I am currently under contract to purchase a home. I was preapproved through QL and have submitted all the necessary documentation. My work history (15 yrs), earnings ($65 annually), DTI ratio (about 10%) are all good. I have been working on repairing my credit over the past two years--not a single late payment, CC balances low, etc. I received a call today from QL that my application has been suspended as a result of reviewing my bank statements because of checking account advances on the statement. US Bank offers a 'Checking Acct Line of Credit' (which is essentially an advance when you break it down, I suppose). I have opted to utilize the advances vs using credit, thinking that it's better to borrow from myself and keep my CC balances low. As a first time homebuyer, I am going crazy waiting for the LO to return my call. Does anyone have any experience with this type of situation? I am completely freaked that I will be denied totally. Any advice or words of wisdom would be greatly appreciated :-)
Starting Score: 611
I understand your reasoning, but also understand why this scared QL. Anytime you have to make the choice of either turning to credit or taking a pay-day loan (which is what those advances are), then it indicates financial distress. From the perspective of the lender, if you are currently having to do this, what will it be like after a mortgage with all the additional costs for repairs, utilities, etc.
Best thing you can do is contact them, explain to them why you did what you did and ensure them that you are financially sound. If you can't do this, then purchasing a house right now might not be the best idea.
Starting Score: 627 EQ, 621 TU - 11/15/08
May be time to go lender shopping. Try a mortgage broker. If I would have done that instead of waiting on Quicken, I would be in my home right now!
Thanks for the feedback. I'm slightly hopeful that it will go through...will keep posted.
The official denial came today and the 'official reason' is "Debt to Income: Excessive Debt". What's ironic is that I have less than $800 in credit card debt and a car loan, and that's it. I spoke to another (local) mortgage broker-who is also an underwriter- today and she said that based on my credit score (620) that I don't meet the criteria of 640 to qualify. It would have been nice if Quicken Loans told me the same thing instead of giving me a pre-approval. She did tell me that if I paid off the credit cards, she could do a rescore and we may get the 20 points to proceed. So, as frustrated and disheartened as I am, I'm off to the next step.
FHA
I would shop around some more there are still a few co's that go with a 620 middle score. My LO had us all the way approved through underwriting with a 624 score. Unfortunately the bank not meeting the appraised value of the house totally blew it for us 