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We live in GA and are applying for an FHA loan. I had an overdraft 2 months ago. Am I SOL?

We are not married, but have lived together for 8 years.  We have never had a combined bank account so they asked to see his 2 month and my 2 month bank statements.  Everything we have done we have had to do double because of not being married.  I show an overdraft on my statement 2 months ago.  My mortgage broker called today and said they needed an explanation on why I had it.  It was 10 days before Christmas and I don't balance a checkbook very well and on oversight on my part.  We sent that to the company.  Now I am beside myself with worry.  Did I totally just get us denied because I am a bad balancer?
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January 30 2012 - Brunswick
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Answers (6)

Tiffany,

You should be fine.  If that is your only blip then the letter of explanation should be sufficient for the underwriter to approve the loan.  I would not worry for now.

Justin Herring
Southeast Mortgage
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January 31 2012
Over drafts in account statements really only an issue if:
1) constant pattern of over drafts
2) significant payment shock present on the new loan (higher housing payment than what is currently being paid in rent)

There a lots of little issues that require the loan file to have an explanation from the borrower that don't amount to much - just need to have the explanation in the file to cross t's and dot i's.
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January 30 2012
No need to worry.  It seems like you are on track with the purchase of your home.  Ask your current lender if they have any other questions regarding the letter of explanation regarding the overdraft?
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January 30 2012
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I already submitted it to him.  They asked for an explanation of my overdraft. So he wrote a letter stating that it was a bookkeeping error on my part.  Since there is only 1 in the whole 2 month cycle, and all they asked for was an explanation...does that mean that I might be ok?  So far they have asked for two explanations.  They asked for the reason I had an overdraft, and they asked for verification that my last name has never changed.  Once when we had home phone service they listed us together under his last name.  So we sent a letter explaining both of those things.  Should I be worried? 
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January 30 2012
Don't provide bank statements.  They can order a VOD (verification of deposit) which does the same thing as bank statements.  All they are trying to verify is the average balance for the last two months.
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January 30 2012
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nah, i'm sure it will be fine if its not a habit and you have decent credit or a savings account and the overdraft was just a blip.

give as little detail as possible, just say "we goofed, but we took care of it as soon as we found out" and you'll be fine ;P

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January 30 2012
 
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