cancel
Showing results for 
Search instead for 
Did you mean: 

Need A Mortgage ASAP, but High Debt?

Regular Contributor

Need A Mortgage ASAP, but High Debt?

I applied for a mortgage 2 months ago and was denied do to low scores, Cap1 recent charge off, and 4 late Cap1 payments. Scores tanked after several creditors decreased my limits despite paying on time. I applied at a local credit union, I knew I would be denied but I expected to be told in detail how much debt to pay off. Are there any mortgage companies, banks, Etc that can tell me exactly how much debt to pay off in order to get approved? Not looking for a general answer such as- much as possible. My income is ok at around $75k/yearly, I get a raise in a couple months also. I really want to get approved by Feb 2019.

Message 1 of 7
6 REPLIES
Community Leader
Super Contributor

Re: Need A Mortgage ASAP, but High Debt?

The solution may not be just to pay off debt.  With a recent charge-off & late payments, the solution is more likely continuing to make payments on time and/or trying to do a goodwill or pay-for-delete on the previous delinquent marks.   12 months of no delinquent marks, with re-established credit, is the standard guideline most lenders go by for satisfactory payment history.

Helping people with Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
In Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

Message 2 of 7
Highlighted
Regular Contributor

Re: Need A Mortgage ASAP, but High Debt?

Thank you. I was told 6mos for the delinquents, I do plan on trying to get rid of those negative account issues first. I just wish the lenders told me the minimum amount of debt to pay off, or gave me idea on approval amount if I paid off xyz debt.

Message 3 of 7
Established Contributor

Re: Need A Mortgage ASAP, but High Debt?

Payoff the charge off ASAP. 12 months is ontime payments is the Gold Standard and it’s going to take that time to clean up your Mtg Scores. Your Loan Officer should be able to sit down with you and help you to review your situation and help you with a strategy for qualifying. You will better understand the process if you go in and do this face to face.
Message 4 of 7
Community Leader
Super Contributor

Re: Need A Mortgage ASAP, but High Debt?


@Te3030 wrote:

Thank you. I was told 6mos for the delinquents, I do plan on trying to get rid of those negative account issues first. I just wish the lenders told me the minimum amount of debt to pay off, or gave me idea on approval amount if I paid off xyz debt.


If your debt ratio isn't an issue then paying off debt won't make a difference if you qualify or not.  Your issue appears to be credit history.  You could have $0 debt and your credit history would still be the factor that prevents approval.

 

If you had an isolated late payment, then at 6 months old your credit history would probably be fine.  But with a charge-off and multiple late payments, I am not aware of an underwriter who would approve with less than 12 months clean credit, unless you'd be OK with sub-prime loan terms.

Helping people with Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
In Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

Message 5 of 7
Frequent Contributor

Re: Need A Mortgage ASAP, but High Debt?

When applying for a home loan the focus is surely the last 12 months. That's just the facts as stated already. You need to buckle down and make sure you make your payments on time or that clock starts all over again. The fact that you had a recent charge off isn't the deal killer as many older collections at some point will turn into charge offs. Your problem is the Cap One, 4 lates payments (you weren't specific if they were rolling lates or just consecutive lates). Either way, mark the calendar 12 months from the last payment and you should be able to get approved for a government insured loan i.e. FHA, VA, or  USDA.

 

Best wishes to you!

Mortgage Banker - Since 1988 offering FHA, VA, USDA, Conventional, Jumbo and Portfolio Loan Products. Licensed in AL, AZ, CA, FL, GA, IL, IA, IN, KY, LA, MI, MO, NC, NE, NV, NJ, OH, OK, OR, PA, SC, TN, TX, VA and WI.
Message 6 of 7
Regular Contributor

Re: Need A Mortgage ASAP, but High Debt?

Thank you everyone for the advice, I had no idea I had to wait 12mos. The Cap1 was 4 consecutive late payments that started 12/2017-3/2018...the Cap1 charged off 4/2018 despite being on payment plan. My goal is to attempt to get the late payments removed and do a settlement & delete offer for the charge off as its $8500. I am trying to pay down stuff as fast as I can now, but it will take until around Jan 2019 until I can offer settlement on charge off. 

Message 7 of 7