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08-06-2012 04:24 PM
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.
08-06-2012 05:56 PM - edited 08-06-2012 05:58 PM
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.
08-06-2012 06:17 PM
08-06-2012 06:24 PM
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?
08-06-2012 08:49 PM
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)
08-07-2012 03:20 PM