FHA loan help please

[clintj57]

I have been pre approved for a FHA loan. I have 4 items on my credit that are 4 derogatory. (1) An $80 library debt for missing books 2012 (2) A $72 dental bill from 2009 (3) A charged off Kohls credit card from 2008 that I settled for less than the total amount shortly before pre approval (4) A $1890 gym bill. My lender is telling me not to pay off any of the debts until the underwriter forces me too, however the gym is willing to settle for $700. Should I go ahead and settle the debt, or wait for the underwriter to ask me too lime the lender advised.

[ShanetheMortgageMan]

I'd recommend you wait.  The total non-medical is less than $2k, so the underwriter may not even require anything to do be done.

[clintj57]

If I am required to pay the debt will settleling the debt be sufficient, or will it need to be paid in full?

[ShanetheMortgageMan]

Settlement would be fine if it's required to be paid off.  The amount listed on credit is hardly ever the correct amount.

[clintj57]

Are the odds, with that amount of debt and a middle score of 638, a high score of 640, and a low score of 608, decent that the underwriter will aprove the loan? I am paying $900 a month in rent right now, I average between $38 and $40k a year gross. I just put an offer in on a $119,000 home.

[ShanetheMortgageMan]

Really would need to know more about your credit history & your monthly debt payments.

[clintj57]

I really don't have much of a credit history, I only have two major purchases that are showing on my credit. A $11,000 5 year car loan that I paid off in 3.5 years no missed or late payments. The last payment on that was 2011. I had a $3000 snap - on tool purchase on credit that was paid off in 2006 still showing up on my report with no missed or late payments. I also have a secured Mastercard through my bank that I recently started 2 months ago to have a revolving line of credit. I have paid in full both months. The only derogatory items are the ones previously mentioned. I have $91 deducted biweekly for 401k, $118 biweekly for health care, and $33 biweekly for dental and vision. All utilities are in my wife's name other than our cell phone which is roughly $200 a month. I have taken out a $3,500 401k loan that is to be deducted from my paycheck biweekly at $30. I have $6500 in savings including the money deposited from 401k and $900 in checking. Enough info haha...

[clintj57]

Anyone else have any thoughts?

[ShanetheMortgageMan]

Looks like you really don't have any debt, which is good because it helps your debt ratio... but there also isn't a lot of re-established credit since your derog items occurred (just the credit card for 2 months if I read correctly), which isn't a good thing.  It's possible to get approved, but I could see more conservative lenders being a little concerned.

[clintj57]

The house that I put the bid in on is a short sale. The buyer accepted, but the bank hasn't yet. From my understanding this bank moves fairly quickly, but my realtor told me to expect at least a month... In the time being is there anything I can do to get myself in any better position to get approved for the loan. The lender seems to think I won't have a problem, but talk about suspense..... it's killing me