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USDA - Mortgage broker thinks we will be fine, I'm not so sure... help?

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Anonymous
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USDA - Mortgage broker thinks we will be fine, I'm not so sure... help?

I am usually in the "rebuilding" area on this site, but I'm lurking here. Here's the sitch, I am just looking for some opinions, maybe anyone with experience with a situation similar to mine. If you have 2 cents to throw in, please do. We are under contract to close July 20th. Inspection is tomorrow. I'm really super nervous, we really want to be homeowners.

 

My fiance and I saw a very experienced mortgage broker at the beginning of May to see where we stand with buying a house. We were actually expecting him to laugh us out of the office considering we have both had credit issues in the past. BUT after getting all of our info, he said we look good and to start looking if we like. He preapproved us, and told us we can go higher in price, but we are staying around the 140k-150k range.The last 4 years we have worked hard on living within our means, obtaining new basic credit and using it wisely, and paying off debt - except some old collections. We were putting current priorities first, and paying the current debt we had - please no flaming about not paying off the collections.

 

These are the facts, maam:

 

Our mid credit scores are him-685, me-672.

 

Between the two of us, we have 6 credit cards/store charges with a total credit available of $3350 - our utilization is 0%, we keep it between 0 and 5%.

 

Our percentages are 17/21. We are able to save pretty decently since paying off all our cars, credit cards, etc in February. However, I am in the middle of a $4500 dental procedure (due to an injury) that has sapped most of our savings, but not all. We had been trying to get an emergency fund going, good thing we did. On average, we are able to save over $1000 a month.

 

We have about $10,000 in or 401K's for reserves.

 

Between the two of us, we have 4 open collection accounts (no government and no judgments), the largest being $1200, the rest are much smaller. These all went into default the middle or end of 2005, so the statute of limitations in our state will be expired on all of them this year, with the exception of a $70 columbia house one from 2007 (willing to pay it, but didn't know about it until he pulled the tri-merge and don't want to do anything until they tell us to).  So the chance of us getting sued is pretty low, and even if they did, we would just arrange payment with them at that time. Broker said they "may" have us pay some of them off before closing, but he thinks with our scores and percentages, we will be fine.He also said that they streamline at a credit score of 680+, which doesn't require even looking at the collections. He called and asked the UDSA, and he said he couldn't get a definite, but we should be just fine. I would love to trust him, he does this for a living and had done many USDA loans, I am just so flippin nervous.

 

Can anyone shed any light on this, is what he says about the streamlining correct? I have read streamlining at 640, but not 680.

 

Has anyone gotten a house with a USDA loan and had old open collections that were not required to be paid off?

 

Any other experiences or opinions anyone could share? I just can't see any lender giving someone a loan when they have open collections - even if they are old.

 

 

 

 

 

 

 

 

 

 

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ShanetheMortgageMan
Super Contributor

Re: USDA - Mortgage broker thinks we will be fine, I'm not so sure... help?

Getting mortgages with open collections is done all of the time, even these days.  You'll likely have to write a letter of explanation on them either way, but an underwriter doesn't need to document it other than that explanation.  You are correct about the 640 score being the level for streamlined documentation, perhaps his underwriters require 680 though, you'd have to ask him why the 680 score figure.

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