My husband and I are in the process of buying a new construction loan and the lender says we should go the FHA route since she feels that is the best option for us. Please note, settlement is scheduled for August 31, 2017. Lender said soft pull will happen again on August 24th to prep for closing.
My husband's scores and debt are good. His scores are 699/683/676. He is about as debt free as they come. The only debt reporting on his credit is Discover with a $2,000 limit and CapOne with $2,500 limit. His current reporting balance for both cards totals to $247.
My credit on the other hand is not so great. When the lender pulled my scores, they come up as 524/547/565. I currently have a CapOne with a $500 limit and reporting a balance of $34.
Here are the collections I have:
National Credit Systems - Apartment collections $4,181 - opened January 2011 - CR's say it's scheduled to be reported until Aug 2017
Fair Collections - Apartment $1,668 - collection date Nov 2011 - CR's says its scheduled to be reported until Jan 2018
BB&T - Repossession Charge-off $1,411 - called to settle for $705
DeVry - $1,300 Student Collections - applied for consolidation so debt and history of this will be removed in two weeks
Berks Credit & Collections - $684 - CR's say it's scheduled to stay on until Aug 2017
Berks Credit & Collections - $724 - CR's say it's scheduled to stay on until Dec 2017
Berks Credit & Collections - $783 - CR's say it's scheduled to stay on until Dec 2017
The lender has advised me to settle these accounts and then get added as an authorized user on husband's CapOne card. My issue with settling these debts is that they are so old and stemmed from a time when I had postpartum depression which caused me to lose my job and I was unable to pay the bills. Lender is only advising me to settle accounts so I can "raise" my score. How will my score raise on a debt so old that I am settling for? None of these accounts will note paid in full either. Already called to check.
Lender has also given me a form which is a letter of explanation for the debts. Can't I just explain the situation? I haven't had a hiccup or late payment in my credit since then.
I just opened a $1,000 secured card with Navy Federal since I've been a member since 2015.
Can I get anyone's opinion on this? If it matters, this lender is not the underwriter themselves. She has told me that with my husband alone on the app it was placed into "Refer" status only because his DTI with the mortgage payment would be 55%, and the limit is 43%.
I questioned paying the debts with the lender and told her that my plan was to let nature take its course and let the debts fall off since the time is so close. Her response was "pay what you want to pay". And also said that if I can get my scores to a 580, then she can get us a definite approval.
