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Old 04-13-2015, 10:59 AM
 
11 posts, read 13,111 times
Reputation: 13

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Hi,

I am right now in underwriting for an FHA mortgage in Texas. I have three questions:

1) Will my new tax bill for this year result in a denial? I read that FHA will take proof of 12 months worth of payments (doesn't have to be 12 months ON TIME payments - meaning if my 2014 tax bill is due April 15, I can go on repayment plan and pay 12 months of that repayment amount at once).

2) I have a 6 year old judgement with 3 documented payments - will this suffice?

3) 2 of my student loans were recently transferred. They now show as closed on my credit report, and the new servicer has not appeared, which I'm sure resulted in a drop in my credit scores. Will this kill my application since my scores will be pulled just before/after closing?

I have made sure not to get invested in this process so as not to be dissappointed in case of a denial. However, I feel frozen in time until underwriting gets back to me.

Thank you for any responses.
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Old 04-16-2015, 05:18 PM
 
Location: New York
2,251 posts, read 4,160,232 times
Reputation: 1607
.

Henrietta welcome to City Data.

It appears you lack experience dealing with the mortgage process. Knowing there are issues, it is better fixing them. Before time and money is invested into something that might not work out.

The normal steps for a mortgage before a closing are;
  • Filling out a 1003 Mortgage Application.
  • Having your credit report run.
  • Sending in required documents to support your application.
  • Setting up and paying for an Appraisal.
  • When appraisal is completed package goes to a 3rd party Underwriter for preclosing conditions.
  • 3rd party title report is ordered.
  • Title report completed goes back to Underwriter for review and post closing conditions.
Your loan officer should of discussed issues with you with after your credit report was run. You are saying loan is with an underwriter, was after the appraisal? Chances are you will lose what you paid to have the property appraised. If the appraisal wasn't completed, chances are your application won't make it past the loan officer supervisors desk. It is not in the banks best interest to work on an application they know is going to be denied, because they also will lost time and money. Boils down to how experienced the people are you are dealing with.
  • Your #1 above - Underwriting is most likely going to set any taxes owed as a condition to be paid. They can argue if you failed to pay could result in an income garnishment.
  • Your #2 above - if you have judgments appearing on your credit report. Not sure what you mean by three 3 documented payments? Will be asked to provide Judgement Satisfaction letters. If you have paid and satisfied those judgments. It is in your best interest to contact the Credit Bureaus directly and have it them removed. It takes average of 30 days to do this and your credit score could possible go up. Another way of looking at this is answering. If it is prudent to clean up your credit report so you can qualify for a better loan, or do you want to pay more over the lifetime of your mortgage being charged with a higher interest rate?
  • Your #3 above -student loans not being paid or deferred. The monthly payment will most likely be factored into your DTI score. If you were hoping to eliminate loan payments, the old servicer would show a $0.00 balance or paid in full on your credit report.
Good Luck

Last edited by Modification Specialist; 04-16-2015 at 05:33 PM..
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Old 04-17-2015, 06:33 AM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
Reputation: 8078
Hi there, very few lenders allow a buyer to proceed to closing owing to the IRS. The first thing the IRS attaches for nonpayment is a home. On item #2, as Mod Specialist states, you will need a certificate of satisfaction filed in the courthouse by the creditor. Item #3, installment loans rarely affect scores. Hopefully, you disclosed the debt. All your lender must do is contact the bureaus for an account update. We do it all the time. Hang on, you should get answers soon. Ask your lender if you got a DU or LP approval. If the answer was yes, you should be good with your biggest challenge being those taxes. Ask family for a "gift" you can feel compelled to repay after your first tax refund after homeownership, or pursue a loan to pay them.
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Old 04-17-2015, 12:13 PM
 
11 posts, read 13,111 times
Reputation: 13
Hi,

Thank you for the responses.
I do in fact understand a lot about the mortgage process - specifically FHA. I had an automatic approve/accept and the appraisal was already completed (and paid by the seller - so I have nothing to lose) I have already discussed 2 of these issues with my loan officer.
1) - I am on a payment plan with the IRS for my new taxes for 2014, which is not due for another 4 months.
2) - You can in fact get an FHA mortgage with an unpaid judgement showing on your credit report as long as there is proof of a payment agreement and at least 3 payments made.
3) - The deferrred student loans all appeared on my credit report during my application approval. It was right after that 2 of the loans were transferred, and the new company has not appeared on my report yet. So my loan officer explained that a credit supplement will be done, as well as a possible conference call with the new servicer.

The only thing I have yet to discuss is the tax bill (which I will). The bill is not late or past due.
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