Tricky Situation for FHA Loan application! Adivce?

[Blueshirts]

Illinois

McHenry / Lake County

I posted a topic on this board a year or so a go regarding a pending foreclosure that my sister and myself were / are going through on a shared property. We have since negotiated a repayment plan with the lender and have brought the mortgage current as of January 08.

I have since moved out of this property for the past 14 months (Feb 08 – current). My name is still on the mortgage but the payments have been made on time since we brought it back current according to my latest credit report pulled yesterday. The last negative was 12/07.

I am in the process of trying to qualify for a loan on my own. Now my credit history is pretty good except for the foreclosure process that was started but never went through. There are a number of 30, 60, 90 and one 120 day late entries from this debt.

My credit scores from my report that I saw yesterday were; 703, 708, 713.

The mortgage company I spoke with yesterday stated that under FHA, there can not be any 120 day lates on the report in the past three years. Also mentioned that I would be looking at a 7.25 percent instead of the standard 5.0 or 5.25 for 30 year fixed.

Now I am pretty green to the FHA rules and guidelines but does this make sense to anyone? I know I could refinance later after the three year period has elapsed. Obviously the market could be much better or worse at that time and I could end up missing out on the lower fixed APR now. Just looking for others opinions / experiences on similar circumstances.

I am in the process of writing a Letter of Explanation and also acquiring the proof that I have not made any payments on this account in the past 12 months. This is to prove that I am simply a co-borrower on the account. I have repeatedly tried to get my sister and her now husband to refinance the loan to get my name off of it but they can’t afford it without my name on the loan. She has two kids and I simply did not want to force them to move or sell the property. I explained I am taking a risk and doing here a huge favor by keeping my name on this.

My main question, does what the mortgage company told me yesterday make sense regarding the APR. I would love to buy right now but I may be forced to lease for a year and try again.

Thanks,What is the name of your state (only U.S. law)?

 

[Zigner]

In a nutshell - you co-borrowed on a property and the payments were late. Your credit was affected. The interest rates reflect your lower credit score.

 

[Blueshirts]

In a nutshell - you co-borrowed on a property and the payments were late. Your credit was affected. The interest rates reflect your lower credit score.

Right, I understand that negative entries affect my interest rates for future loans.

Looking at Bankrate.com mortgage rates across the nation, I should be at 5 to 5.25% with a credit score over 700.

Here is what I am using as a reference.

http://www.bankrate.com/funnel/mortgages/mortgage-results.aspx?zip=60156&loan=165000&perc=5&prods=1&points=All

 

[Zigner]

Right, I understand that negative entries affect my interest rates for future loans.

Looking at Bankrate.com mortgage rates across the nation, I should be at 5 to 5.25% with a credit score over 700.

Here is what I am using as a reference.

Mortgage Rate Results : Bankrate.com

bankrate.com is NOT a rate quote. If you feel you should be getting better rates then shop around!

 

[HUD-1]

On an FHA loan, you either qualify or you are rejected. There is no sliding APR depending on your credit score. Everyone must get the same rate/term from a particular lender. Terms can vary between lenders, so shopping around is a good idea.

 

[Blueshirts]

On an FHA loan, you either qualify or you are rejected. There is no sliding APR depending on your credit score. Everyone must get the same rate/term from a particular lender. Terms can vary between lenders, so shopping around is a good idea.

Based on some of the documentation that I was shown yesterday, there is some form of a "SLIDER" that dictates what your rates are under FHA. Points, interest rate, etc.

I will wait to see what this person tells me tomorrow and will decide what to do.

 

[wyett717]

I am in the process of writing a Letter of Explanation and also acquiring the proof that I have not made any payments on this account in the past 12 months. This is to prove that I am simply a co-borrower on the account.

Even as a co-borrower, you are still responsible for the payments. It's doubtful that your letter will have any weight, since all of the late payments were made while you were still claiming responsibility for the property.

 

[Blueshirts]

Even as a co-borrower, you are still responsible for the payments. It's doubtful that your letter will have any weight, since all of the late payments were made while you were still claiming responsibility for the property.

I did this at the request of the Mortgage loan consultant I was meeting with.

I have since spoke with multiple people and all have claimed to be requested to provide the same information. A letter of explanation and canceled checks for the past 12 months showing the payment is drafted from another account other than mine.

 

[wyett717]

That will establish that you haven't been responsible for the payments for the last year. It will not erase the 30, 60, 90, and 120-day late payments.