Soldier looking for a mortgage

[Anonymous]

A little about myself, I am a soldier currently stationed in Iraq cleaning up my credit. I have learned so much on these forums, thank you everyone for contributing! I have very bad credit, mostly due to the number of deployments, and sometimes bills get pushed back. I have a 509 equifax score, 529 experian, and 569 transunion. I am in the process of disputes, pfd's, and gw's. I have seen a rise in my scores, and I know it will take time. My wifes credit is a little better, 569 experian, 600, transunion, and 569 equifax. We know it will go up quite a bit once we pay down all her credit card to 10% utilization. Currently she is about at 90% on all three cards.

Now, we shopped around for a mortgage in the summer time, just to kind of see where we stood. The one good thing we have is that we make pretty good money between the both of us. We clear around 6000$ a month after taxes. Our only major bills are her truck payment (600) insurance (150), student loans (300), and various credit cards (total min a month is 250). Our question is why we were told to clean up our credit report when we were trying to qualify for a loan? I have six collections, and she has three which total about 7000 dollars when all is said and done. Mostly petty things on my credit from my deployments, like gas, cable, and one charge off on a credit card. The mortgage broker says we need to pay off all of our collections, and we should qualify. He did not like that she changed jobs (same field, she is a engineer). She worked for her old company for 5 years, and took basically the same job with another company about two months back, which pays her about 10% more.

Can someone please tell me what I NEED to do to qualify for a mortgage? I want to use my VA home loan guranty, as I am on Active Duty in the ARMY. We pay an outrageous amount for rent, and would have NO problem paying 1500-1800 a month in a mortgage. Why is it so hard for us to qualify? I wish a broker would just tell me exactly what to do to qualify, so that I can do it. We want to look for a house in May when I come home for leave for three weeks. Is that a unrealistic time frame to get everything in order? We do have expendable money to pay off all our old debts. We just want to do everything quick, and go about it the right way.

Thanks alot and any advice would be appreciated, especially from shane!

[ShanetheMortgageMan]

Hi mersac,

"Do everything quick" is not normally the "right way".  The right way is to make sure you are in a good position to qualify, and obtain a pre-approval on a good mortgage loan, before you buy a home... it can be a quick process, but often it is not if your credit isn't top notch.  With the scores you have outlined, and since you want to use your VA benefits, the only loan program you'd have to choose from is a VA loan program... no other loan program would allow you to use your VA benefits.  VA loans have a VA funding fee (can be financed into the loan amount), but do have pretty good interest rates, can do 100% financing, and no monthly mortgage insurance is required.  They are also not score sensitive, but are credit history sensitive.  They generally like you to have clean credit for 12-24 months, with anything that is derogatory has to be explained by an extenuating circumstance.  So how is your credit in the last 12-24 months?  What are the details on each collection (when was it, what for, and how much)?  What type of sales price range are you looking in?

The reason it is hard for you to qualify for a mortgage is because of your credit scores, conventional financing (anything but FHA & VA) are more score sensitive than they were in the past.  Mortgage insurance on conventional mortgages is impossible to obtain unless your score is at least a 575-580 level... so that would leave you with just sub-prime, and sub-prime isn't a loan program you want to use to purchase a home.  Her changing jobs isn't a big deal as long as she's paid the same (W-2 -> W-2), perhaps your other LO was just flustered with your credit situation.

Hats off to you for serving our country, my step-brother was out in Fallujah last year and it was no picnic.

[Anonymous]

Yes, I understand about the whole process being slow if my credit is less than perfect. Our other LO was not too good, he really did not explain himself. Do you handle VA loans? Or do you know of any LO's in the Houston area that would specialise in that type of loan? I could really use your help. I just need a LO to look at our credit reports and what not to get us on track to be able to qualify for a mortgage. Any help is very appreciated

No...I have no lates in the past two years, my wife has one late on a car payment and credit card due to moving when I deployed. We are working with the creditors to have a gw adjustment..just waiting on a response. Other than that we dont have any debt.

[Anonymous]

Thank you mersac for your service - and pass that along to your DW from another military (retired, now) wife.... pcs can be hectric for all of us.  I think the heartfelt GW will have its intended action, especially with a good payment history otherwise.

Shane is very right - get the financing first but do it when your credit is in proper shape (all those hard pulls don't help).

I would try some GWs on other accounts - when deploying they are suppose to tell you about SSCRA (but usually just give it a quick pass) - many,many soldiers, Marines, AF and squids didn't know how to use this to advantage until after the fact (DH was back on AD for both Enduring Freedom and Iraqi Freedom - and I spent a lot f time helping out young wives wade thru the mess - it was 'my job' to allow his people to concentrate on business and not worry about 'that stuff')

So right now, concentrate on clean-up - GWs, PFDs as needed - and we will all help whenever you need it.

[stpn2me]

I must concur with what the other's are saying.

I would suggest getting your scores up into the 600 to 660 range and then trying USAA. Since I am also active duty, they have been VERY nice to me. They are very helpful and usually can work wonders. Keep disputing baddies on your record and try Good Will letters. It only takes about five or six months to repair credit to useable fashion. Good luck...

All The Way..Airborne!

Stpn2me

[Anonymous]

Thanks to all for the great advice! I think I am being a little impatient with all of this, I just get pissed off when CA's and CB's think they can do whatever they want to you. It sucks! Oh well, I will just keep sending in letters, pray and hope for the best!

[ShanetheMortgageMan]

mersac did you get my respond email?