topic Re: USDA Loan Questions and raising FICO quick! in Mortgage Loans

USDA Loan Questions and raising FICO quick!

Anonymous — Mon, 27 Apr 2015 20:51:26 GMT

My husband and I filed bankruptcy and we were discharged in January of 2011. We have been in the process of buying a home with the USDA program for the past few months. We had originally tried to put both of us on the loan, but that wasn't working out so good. We have been under contract for about two months on a house we love with a very reasonable price and payment.

I am a part time teacher and have decided I will not be going back to work next year and already gave my notice. I did so after I told our loan company we were working with that I wanted a denial letter. They were continually awful to us! They tried to make me feel bad about staying home with my children and reminded me how my lack of work history was causing all of the problems. They wouldn't count my income because I had mostly stayed home with the kids and had only been working for 8 months. We also had problems with being on Income Based Repayment for our student loans. And issues being in CAIVRS because we included a house in the bankruptcy. The problems were never ending and I could see their frustration, but I went way above and beyond to remove all obstacles! I even got our CAIVRS cleared, even though we are only a year out of the claim on the FHA mortgage. After four months of frustration and tears, we were both just DONE! We hadn't even made it through underwriting after sending over 200 pages of documents to them, much less submitted to USDA.

Anyways, We thought we were done with everything and would just work on my husbands credit for the next few months and reapply with someone else (still going USDA). We CANNOT go any other way because FHA counts three years from our forclosure date, and USDA changed their rules in December and DO NOT use that date if the home is included in the bankruptcy. Our lease is up in August and the owners of the home we rent do not want to continue renting because they would like to short sale the house. I have learned so much just by lurking here the past week. I am also very knowledgeable about the USDA requirements. The seller's agent was about to let our Escrow deposit come back after receiving the denial letter, but she wanted to see if we were still willing to make this work and try something new. They were even willing to pay our closing costs, which they weren't willing to do AT ALL before, even if we paid additional for the house.This would mean an entirely new contract!

We found a new mortgage broker and she seems amazing! I have yet to talk to her about all of this because she is out of town on a cruise, but here is the situation.

Hubby's FICO scores (from mortgage company) were pulled March 12th and are as follows:

Trans: 658

Exp : 640

Equifax : 680

The issue was that my scores (mid 621) were dragging us down into manual underwrite. Maybe that was because they pulled my credit FIVE TIMES within the last few months! With me off the loan, I think we have a really good shot at making this work. He had one late payment 90 days past due when his IBR application expired and they threw him on standard repayment. I wrote to them (mohela- student loans) today and they removed it, yay! How much of a score boost are we look at from that standpoint alone? The 90 days past due status was reported for November 2014.

His debt is as follows :

Mohela Student Loans : 33k (Got onto a standard repayment of 250.00 a month, will switch back to IBR once loan closes, they wouldn't accept 0.00 a month payment so we had to do this, or else they automatically calculate 1% of balance as payment)

Suncoast Schools Car Payment - $341.00

Capital One Card $25.00 a month min

$966.00 / $2000.00 limit, now paid down to $587.00, putting us at 29% utilization for this card

Jared Card - $130.00 a month min

$2162 - $5100 limit, now paid down to $1236.00, putting at us 24% utlization for this card.

We pay $925.00 to rent now, our new house payment with taxes and insurance will be around $750.00 a month. Our goal is to pay off Jared card so we can get our DTI within the 29/41 range.

So how does this look for a USDA Guaranteed Loan? His income was calculated at $3900.00 a month. Also, how much of a FICO increase should we expect between lowering our utilization and removing that 90 day past due? We are trying to get the best rate possible and have a much smoother process this time!

Thanks so much for your help!!!

Re: USDA Loan Questions and raising FICO quick!

Lemmus — Tue, 28 Apr 2015 02:37:59 GMT

...your problem is dtir, not scores ...depending on your lender the rate difference between a 658 mid score and a 680 mid score may be 1/4% ...based on your info you may well get the 22pts you need ...but until you zero that Jareds, your dtir is going to kill you ...inquiries are at most 10% of your score and age off pretty quickly ...if you can zero one card and get the other under 10% you'll be in the optimal revolving accounts score range ...but if you had to go with your current scores you'd be okexcept for the dtir ...hth

Re: USDA Loan Questions and raising FICO quick!

Anonymous — Tue, 28 Apr 2015 03:04:05 GMT

That's what we thought too. We plan on paying off the rest of the Jared Friday and that will get rid of that $130.00 a month and make the DTI back end around 36% this however does take us down in savings to maybe $1000.00. Is this something USDA even looks at though?

I think between lowering these two cards and getting that 90 day removed, once our credit updates he should be nearing the 700's and we will be able to get the lowest score.

Re: USDA Loan Questions and raising FICO quick!

Anonymous — Tue, 28 Apr 2015 03:10:13 GMT

Ty Lemmus by the way! I needed some encouragement after the long road we have been on! So excited that for once, it's an easy fix

Re: USDA Loan Questions and raising FICO quick!

frugalQ — Tue, 28 Apr 2015 03:24:32 GMT

Good luck!!

Re: USDA Loan Questions and raising FICO quick!

Lemmus — Tue, 28 Apr 2015 04:00:21 GMT

...usda is zero down but they'll want to see that you can manage prepaids and closing costs ...lender fees, inspection, appraisals are costs that will come out of your pocket ...depending on your market ...and assuming you have a realtor that understands usda loans ...you can structure your offer such that the seller pays all your closing costs ...unlike other govt programs, usda does not limit seller concessions ...there are a number of ways to structure your offer, thats why its important that your realtor knows what they are doing ...the other advantage usda offers is loan to appraisal regardless of contract price ...you can actually roll your closing costs into the loan if the appraisal is higher than the contract ...you can also ask for a set seller concession that will cover all closing costs and prepaids ...ie a flat 6k seller concession instead of 6% ...your realtor should understand your market and what will work best for you ...patience and persistence are your best weapons ...make offers that work for you, back out of anything that doesn't no matter how much you like the property ...hth

...ps ...the great majority of appraisals come out at or just above the contract offer ...either realtors are super pricing gurus or something else is at work here ...know it, use it to your advantage

Re: USDA Loan Questions and raising FICO quick!

Anonymous — Tue, 28 Apr 2015 20:02:49 GMT

We are thankfully already past all that, sellers refused to cover loan costs even with higher price, they were convinced we were screwing them. Paid for appraisal and it came back 3k higher so we rolled in closing costs that way, preparing to bring around 2k to the table. Now sellers are saying brand new contract with closing costs rolled in an effort to keep the ball going. Most of the work is done, it's just that we have to go with a new lender and resubmit everything. All inspections are done and came back perfect!

Re: USDA Loan Questions and raising FICO quick!

Anonymous — Tue, 28 Apr 2015 20:15:41 GMT

If you are still looking at banks for the loan, I had started working on a USDA loan with Bridgeview bank before I found the direct program. They were pretty helpful.