Hi All! First of all this forum is awesome! I have been a lurker and have gleaned so much info from you all! Thanks so much! We're just starting the mortgage process and need some answers if anyone can help! We've moved several times due husbands job and always were able to build equity from moves til the housing crash which caused us to lose $95,000 in equity which wiped out our down payment. YIKES!
We've rented while living where we are now and now it's time for another move. We have about $10,000 in savings and are willing to use up to $25,000 from 401k for down payment. Here's some background and my questions: The Good: Husbands salary is about $165,000 Debt to income is great - only one car payment and a few small cc payments. Total monthly payments, about $450 Husband's been on job for 15 yrs. (I have no income and won't be on the loan) Good amount in 401k Scores as of today ( lender pull ) are as follows: EQ 642 EX 672 TU 667 (these scores were very surprising - except for EQ - because I had pulled all scores just on Friday and the EQ was exactly what lender pulled, but Transunion per myfico was 624, so to have them pull a 667 was a pleasant surprise!!
I also expected to have a EX score lower than what was pulled. Due to small down payment and the fact that we want to keep housing costs low we were looking at FHA, so we thought "Great" scores are well with range for Wells Fargo FHA limit of 600 score. Well they told us that initially it was not coming back approved even for FHA!!! We are in a panic! They are sending it to underwriting and will get back with us. Below is the negatives of our situation.
The Bad: We went through a stretch for several years of late payments. Some due to just not paying close attention to credit as we should and partly due do helping our family members (mom/dad) who became ill. In any case, the last 2 years have been perfect in terms of being on time for payments EXCEPT one utility bill ( a gas bill) thatni thought was on automated payment from my checking account. ( I honestly didn't even open the gas bill for several months as I have all bills set up to be paid with automated online bill pay and I thought I had set the gas bill that way too, but instead it has been reported as late -only to TU- from July thru November! It has it listed as 120 days late!!
When I finally opened the bill in December I was in shock and paid it right away. I even sent them a Goodwill letter, to no avail! This extreme late is only 5 months old but it's the only one. The mid score is from TU which is what they use for approval - also, of course the report that has the worst data! Will this stop us from getting an approval?! I am in a panic! By the way, we had high util for the past 2 yrs which is why the score isn't higher even though we've paid on time for the 2 yrs. we just paid off a chunk of debt about a month ago and saw a 30 pt spike.
So, I'm wondering if we'll get approved or does that one account keep us from an approval? After hearing the scores we started thinking about getting a conventional loan with 5 percent down since Wells will do conventional with a score of 660. But those hopes we're dashed when he said he has to send it to UW even for FHA. Any help or thoughts would be greatly appreciated!!!
Hello and welcome.
I took the liberty of editing your post into smaller paragraphs. This makes it much easier for everyone to read.
MarineVietVet, myFICO moderator
Like the other poster said shop around to other brokers. I know FHA can look around a baddies. Just be prepared to write a bunch of LOE's.
An FHA loan requires 12 months of clean credit. That won't be until seven more months due to the gas bill.
You might find a conventional loan with 5% down that could do it - I don't know the rules for that kind of a loan.