topic Re: trying to get pre-approved earlier than expected... what are my chances? in Mortgage Loans

trying to get pre-approved earlier than expected... what are my chances?

stee0616 — Mon, 05 May 2008 16:51:20 GMT

Hi All!

I'm interested in a new construction starter home that would be ready by late 2008.

I've been frantically repairing my credit reports for the last 6 months. Current scores are:
TransUnion 661
Equifax 596 (still waiting on 1 collection and some GW adjs. to be dropped here...) Experian 671
TU and EX have no lates since early 2005. By next month, EQ will have no lates for 1 year.
4 current tradelines reported (2 major ccs, 1 dept store card, student loan). All in good standing.
6+ years with current employer. Generous annual pay increases plus bonuses.

My original mortgage approval plan was to continue to send GWs and pay down credit cards to 1-5%; utilization (it's currently at 50%;, however credit reports pulled today still show 80%+) this summer in hopes that my scores would increase 30+ points by closing. Not sure why EQ is so behind, but I would assume that this plan would put TU and EX at 700+ by this Fall.

Here's my problem. In order to hold a lot in this neighborhood at the current pricing, I have to get pre-approved and make an offer ASAP. Once the offer is accepted, I will be under contract while I build for the next 5 months. Then, we would close by November 2008. Therefore, I have to attempt to get pre-approved in my current credit situation.

Does anybody think this is even possible??? Has anybody been in a similar situation?

Thanks in advance for your advice!

Message Edited by stee0616 on 05-05-2008 09:51 AM

Re: trying to get pre-approved earlier than expected... what are my chances?

ShanetheMortgageMan — Mon, 05 May 2008 17:43:29 GMT

It's possible to obtain a pre-approval now, would just need to evaluate your situation to determine that.

Your credit is probably fine - so the question remains on what is your debt to income ratio & loan to value situation.

How much is the sales price? How much are you putting down? That would determine the loan to value.

How much is your current base pay (hourly/salary), and have you made any overtime/commissions/bonuses for the past 2 years? That would determine the effective income you'd have to qualify with.

How much are the minimum monthly payments on credit cards, car loans, student loans, etc., that you expect to have? That, along with the income, sales price, and down payment info - will determine your debt to income ratio.

Where are you buying? That will help determine what mortgage options (FHA vs conventional) you would have.

Re: trying to get pre-approved earlier than expected... what are my chances?

stee0616 — Mon, 05 May 2008 17:50:47 GMT

Hi Shane. Thanks for the quick reply.

Home price is $138,900. Estimating $1,400 taxes and $400 insurance. No Homeowners dues.

I'm hoping to put down 3% or less. I'm a first time buyers, so I would love zero down with my local credit union. Not sure if that is possible...

Current salary is $35K plus bonuses. By July, it will be $40K plus bonuses. Bonuses are anywhere from $2 - 10K annually.

Little debt. Only $109 student loan and $45 min, payments for ccs. No car payments.

Home is located in Pitt County, NC.

Thanks!

Re: trying to get pre-approved earlier than expected... what are my chances?

ShanetheMortgageMan — Mon, 05 May 2008 18:00:38 GMT

You are welcome. Your debt to income ratio is fine, and that is on $35k and not even including your bonus income. You should be OK to just put 3% down, and I'd probably suggest FHA when it comes time to select the mortgage program... only remaining no down payment programs are USDA & VA. If you are buying in Greenville then USDA wouldn't be an option, but if you are buying outside of Greenville then USDA could very well be an option for you... "in" and "outside" are relative, so I'd suggest you follow the following instructions. To see if USDA would be an option, check the "eligibility" features (left side) at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?NavKey=home@1 to determine if where you are buying is an eligble location, and if your income is within eligible limits. USDA does 100% financing and does not have mortgage insurance. Your CU might or might not offer USDA loans.

Re: trying to get pre-approved earlier than expected... what are my chances?

stee0616 — Mon, 05 May 2008 21:46:02 GMT

Shane - It's a Winterville address so the home location does qualify for USDA, but today a bank quoted me 7% interest plus 3% (2 points plus 1% origination fee) due at closing. Seems like a rip off compared to FHA... do you know if this info is accurate?

BTW, based on the FICO scores/ reports I provided lenders this afternoon, I was told no for any conventional programs at a traditional bank and my local credit union is considering me for their first time homebuyers program (2yr ARM @ 4.75%, no PMI, cannot increase by more than 1 point every 2 years). Apparently all first time buyers programs must be approved by cu branch managers now, so I asked them to use the myFICO report I pulled this morning for consideration (and then they can pull it if the manager is confident about the pre-approval). Overall the credit union was more optimistic, but it still wasn't a "yes" on the spot so I'm not feeling confident that I'll be approved for any conventional/ first time homebuyers programs. Next step is probably FHA, but I have not been able to find a broker willing to do FHA thus far (I've only been researching as of this weekend though...). Know any FHA mortgage brokers in Eastern NC??

Re: trying to get pre-approved earlier than expected... what are my chances?

ShanetheMortgageMan — Wed, 07 May 2008 09:51:40 GMT

Yeah the 7% rate plus 3% due at closing is definitely a rip off... and the 2-year ARM from the CU is a little risky as well, sure the rate is good now, but it'll be higher down the road... the good thing is it wouldn't increase rapidly or very often. For USDA you should get a rate around in the low 6's. Since the home is eligible I think that should be the route you look into first.