topic Re: the more I learn, the more nervous I get in Mortgage Loans

the more I learn, the more nervous I get

Anonymous — Fri, 10 Apr 2015 22:08:31 GMT

I've posted a few times. I have a medicore score (666). A few dings on my credit report (5 30 day late mortgage payments in 2010 and 2011, last one was 9/2011) all due to my son being born with a severe disability and the bills that followed. No lates previous to that (from July 07-Feb 2010 or after 9/2011 to present on any accounts.

there was a CC account settled in 2013 for less than full balance, but I was not the account holder, just an authorized user on my wife's card. No late payments, money was just tight and we did what we had to do to make ends meet. Neither of us were working at the time.

The only other thing on there are 3 inquiries - two are for mortgage rate shopping both on the same day from the same company. The third was my CC company as I was eligible for a LOC increase and I was looking to decrease my utilization ratio (not to make purchases). I have excellent letters of explanations. They were posted here for review last night if someone needs to see them.

Since those lates, we have refinanced without an issue. But now we're looking to move. I have a good salary (80k is eligible salary, 110k total due to a PT job I can't claim because it's been less than 2 years). Monthly income is about 6734 that can be claimed.

We're going FHA, 3.5% down because the rest of the $$ will be needed for home handicap mods. We'll have about 5-6k in savings and about 35k proceeds from the sale of our home.

Monthly expenses total $739 (155 CC, 584 student loan).

LO said we're looking at a preapproval somewhere between 325 and 350k based on 50% back end DTI due to compensating factors (reserves from home sale and 2nd ineligible job that pays $75/hr and I'm a physician assistant so lots of room for growth and salary increase since I'm still a new grad getting new grad pay. I was told by my employer at contract signing -with $20,000 sign on bonus still being paid out in installments-- that in 3-4 years my base salary will jump to six figures).

I'm just horrendously scared about the effect those 5 lates will have on our application being approved under these circumstances. We NEED to move as our current home is no longer suitable, nor is the school district. The homes in our area are very expensive so decreasing the budget isn't really a viable option.

PLEASE tell me that a good explanation letter + the late payments in question being almost 4 years old will be sufficient... or am I just wasting my time?

Re: the more I learn, the more nervous I get

StartingOver10 — Fri, 10 Apr 2015 22:45:39 GMT

You are not wasting your time at all.

Because you are going FHA you won't see a rate hit unless your scores are low. I don't remember what your mortgage scores are from the last post but your LO should have been able to quote you a rate. Naturally, if you are using the proceeds from the sale of your home, the rate that will be applicable is the rate at that time. It sounds like you have a solid plan in place for moving closer to work. Remember, the LOs and u/w's aren't looking for perfection (although it is nice to have). You have excellent reasons for having mortgage lates in that time period and you have recovered well and made all the payments on time since that lapse. I think you will come through with flying colors.

Re: the more I learn, the more nervous I get

Anonymous — Fri, 10 Apr 2015 23:18:25 GMT

The LO did a lengthy phone interview with me and some quick math and used a 3.5% rate in his calculations. A previous lender we decided not to go with (primelending) said my score was 666, and that was just a week prior. The only thing that could have affected this score was the hard pull from my CC company to increase my LOC. Thye told me it was only going to be a soft pull which clearly wasn't the case.

He said he got the range of 325-350k by figuring our monthly payments could go up to over 2600 based on a 50% dti which is the allowed % with a compensating factor. Taxes here are generally between 7 and 10k per year, so he said obviously we'd have to take that into account. He based his numbers on 7k per year.

I'm just nervous. A lot is riding on this move, including increasing my son's quality of life. It's just a big deal, and I'd be devastated if I ruined it for him by making late payments several years ago because of all the bills we had with him in the hospital on and off for 18 months. It wasn't just the medical bills themselves, but the hospital was an hour away, so gas, tolls, food, lodging during important procedures, loss of work time, etc all added up.

Re: the more I learn, the more nervous I get

Anonymous — Fri, 10 Apr 2015 23:25:03 GMT

If all you are concerned about is old late payments, you have no need to worrry. A late payment simply impacts your credit score, but there is nothing you need to "pay off" like with an account in collections.

If your credit score still meets the minimum requirements even with the lates, you should be good to go .