No credit card required
Browse credit cards from a variety of issuers to see if there's a better card for you.
Here is the situation. We have spent a long time getting our credit to where it needs to be for an FHA loan. Both DH and I are around the 620 mark. I had a foreclosure 4 years ago but DH was not on the loan. We are looking at buying a home in Southern Indiana. All credit cards have just been paid off but it each card won't report for a few more days so our reports don't show the updated utilization . No lates for years. However, we do have an old collection on our report which is 4 years old for an apartment complex that screwed us over when we moved out. We don't owe a fraction of what they say we owe. I have tried disputing with them and the credit bureaus. I have also tried settling with them over the years but to no avail. Our lender tells us we have to pay them in full ($4800) to get the loan approved. We have spent a long time saving up for a downpayment. Will all lenders require the collection be paid? or will other lenders approve the loan without it being paid?
Another wrinkle is that DH has moved for his job. The new job is in the same field and pays a lot more than the old one but is out of state plus he is working as a contract employee but he is a w2 employee.
I am still working my old job as a teacher/school administrator and won't be moving till the end of the school year. Needless to say I have not got a job in the new area yet but as a science teacher it is never hard to get a job.
wrote:Here is the situation. We have spent a long time getting our credit to where it needs to be for an FHA loan. Both DH and I are around the 620 mark. I had a foreclosure 4 years ago but DH was not on the loan. We are looking at buying a home in Southern Indiana. All credit cards have just been paid off but it each card won't report for a few more days so our reports don't show the updated utilization . No lates for years. However, we do have an old collection on our report which is 4 years old for an apartment complex that screwed us over when we moved out. We don't owe a fraction of what they say we owe. I have tried disputing with them and the credit bureaus. I have also tried settling with them over the years but to no avail. Our lender tells us we have to pay them in full ($4800) to get the loan approved. We have spent a long time saving up for a downpayment. Will all lenders require the collection be paid? or will other lenders approve the loan without it being paid?
Take off the disputes and we won't require the collection to be paid. We'll use 5% of the total balance as a payment against your DTI. If your lender is saying to pay it off, then it's most likely a DTI issue. If it's a judgement, then we'll require it to be paid.
For DH, he needs a letter from his employer stating that the out of state job is normal and they move employees around wherever the contract is, but we will need to count the "rent" he pays to stay where he is for his job unless his employer pays for the "rent".
DTI is not an issue. We are well within both the front and back end ratios. There would be compensating factors such as the mortgage we would be looking for would be the same or less as we currently have
Also we are moving to DHs home town so there is no rent as he is living with his parents until we get there.
Our lender is insistent it gets paid. He says that FHA guidelines require that it be paid or that we have a payment plan on it for 3 months because it is over $2000
wrote:DTI is not an issue. We are well within both the front and back end ratios. There would be compensating factors such as the mortgage we would be looking for would be the same or less as we currently have
Also we are moving to DHs home town so there is no rent as he is living with his parents until we get there.
Our lender is insistent it gets paid. He says that FHA guidelines require that it be paid or that we have a payment plan on it for 3 months because it is over $2000
It doesn't have to be paid unless it's a judgement. I assure you that lenders that have no to minimal overlays will use 5% of the aggregate collections (if over $2,000) as a payment to go against your debt-to-income ration. This was taken from the FHA handbook. Your situation can be handled by the sentences in red.
Collection Accounts (TOTAL)
Collection accounts of a non-borrowing spouse in a community property state must be included in the $2,000 cumulative balance and analyzed as part of the Borrower’s ability to pay all collection accounts, unless excluded by state law.
If the Mortgagee uses 5 percent of the outstanding balance, no documentation is required.
When the creditor is asked to prove how you owe what they claim you owe, what type of proof do they provide you with that makes their claim valid?