Can someone ease my mind over applying for a mortgage?

[Anonymous]

Hello all!
I'm hoping someone can give me some advice or words of encouragement as I am losing sleep at this point over this...

My hubby and I are (hopefully) building a new home. We've been working with a builder and we are at the point now that all we are waiting on is the mortgage company to say yes or no. We were pre approved for up to $297k.
A little financial info about the 2 of us:

Hubby has a 100% blemish free credit report. Equifax score of 758. As far as debts, he currenty has our current (conventional) morgage which has approx $73K owed on it and a car loan with approx $15k owed on it. He has multiple credit cards, none with a balance, and has about $80k in available credit from those cards. He also has a HELOC on our current home with a $0 balance and $23k available credit. He makes roughly $66k a year. He has been at his current job for 15 years.

My credit report is another story. In October 2015 I filed Chapter 7 bankruptcy. It was all credit cards- totaling up to roughly $20k...no vehicles, property, mortgages etc were involved. BK was discharged February 2016. My current equifax score is 704. I have worked VERY hard the past few years to raise my score. I've been able to obtain 4 credit cards on my own since the BK which has given me about $15k in available credit...none of which I use...I pick a different card every few months and purchase a tank of gas with it and immediately pay it off. I used to have approx $14k in student loans which I had previously fallen behind on prior to my BK. After the BK we worked very hard and have paid all of those off in full. I make roughly $40k a year. I have been at my current job a little over 2 years.

They two of us together have roughly $140k in retirement accounts...none of which we will be using during this process but the mortgage company is aware we have those funds available to us.

We jointly applied for an FHA loan (due to my BK...as I haven't met the threshold since discharge for a conventional mortage) and that is where we got the pre approval from. We will be paying approx $10k down on the new home and selling our current home once we are in the new one,

So we have approx $100k/ yr joint income (usually a decent amount more with over time)
We will have:
$73k (temporarily) on our current home
$280k on our new home we're having built
and $15k on an auto loan (which will be paid off with some of the money from the sell of our current home...but I realize the bank can't look at it that way)

Our Loan Officer claims she forsees no issues and has approved people who have had multiple BKs, forclosures, etc...Our realtor and home builder also both claim they forsee no issues and have seen people in way worse financial situations than us be approved...
BUT I worry entirely too much and am losing sleep every night wondering if we will FOR SURE be approved for this mortgage or not...anyone been in a similar situation? Forsee any issues?

[VALoanMaster]

Hi Ad94,

I don't see any issues based on the info you provided.

Get some sleep, you'r good to go.

[homeloanexpert]

Based on your scenario you spelled out, I concur with my colleague. You can sleep like a baby. For those who may come across the post that have the similar situation, here is my best recommendation. On new construction purchases, I always run the borrower's loan file through a full Underwriter review. Before they make an offer. Meaning I submit the borrower's loan as a TBD (address "To Be Determined"). Complete with paycheck stubs, W2s, bank statements, ID's and any supporting documentation i.e. BK Voluntary Petition and Discharge. This loan submission is an actual loan only minus a specific property.

The UW will issue a full credit approval with conditions so the borrower and I know in advance what hoops if any, we need to go through. Once the borrower find a property and has a fully executed contract, all I need to do is turn in the contract and most of the work has already been done. Simply order the appraisal and request title work and boom! As an LO,  I too like to sleep like a baby and when I issue a Pre-Approval on a new construction build where I know that Builder is breaking ground, pouring concrete and the borrowers are pick out their upgrades from the design center, I want to make darn sure I have crossed my t's and dotted my i's.

NOTE: This is just my opinion, and you know what they say about opinions.

Best wishes to you!

[Anonymous]

Thanks to both of you! I do wish the process had been done differently...I would rather have known 100% we were approved rather than going through all the meetings and spending hours with the builder picking out options, making changes, etc and knowing that our pre approval isn't guaranteed. It's been 6 business days since we last met with our LO and provided her all documentation. She advised us we should hear an answer within 7-10 business days but could take up to 30. *fingers crossed*...the sooner they say yes the sooner our home builder breaks ground!