I was hoping that somebody experienced in this area might be able to shed some light on things…
My wife and I have had our offer on a home accepted, and we applied on Friday with Wells Fargo for the mortgage.
I calculated my own DTI’s (we are applying for an FHA mortgage because of credit problems) and we fall withing the 29/41. I have some tax debt, collection accounts and an open judgment that are all being satisfied on 12/15. My middle credit score was 557 and my wife’s was 585. The down payment will be 3%, and it will be borrowed from my 401K plan. The seller agreed to a $14K seller consession so we could finance the majority of the closing costs.
The sr loan officer told my wife that the "system" didn’t approve it, so it went to manual underwriting today.
We definitely have the income to make the PITI payments and our monthly obligations…so the credit is the concern…
What happens in manual underwriting? any idea what % that go into it get approved?
I maintain my certification as a Direct Endorsement underwriter…a DE underwriter is authorized by HUD to underwrite FHA and VA loans.
What caused the loan to fail the automated underwriting is because the credit report itself, the system graded it as having an open judgement.
Understand that the judgement will have to be paid in full either at closing or prior to, and it’s up to you to get a formal payoff so the closing attorney can make sure it’s taken care of.
If your LO told you that you can close prior to 12/15 with an open judgement…he’s wrong…FHA won’t allow it.
Your credit scores don’t matter with FHA…your recent payment history does and if you don’t have the correct number of tradelines, they can use alternative credit such as electric bills, cell phone bills, etc.
It’s not going to be the debt ratio that is going to hold you back…negative credit is going to have the biggest impact on if you are approved or not, and I wouldn’t be able to answer that without seeing your actual credit report…which you can’t do online.
An underwriter should not take any longer than 3 business days to underwrite that loan.
I maintain my certification as a Direct Endorsement underwriter…a DE underwriter is authorized by HUD to underwrite FHA and VA loans.
What caused the loan to fail the automated underwriting is because the credit report itself, the system graded it as having an open judgement.
Understand that the judgement will have to be paid in full either at closing or prior to, and it’s up to you to get a formal payoff so the closing attorney can make sure it’s taken care of.
If your LO told you that you can close prior to 12/15 with an open judgement…he’s wrong…FHA won’t allow it.
Your credit scores don’t matter with FHA…your recent payment history does and if you don’t have the correct number of tradelines, they can use alternative credit such as electric bills, cell phone bills, etc.
It’s not going to be the debt ratio that is going to hold you back…negative credit is going to have the biggest impact on if you are approved or not, and I wouldn’t be able to answer that without seeing your actual credit report…which you can’t do online.
An underwriter should not take any longer than 3 business days to underwrite that loan.
References :