'Underwriters'; what did they expect from you when you bought your home?

[jimmysgirl424]

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Kym- I am a mortgage underwriter, so if you have any specific questions I can try to answer them.

[jimmysgirl424]

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[2 Crazy Pugs]

The market has nothing to do with you paying off credit card debt. When we look at debt, we run "debt to income ratios", two of them. The first one is your housing ratio, which is all your monthly housing expense (on the new home- meaning principal/interest/taxes/insurance/HOA fees (if there are any) mortgage insurance (if you will need it) divided by your monthly gross income (combined you & your husband). The second ratio is your total debt to income ratio, which is all your monthly debt (housing plus all other debt, credit cards, car loans, etc) divided by your gross monthly income. Standard ratios are 28/36, some lenders will go higher depending on your LTV (loan to value).

Have you met with a mortgage company yet?

[jimmysgirl424]

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Is your credit good? When underwriting we use a median score- we take your 3 scores, your husbands 3 scores, get rid of the high & the low and use the lower of the remaining two.

If credit is good, employment can be verified and show stable income for a minimum of 2 years, the appraisal comes back on the house acceptable, you shouldn't have any problems at all.

100% financing- is it 1 loan or are they setting you up with 2 loans? (a 1st mortgage and a home equity?)

[jimmysgirl424]

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You should definately ask if it is 1 or 2 loans. Because if it is 2, the second is usually at a much higher rate, and you will be making 2 mortgage payments a month. But it will get you into the house, and then wait a year or so, refinance them both into one loan. By then, you should have some equity in the house.

Also ask if there is a prepayment penalty on the loans.

[ks_piper]

We were in a similar situation and had to provide tons of paperwork. I don't know how much you provided for your pre-qual, but we had to furnish 2 years of tax returns, w-2s for both of us, credit reports, a statement about each negative item on our credit reports, I had to offer a statement as to my gap in work (I was a SAHM for 3 years and now work part-time), provide statements from our utilities showing our payment history for the past year, same for rent, 2 months of bank statements and pay stubs, and we did have to pay off some debt, but that was to get qualified. I also had to provide W-2s from earlier years when I worked full time.

And unlike you, our debt to income ratio was higher - we have a car payment, but once we paid down some debt it all worked out (I also got a raise and started getting a few more hours at work).

We are putting money down on our house, so we didn't need 100% financing. And we went with an FHA loan - which does have a lot of requirements in terms of supporting paperwork and such. I even had to provide a statement about my future career goals!

We had our appraisal done about 2 weeks after we had the contract signed on the house and it went really well. Appraised for what we expected and the seller had a minor amount of repairs to satisfy FHA.

Best of luck - it can be a stressful process, but it is so exciting at the end of it all. And it's enlightening to know where you really stand financially. :) If you're lucky like us, our mortgage payment (including PMI, insurance and taxes) is less than our current rent.

We close on our house tomorrow morning and hopefully you'll be doing the same soon!

[2 Crazy Pugs]

FHA loans always require tons of paperwork- its a good program but a lot more work!

If I can think of any other questions that I think you should ask I will let you know.

[ks_piper]

I was amazed at the amount of paperwork required. The file on us at Wells Fargo is HUGE! And they asked for some strange stuff, but we got our loan and we're getting our house and that is what matters most to us. :)

We never thought we'd be able to afford a house on our income, but thanks to FHA and a lot of hard work on our part over the past year to right past credit wrongs, we'll be homeowners tomorrow.

:)

[Asha]

something the underwriters demanded from us at the last minute was proof of a green card for my dh. this really made me mad bc i had asked several times if this was going to be an issue, and they told me no. it takes the u.s. a long time to send out green cards even after you have been approved. luckily, they were able to consult their "immigration expert", and he told the underwriter how to look up his status online.

[jimmysgirl424]

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Its not to really show you are divorced, its to make sure that you are not responsible for any debt that you may have incurred with your previous marriage, and if you get any sort of alimony/child support income, the divorce decree is used to show how much you receive and how long it will continue (needs to continue for a minimum of 3 years to be considered as stable income).

Sorry to sound like a know it all, but I underwrite 7-10 loans a day (mortgage loans), its my career.

[jimmysgirl424]

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I don't think you will have to pay off the Zales account either.

As for turn around time, our company policy is 24 hours for new loans, but I don't know about your mortgage rep's company.

[jimmysgirl424]

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[craftgenius]

Our loan process with Wells Fargo was much easier than I expected. Our lender initially wanted the last two years of W-2's, the last two tax returns, the last 3 months bank statements, pay stubs and IRA statements. Before our loan was finalized another month had passed so they asked for the current month bank statement, check stubs and IRA statement. Our debt to income ratio was ~19%. I've heard that lenders prefer it to be under 25 - 33%...but that is not necessarily true because I know tons of people who have purchased a home with a higher debt to income ratio. As far as the credit card, I don't see that being a problem since it is the only one that you have. I've been told that lenders like to see your balances being no more than 1/2 the credit limit....ie if you owe $2000 but the limit is $4000, you are good. My DH and I had more credit card debt than you do and we had no problems at all...as long as the credit reports show that you are paying on time...with no 30+ day late markers in the past year showing up on your credit report, you are probably good. However, when our loan was pre-approved, I had one 30 day late marker on my credit report that happened 11 months prior to the pre-approval...the lender didn't hold it against me obviously because they approved the loan, and at a really good interest rate too. I seriously doubt they will ask you to pay off the credit card...especially since it is the only one you have.

[jimmysgirl424]

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Did they give you a reason for the increase in the rate?

[kam]

I would definitely shop around. You don't have to go through a particular company - our agent actually did all the leg work for us in finding the best rates. To avoid mortgage insurance, we did an 80/20. I've heard horror stories about the 20% being a very high rate (8-10%) but not all seconds are like that (ours is in the 6% range).