my fiance' and i are in the process of buying a home in las vegas. we are both disabled vets and will be using a VA loan. we will have in the next 14days 30-35K in our joint account from a car accident settlement. our loan has to be given to a UW due to our old debt/earnings ratio 9we paid everything off) and our credit scores (589 median for both of us)
my problem is my LO asked for 60 days worth of acct statements. she said she only needed deposit info and check paid on the acct. i told her that recently i have had 2 overdrafts on the acct, but as soon as i realized them i put the acct to a positive balance. i have NEVER bounced a check, and all my payments were made and these overdrafts had no effect on anything (accept the 30$ charge) these were a mistake made on 2 vacation trips, when the bank didnt catch up with my running the ATM card.
will this really affect our chances of getting the loan? our LO said no, and it would be no problem, but i am really stressing about this. i dont want anything to raise a red flag.
also i read about a VOD being used in leau of bank statements? should i ask my LO to use this instead? how long do they take? and how much are they?
please help ease my nerves...i am losing my mind here! and i'd hate to think something so stupid could blow our chances of a home...seeing as i kept my acct in good standing for 10 months before this... ugh
I think you'll be fine! Obviously I'm not one of the loan experts but I had a couple Overdrafts on some of the bank statements I handed my LO and she never said anything about it. I closed 2.5 weeks ago.
i talked about a VOD with my LO, and she said it would not be needed since she is only going to pull deposit info, and paid checks history on our accounts. she also said that if the UW wants to look at the statement they can, but seeing as we will have about 35 grand in our savings they wont really care because we will have the money to cover about a yrs worth of mortgage payments. she said everything should work out fine. she has been doing this for 30yrs, and shes been right on everything i've questioned so far...so i don't know what to do. i guess ill just trust her with it.
Although the reserves will help, the history of being short in the account and the knowledge that the money that is there is a one time deal (not a history of you saving and having that much cash sitting around) can still easily scare an underwriter in this situation. One thing does not trump. Lower credit scores and 2 recent overdrafts is just asking for one more thing to pop up out of nowhere and kill a deal. As far as just pulling deposits and check paid, that is the bank statement they are talking about. They WILL look at any overdrafts and NSF as negative factors in underwriting, particulalry as there are two. If you go with a VOD then you avoid this entirely. Loan officers are great, but sometimes in this market are stuck in practices they have been doing for awhile (since the boom) and some of this stuff the UWers are getting stickier with by the week. So, why risk it. Even if the UW gives a preliminary approval now, what if some old collection or something pops up again as they have been known to do.
One lender's guideline on it: Underwriters may require explanations for any NSFs found on an applicant’s bank statements, but generally will not require an explanation for an isolated incident. An isolated incident may be that loan file where there is no evidence of problems with cash flow (such as late payments on credit accounts) and there is one or more NSF shown on the applicant’s bank statements in the past 60 days. When review of the loan documents indicates cash flow difficulties and there are 2 or more NSFs in the last 60 days, the applicant’s written explanation will be required.