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denied VA mortage, UGH!!

New Member

denied VA mortage, UGH!!

Hi everyone, new to the board, and have some questions. My husband and I are trying to get a VA backed loan and applied through Wells-Fargo.  The LO told us this morning she could pre-approve us for only $80,000 or so, which is less than what we were aiming for $100,000. She told us he had one negative $150 collection on his credit report, which was confirmed by us. Hubby's credit scores were 651, 617, and 6-something (he couldn't remember what she said). Later today when my husband called to say that we would take the $80,000 as the houses we are looking at are around $50,000 she told him she couldn't work with us. WHAT?!? She wouldn't even tell us if we should pay off the negative debt, or our credit cards ($1900).  She wouldn't say if a larger down payment would help. It was pretty much just "no". Now what?!? We plan on paying off the negative debt and the credit cards, which would only take us to the end of the year. Would this raise his FICO scores up enough to get close to the 620-640 range? Or should we just try someone else? Our current DTI ratio is around 28% without a mortgage. 

 

Message 1 of 9
8 REPLIES
Senior Contributor

Re: denied VA mortage, UGH!!

Has he tried doing a PFD on the collection?


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Message 2 of 9
New Member

Re: denied VA mortage, UGH!!

I'm not sure what a PFD is? Please explain

Message 3 of 9
New Member

Re: denied VA mortage, UGH!!

OK, Pay for Delete.  I think this would be our best way to go. Thanks! Would this mean it would be taken off his report entirely? 

Message 4 of 9
Moderator

Re: denied VA mortage, UGH!!

You have a couple of issues just based on your limited post:

1) Wells Fargo is not the best lender to go to for a VA loan - try almost anyone else. Your best bet would be to go to a mortgage banker with all of your info (paystubs, tax returns for the past two years, credit reports etc) so you can speak to a loan officer that can explain to you DTI and how it affects your loan amount.

2) You will need to have 12 months with no late payments or collections.

3) If you do a PFD and the CA agrees to it than that particular collection will be removed from your credit report

4) If you pay off all of your cc's then you can buy more house. Have no more than 9% of your credit line report on one of the cards and zero for the rest.

5) is the rest of your debt coming from a vehicle loan? 28% is very high considering you aren't including in a mortgage payment in that ratio. Once you add in the new mortgage amount, your ratios will be too high. This is probably why she couldn't do your loan now. All you have to do is reduce your DTI so you can actually afford a mortgage. The DTI is based on your total debt against your total gross income.

 

What makes up the 28%? If you can list it here, maybe we can help you come up with a plan.

Message 5 of 9
New Member

Re: denied VA mortage, UGH!!

The 28% is car payment, student loan, credit card. The car we just purchased, ours died. We still have five years to pay it. The student loans are here for sometime. The only things we can pay off soon are cards and negative collection. For a $500 or so mortgage and interest payment we would be around 41% DTI? Not the greatest, but a mortgage is way cheaper than renting. My husband also gets a guaranteed raise 3% every year. We know the next five to ten years are going to be tight, at least until the car is paid off. For a VA loan, we thought 41% was the cut off. Maybe we should try somewhere else?
Message 6 of 9
Moderator

Re: denied VA mortage, UGH!!

The entire payment is included for the mortgage to figure your DTI. This means principal, interest, real estate taxes, homeowners insurance and mortgage insurance and HOA/Condo fees if applicable. However, in a VA loan you don't pay MI. Are you sure your new mortgage payment would only be $500 with everything included?

 

Your car loan is killing the deal. How much is your car payment and how much do you owe? What is the vehicle worth? Are you upside down?

Also your student loans are hurting you too.  How much do you owe on student loan debt and what is the payment?

Message 7 of 9
Established Member

Re: denied VA mortage, UGH!!

I also am wondering about the $500 because my new home ($77,000) is $734 a month after note+taxes+insurance. My note is $400 before taxes + insurance. (Sooo cannot wait until homestead exemption! LOL)

Message 8 of 9
Moderator Emeritus

Re: denied VA mortage, UGH!!

How much is the student loan payment. Any chance of getting that reduced through an income based repayment plan? Also how much is the car worth and what sort of term and payment and Apr are you at with regards to the car?

Any chance of refinancing the car through nfcu or usaa or another military friendly lender? If you try to pay down principle on the car as well as refinance it in 6 months; you may be in a better position to buy a house


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