topic Re: Shane or Dallas need a pro's opinion in Mortgage Loans

Shane or Dallas need a pro's opinion

fot1 — Sat, 18 Feb 2012 07:28:45 GMT

Ok so i just typed this long post and it got eaten by the internet monster..lol I have spent the past year and half repairing my credit in the hopes of buying a home. Long story short I have one last baddie to take care of. And I have two options. Pay in full for a deletion or pay %30 and let the account age off (7/13.) So the question becomes will I be eligible to get a loan this summer/fall or will it be longer? Here is where I am at.

Credit. My scores are currently are TU(98) 695, Experian (from PSECU) 669 equifax 660 and this is with %37 ultilization on my cards from Christmas.

My baddies are as follow

Chapter 7 Bankruptcy filed 6/03 discharged 10/03

Capital one Charge off dofd 7/06 last reported 7/07 paid nce

Capital one Charge off Dofd 5/07 last reported 2/10 purchased by another lender

Collection for the above Capital one date assigned 1/10 paid

All the rest are good standing with no lates or missed payments

Gerc/Mrvyns Opened 11/95 closed 10/08

Fingerhut opened 2/11

Kays opened 2/11

Credit one opened 1/11

Hsbc Opened 11/10

Income. $14 hourly .

Monthly debt payments. $50month for credit cards when carrying a balance.

Employment This is an area I am concerned with .W-2'd I just started back to work this month as a CNC operator after 5 months on unemployment. Before that I had ten years as a CNC Maintenance tech before the company closed down our location. The Employer now and my previous employer were once working partners sharing the same building and equipment.

Assets/Reserves. $3500 in savings and plan on pulling my 401k 26K before penalty

Location. Paradise/Magalia area of Butte county in California.

Property. single family house,

Value. $90,000-$110,000.

Occupancy. Primary residence

Transaction Type. purchase

Looking at 6 months from now FHA or maybe Conventional loan, also this would be a first home purchase. So assuming 6 months steady work, my scores stay the same or slight improve could I qualify?

Re: Shane or Dallas need a pro's opinion

fot1 — Sun, 19 Feb 2012 20:54:45 GMT

I know i addressed this to Shane or Dallas, but anybody who has experienced with something like this chime in.

Re: Shane or Dallas need a pro's opinion

Anonymous — Sun, 19 Feb 2012 23:50:06 GMT

I'm by no means (really...) a professional, but I'd think you have a legitimate shot at an FHA.

At 14/hr, what's your annual income? 28k-ish? If you get overtime, that might be hard to figure in with limited history. Also, pulling out the 401k is a hard pill, BUT in your income situation, you may be able to do it as hardship (i.e. no tax liability, just penalty IIRC). Also, your income might qualify you for many down-payment assistance grants available, which in my area (North Texas) all seem to cut off at 80% of local median wage.

So yes, sounds like you're in ok shape, but you'll want a professional's opinion.

Re: Shane or Dallas need a pro's opinion

fot1 — Mon, 20 Feb 2012 01:07:41 GMT

Cassembler yes it looks like 27-28 K a year. salary. Agreed on OT no way to predict and shouldn't be used to figure income. On the 401k, it's in my old employers plan and I should have zero issue withdrawing the money. I was told the first 10K if used within 30 days for first time home will not be penalized, and then anything over that amount will have %10 penalty and then have to be claimed as income on that years taxes.

I think I am in pretty good shape for FHA, other then the employment. That 5 month unemployment is my concern. I have read a lot on these boards and haven't found anybody else who had a lapse like that that applied for a loan. I know convention loans don"t have that requirement, but think my credit file might have a bit too many negatives.

Re: Shane or Dallas need a pro's opinion

Anonymous — Mon, 20 Feb 2012 01:44:43 GMT

@fot1 wrote:
I was told the first 10K if used within 30 days for first time home will not be penalized, and then anything over that amount will have %10 penalty and then have to be claimed as income on that years taxes.

Again, be careful and read the fine print. That's what I understood as well, until I dug deep into my 401k website, which indicated that you have to be able to provide documentation on hardship (which I understood to be bank statement and check stub with a LOE, purely IIRC).

As for the unemployment, that's beyond my expertise, but I'm sure someone here can help with that

Have you found anything on down payment assistance programs? My city is offering $7.5k - 10k as a deferred, completely forgivable loan, if you make payments and live in the residence for five years. First time homebuyers only though, and my income is too high

Re: Shane or Dallas need a pro's opinion

203bravo — Mon, 20 Feb 2012 16:34:38 GMT

As OP is no longer employed at the company where the 401(k) contributions were made - it is correct that they can be withdrawn at any time for any reason.

However, OP is incorrect that the first 10k is not subject to the 10% tax penalty - that exception is ONLY for IRA withdrawals... Thus if planning on applying in several months best course of action would be to open and IRA and then do a custodian to custodian transfer of the 401(k) funds to the new IRA. There should be no fee in doing this.. then when ready to withdraw it'll be an IRA and the 10k will be penalty free. just be cautious to find a company for the IRA that doesn't charge a penalty for closing the account within the first few months.

best of luck.

Re: Shane or Dallas need a pro's opinion

fot1 — Mon, 20 Feb 2012 21:29:04 GMT

Thank you 203bravo I forgot about that. The original plan was to do a 401k loan, so I hadn't looked at too many other options.But after you said that I remebered reading that..

Cassembler I have kinda looked at some programs for down payment help, The city I am looking at has a program for if you don't have enough of a downpayment, but I really want to put %20 down so I don't have mortage insurance (assuming FHA loan is all I could get)

Re: Shane or Dallas need a pro's opinion

fot1 — Tue, 21 Feb 2012 23:51:32 GMT

Any thoughts on the employment being an issue?

Re: Shane or Dallas need a pro's opinion

DallasLoanGuy — Thu, 23 Feb 2012 19:17:20 GMT

with about 1 out of 5 people unable to find work..... a 5 month gap isn't as bad as you might think.

I wouldn't worry about that.

My biggest concern is the derogatory info being reported AFTER bankruptcy. To overcome that, I would think that you would need a few compensating factors.
How is the rent history?

I would certianly have that checked over 24 months and put it in the file.

Actually, I would physically put the file in front of the underwriter BEFORE issuing a preapproval.

Anything unpaid should be paid as soon as possible. Any unpaids post BK would be a deal killer for me on most files.

Re: Shane or Dallas need a pro's opinion

fot1 — Fri, 24 Feb 2012 00:24:39 GMT

Thank you for responding Dallas.

All the derogs accounts will have been paid before I apply. I have never been late on Rent in 10 years with this rental company. I have also been paying a higher rent amount then what a mortagage would be.

I have two bad periods on credit report. Bankruptcy was shortly after the birth of my twin sons. My wife had complications with the pregenancy and was placed on bed rest for 6 months of the pregancy. She recieved some disability pay but nothing like her normal pay and with the added medical bills it was more then my single income could handle.. The second was when my marriage ended abruptly and I had to find someplace for me and my boys to live in short order.

Re: Shane or Dallas need a pro's opinion

DallasLoanGuy — Fri, 24 Feb 2012 01:02:41 GMT

@fot1 wrote:
Thank you for responding Dallas.

All the derogs accounts will have been paid before I apply. I have never been late on Rent in 10 years with this rental company. I have also been paying a higher rent amount then what a mortagage would be.

I have two bad periods on credit report. Bankruptcy was shortly after the birth of my twin sons. My wife had complications with the pregenancy and was placed on bed rest for 6 months of the pregancy. She recieved some disability pay but nothing like her normal pay and with the added medical bills it was more then my single income could handle.. The second was when my marriage ended abruptly and I had to find someplace for me and my boys to live in short order.

without seeing a full file.....

if i could timeline/document your story with what the credit report reads..... i could sell this deal to my underwriter all day long

make sure you get referred to a good loan officer. ask friends/relatives/realtor/ect

resist the urge to go with a low ball offer from a loan officer.

lowball loan officers lowball because they do not get referrals from trusted sources. they suck

you need a 'pro' who has done a lot of fha deals

Re: Shane or Dallas need a pro's opinion

fot1 — Mon, 27 Feb 2012 06:50:40 GMT

Thanks again Dallas. I should have plenty to document both events, Divorce and birth certificates ect.