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Posts: 453
Registered: ‎01-03-2012
Re: The mortgage pre-approval process
[ Edited ]

Hi Shane!  I live in the Las Vegas area and am looking into getting an FHA loan for my first home.  My scores pulled by were 650, 637, and 598 and when I pulled them on my own on 12/30/11 I got 640, 633, and 627.  I have an income of 1600/mo that is solid and another almost $700 that fluxuates as my son is disabled and receives social security, but when he is in treatment, there is no payment. I only have one credit card with a very low limit (I like it that way) and can have it at a zero balance tomorrow if necessary. 


I am hoping to purchase in the next 4 months and will be using a portion of my tax return to finance the down payment of 3.5%.  I am looking at homes between 40K-70K (70k only if I receive assistance from a non-profit organization here).  As far as debt goes, I made mistakes 10 years ago in college with credit cards (why I don't like them now), but there are 2 medical bills from 2005 that were refused by workman's comp for a total of 4k that will fall off in April/May of this year. 


I have 3 very minimal medical bills ($35 here, $180 there, $40 there) from a car accident in 2006 that I guess were never paid by the at fault driver's insurance company. I then have a $12 home phone bill that I wasn't even aware that I owed until now from 2005, and one more medical bill of $380 from the birth of a child in 2007 while I was insured (I tried to get it corrected but they said it's been too long and insurance won't pay). I have a lien from the IRS in 2007 after I had filed my taxes wrong and a $2800 debt turned into $8600 with penalties and fees that has been paid in full and released as of 2010.


I had a student loan default from 2005 of $1050 in 2008 that is paid in full as of 2010 and debt from the VA of $811 for overpayment of educational benefits that was paid in full in 2010.  I have rented in the Las Vegas area for over 9 years, never been evicted, always carried out my lease, and have been late approximately 3 times in all 9 years on paying rent (nothing more than a week due to payday schedule).  The residence that I currently live in, I am on my 5th year lease and have never been late with rent. 


All utilities are paid up to date and have not had any late payments in over 2 years and no 30+ late payments in at least 4 (if any, sometimes my gas bill was only $8 so I would let it double up... not sure what damage that could cause me, if any).  Due to my son's disability there are times that I have only worked part time in the past in order to care for him.  In 2007, I went back to full time employment and the company closed in 2008 due to the economy.  I was on unemployment for 6 months and then obtained a job where that company closed 4 months later in 2009. 


I have since been employed full time as of October 2010, but I left that position in March of 2011 when I was offered employment with the State of Nevada, I was then laid off at the end of June 2011 due to budget cut backs. I then obtained my current position 2 weeks after leaving the state and am very comfortable where I am at, even though the wage is lower than I could get, the people I work for are honest and my job is secure. 


The home I am currently looking at is $65000 and there is another one that I like that is only $40000.  Given today's market and my history, what is the chance that I will be approved for this FHA loan?  I don't want to end up ruining my score with hard hits for a mortgage or get my hopes up to have it all be a dead end.  Aside from medical bills, my total debt is less than $400, which I am willing to pay to close, but I won't attempt to do anything with it now since they have been dorment for so long. 


I am a single mother of 3, one of which is disabled, and given this circumstance and the credit issues of my past, I'm almost "proud" of my current scores, as they are increasing consistently. Because of the lack of credit, would I have to go through alternative credit? manual underwriting? Would I be denied for not having enough credit? Please let me know your thoughts! Any help would be appreciated!

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