Bank Statements on FHA loan

[shannonrobbie]

What exactly are UW looking for on bank statements?  I just sent my loan app to my processor yesterday and forgot to mention something to her that I didn't think was that important until I starting reading all the posts.

On my last 2 statements I submitted I have no NSF.. but I do have a payment to payday loan company.  I only have 1 more payment to make on it... so will that be a problem or a red flag to an UW.  What exactly do they look for.. just to make sure the account never goes negative.. or are they looking at the way I spend every time and to who I write every check to?/

I am crossing my fingers and toes (and anything else that will cross) that my loan gets approved.  My mid score is 587.. I have 1 collection acct that is 11 months old (i think its older than that and disputed it 2 times but it has not be updated or removed) and I have one collections account that is 16 months old.  I have 8 or 9 credit accounts that are a year or older and all have been paid on time..At the same job for 7 years and make $5k a month...and I will have $10k for down from a gift... Do I have a chance?

[DallasLoanGuy]

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shannonrobbie wrote:

What exactly are UW looking for on bank statements?  I just sent my loan app to my processor yesterday and forgot to mention something to her that I didn't think was that important until I starting reading all the posts.

On my last 2 statements I submitted I have no NSF.. but I do have a payment to payday loan company.  I only have 1 more payment to make on it... so will that be a problem or a red flag to an UW.  What exactly do they look for.. just to make sure the account never goes negative.. or are they looking at the way I spend every time and to who I write every check to?/

I am crossing my fingers and toes (and anything else that will cross) that my loan gets approved.  My mid score is 587.. I have 1 collection acct that is 11 months old (i think its older than that and disputed it 2 times but it has not be updated or removed) and I have one collections account that is 16 months old.  I have 8 or 9 credit accounts that are a year or older and all have been paid on time..At the same job for 7 years and make $5k a month...and I will have $10k for down from a gift... Do I have a chance?

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i have seen many of these on bank statements. never once has an underwriter mentioned them.

oh, and stay away from them.... they are an evil trap.

[shannonrobbie]

I agree..they are an evil trap..I wish I would have never got it.. but thankfully I am almost done paying it.

From looking at my info do you think I have a pretty good chance?

[DallasLoanGuy]

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shannonrobbie wrote:

I agree..they are an evil trap..I wish I would have never got it.. but thankfully I am almost done paying it.

From looking at my info do you think I have a pretty good chance?

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i havent seen anything to concern me too much so far.

i didnt mean to be judgmental... but a one time use of those deals is one thing..... i see people fall into the 'trap' which is cyclical.... really sux

[jandlynn]

apologies for the necropost, but I am in a similar situation and I am beginning to freak out. I do not have any nsf's but I have 4 payday loans from the past 2 months showing up on my bank statements.

I am acheduled to close on the 31st. Lenders assistant had me write a letter explaining payday loans. I told the truth, wifes dad died unexpectedly in december, dog was diagnosed with cancer both of which added unexpected bills on top of holiday expenses. I did not want to over utilize credit cards and also knew that if I put these on a credit card I would probably not pay them off right away. Leveraging payday loans would force me to pay them off immediately.

Since I receive a 20% annual bonus every year in february (guaranteed by contract) I thought payday loans made most sense for my situation.

After the lenders assistant asked me for a letter of explaination, I followed up to ask if I ought to be concerned about these new developments. The reply I received was that, "in this lending environment we can't hide from anything. All we can do is make our best case for you - which we have done. It is not too often that we cannot work through these payday loan issues."

That doesn't sound very reassuring to me. I have sent subsequent emails and voice mails but none have been returned Z(it's Friday so they may have left for the weekend). Not sure if I am over reacting. Will the payday loans kill my fha approval? Before this everything was "looking great". Scores are ok, income is great, debt to income is excellent. No lates in past 5 years. Help!

[Heavanly1]

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@shannonrobbie wrote:

I am crossing my fingers and toes (and anything else that will cross) that my loan gets approved.  My mid score is 587.. I have 1 collection acct that is 11 months old (i think its older than that and disputed it 2 times but it has not be updated or removed) and I have one collections account that is 16 months old.  I have 8 or 9 credit accounts that are a year or older and all have been paid on time..At the same job for 7 years and make $5k a month...and I will have $10k for down from a gift... Do I have a chance?

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That may be a problem. Most lenders today require a mid-score of 620-640 before preapproving you for a mortgage. Maybe others can chime it but I think lenders willing to preapprove you with such a low mid-score are few and far between.

[mauve]

Heavanly, you're answering a 3 year old post.  The person looking for advice is the last one to post.

[Heavanly1]

Thanks Muave!

To jandlynn: I don't think you should be overly concerned about the payday loans, especially if you LO is reassuring you that all is okay. You provided a letter of explanation, which seems sensical since you didn't want to increase the utilization on your credit cards and possible negatively effect your credit score.  You've paid the payday loan on time, so at this point all you can do is cross your fingers and wish for the best.

[Anonymous]

Cases like this are very dependant on the whole file.

The thing to keep i mind though is that UW are going to be leary of giving anyone a loan who needs to hit payday loans/nsfs right before buying a home (when al accounts warn you to be VERY careful how you are handling money.  The concern is goign to be that not only do you not have reserves, but you have actually had to take out loans to meet your obligations.  There is a reason the LO is being a bit cagey and that is because these situaitions are a crapshoot.  If you fiel (besides this) is really strong...then you are probably fine.  If there are other issues then it could be a big problem.

[jandlynn]

I could have put these expenses on my credit cards, however I opted not to as a matter of personal preference for this situation. I only need 14.3k for a downpayment and 8k for closing costs, I have 36k in my checking right now and will have 44k in it by closing day (tax returns). my father in law (and dear close friend) violently took his own life a week before christmas. I was involved in a major car accident 3 days prior, my dog needed unexpected cancer surgery and I knew that my bonus was only 6 weeks away. All of the above resulted in big unanticipated costs. Its funny kind of because I look at it entirely in a different light. All of those once in a lifetime events unexpectedly converged with a week of each other and 2 months later I am still sane and have more than plenty of liquid reserves. the fact that I paid the loans off immediately doesnt matter? If I would have put these expenses on a credit card no underwritter would have cared, but I may have possibly paid more in interest. These are the aspects if "creditworthiness" that I simply can not grasp. If I pay my bill on time, all the time and always have cash in my banking accounts as well as a healthy retirement account (growing my 401k at about 15% Annualy) ; why should it matter if I use payday loans over credit cards for any given situation? I dont get it. If there was a real pattern of payday loans and they werent paid off right away then it would be easier for me to understand the issue. Anyway, I guess my thoughts dont matter in this situation. I am at the mercy of the underwritter. Thank you for taking the time to respond, as you can see I dont quite understand the process. Does income level factor into any of this at all? I also have plenty in my checking account now. Thanks again.