@Anonymous wrote:
So I was recently declined at my credit union for a FHA loan of around 118000. I have 12000 in medical collections mostly from 2011, and a judgement from 2010 or 5000. I have not started a payment plan for the judgement yet. I would like to buy a home this year. My current fico mortgage scores are TU 660, EQ 640, EX 567 and I've been gainfully employed for 4 years. My mortgage broker said it would be impossible to get mortgage insurence with my current credit file. Why would the FHA change it's guidelines and the insurance company doesn't? Can I get a home loan? Any advice would be appreciated!
Find a more helpful mortgage person.
Find a mortgage banker that originates, underwrites and funds their own loans so they can guide you with what you need to do to become qualified to obtain a loan.
I see a couple of items from your post that you need to work on but its not impossible.
If you apply for an FHA mortgage there is no separate approval for mortgage insurance at all. Your approval for an FHA loan includes the approval for mortgage insurance. However if you go for a conventional loan, then yes, there is an entirely separate approval required for PMI (mortgage insurance) and it is more restrictive than getting approved for a conventional loan. Both the conventional loan interest rates and the PMI rates are tied to your mortgage scores and the lower the scores the higher the PMI rate - much higher than the MIP rate for FHA. Is it possible he was trying to get you a conventional loan approval?
As to the items that need to be addressed by you:
1) the judgment has to be paid so it doesn't attach to the property when you close. Can you make payment arrangements with the judgment lien holder? It is best that you don't mention you are going for a mortgage as the judgment holder will stick to their numbers knowing you have to pay it off to close.
2) $12k in medical collections is probably hurting your DTI as the lender has to take it into account for repayment
Read this excellent thread so you know how the judgment and collections are impacting you for approval:
http://ficoforums.myfico.com/t5/Mortgage-Loans/FHA-changing-collection-account-judgments-amp-disputed-account/td-p/2376607
Here is a link about judgments and judgments becoming liens for you http://www.nolo.com/legal-encyclopedia/property-judgment-liens
Next, head over to the rebuilding forum for advice on handling the judgment and the medical collections. Also google 'hipaa method' for your collections
