 is the one year mark for not having any late payments; Send GWs out for these two recent lates...Lenders want 12 mo of clean history.

4. I graduated with BA in June 2012, and my student loans start payments in December 2012, $205 per month;

6. I was employed at my previous job as a legal assistant for over 10 years, but I left that company at the end of August 2012 and started a new job at another law firm as a legal assistant on September 4, 2012; You should be fine since it has been the same field of employment.

7. I can have my credit card utilization down to 20 percent by May 2013, which hopefully will push my score towards 620; and Try to drop this under 10% for the best score boost.

8. My final car payment will be March 2012. Awesome congrats. This wont be included in your DTI

The above are the things I want to clear up before filling out the loan application for a pre approval. My goal is to get approved for an FHA loan with 3.5 percent. I don't want to deal with a short sale. I know many lenders won't even look at my application if I have lower than 620 even though FHA asks for 530-580. I think when I am ready I would try Key Bank and/or First Guaranty. 

I have yet to speak to an agent or broker. I know very little about real estate sales process and loan process. Please let me know if you have any recommendations or ideas in how to help me get approved for an FHA Lender loan by June 2013? Also, I live in the Seattle, WA area, if there any recommended mortgage brokers in the area please let me know.

Thank you,

Ycnan

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How long is your credit history and what is your income. Do you know your actual FICO scores?

[ycnan]

My credit history is about 6 years old. I don't know my Fico. I do know that I have 522 across the board (Experian, Equifax and TransUnion). 

What is "GWs"?

My student loan is with the University, so I assume it is private. Its a $2500 loan and I am on a repayment plan that will get it cleared up by Feb. 2013. I don't know how FHA would look at this collections account after it is paid in full. I am afraid I may have wait out another year? Lenders want one year of clear history as far as late payments. How about for collection accounts paid off? 

Thank you for your help.

[ycnan]

From what I have ready previously, I thought FHA/lenders would only as for last 3 months of bank statements. Was this not the case for you since you had them look at a deposit from 9 months ago?

[User273165]

GW's are goodwill letters that you write to your creditors. You ask them to remove the late payments from your credit reports. It works a lot of the time, there is a rebuilding credit section where you can learn a lot more about them.

I am currently going through an FHA loan and am set to close in early December. They asked for the last 2 months of bank statements, my student loan info, paycheck stubs, last two years of W2's.

I would definitely go to a mortgage broker, thats the best way I think to get a low rate.

If you have that much to put down why don't you go conventional?

[ycnan]

My credit score is low and don't think it can get up above 700 to do a conventional loan by June 2013. I don't know much about conventional and assume it is much more difficult to get a loan, even if I have over 20 percent to put down. 

[beb86]

I did an FHA and the needed 2 months of bank statements.