Profile picture for daisylink

My husband and I are tyring to get approved, our middle scores are 630/642, debt/income ratio fine,

We are wanting to spend about $150K and we want to put $10-15K down. The morgage officer we were working with at our bank said our debt/income ratio was fine for that amount of house, however the deal breaker was the fact that right before he met me(January 2009), my husband gave up a car (he could no longer afford it) as a voluntary surrender because a moron friend of his told him it wouldn't hurt his credit. He has been at his job almost 8 years. I don't really have anything negative on my credit, just student loans which are in good standing, and I paid off my car this month which I'm sure hasn't been reflected on my score (I was never ever late). Any advice on how we could get approved soon? We were told to wait 6 months but we'd rather not!
  • October 21 2010 - Augusta
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Answers (7)

Be very careful if there is an outstanding balance on the surrender.  Do not pay it off until the lender tells you.  If you pay it off now it will most likely drop your credit scores even further.   A lot will depend on the last reporting date but it is very risky to do that.  If 12 months has lapsed since then you should be fine for FHA financing.  They will most likely make you pay it off at closing and provide a very good, detailed explanation for the reposession.  If you have a contract showing the car was purchased in both names that would be good to provide too. 
  • October 22 2010
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Hello, Daisylink! All the answers from these lenders are very good and it was wise to start with your own bank.  However, each lender is different so I would recommend you take the information from your bank & contact no more than 2 more lenders (preferably experienced & local so you can meet them face to face) and discuss your options. They need to get a complete picture of your financial position and will advise accordingly.  If you're not working with another Realtor, feel free to call/text/email me and I will be happy to refer you to reputable lenders and help you through the home search/buying process! Thank you!
  • October 22 2010
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FHA will more than likely require you to pay the amount of the charge off (if any shows on your creidt report) and will require a minimum of 12 months seasoning on the derog.  I would also get some advice on how to increase your credit scores in the meantime.  Many lenders are invreasing their minimum credit scores to 640 these days (FHA will go down to 500, but you would have servious challenge in finding a lender that is offering the product).
  • October 21 2010
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Profile picture for wetdawgs
have you considered fully paying back the voluntary surrender difference?  Your husband is responsible for his own decisions, and should talk to the lenders before making financial decisions.
  • October 21 2010
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Thanks Justin. Daisylink, just considering the scores, if they are Fico scores then you can do an FHA loan as they are. Would still need to see everything on the reports and of course the debt ratio's must be in line.
  • October 21 2010
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Impossible to give completely accurate information without all the details but more than likely you're going to need to pay off that car debt. Best advice: do not do anything until you have spoken with a lender who knows what they are doing. This excludes lenders who have call centers with "order takers". You really need to speak with an experienced, licensed loan officers. Your husband's friend may or may not be a moron but that was really bad advice.
  • October 21 2010
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You might be able to find an FHA lender to work with you in that situation.   Is money still owed on the repo?  Was it charged off?

You might be able to settle that debt for a reasonable amount and still enough left for the 3.5% minimum down payment on FHA financing.  

I would suggest your look up Clay Branch in the directory for your area and contact him.   He is a great resource for Georgia and if he can't help you, he will know where to refer you to.
  • October 21 2010
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