Income & Credit Scores
Combined Annual Income: $40,638.00**
Adjusted Income: $40,240.00
Income level: Low
Loan Amount: $183,000.00
Note rate: 3.25%
Term: 38 years
Repayment income was calculated at $32,173.40.
Monthly Payment subsidy: $216.81
Monthly payment amount: $482.00
Insurance & property tax: $400.00 (approximate)
Total monthly payment: $882.00
**My annual income is approx. $8,450. His income is from a pension, social security and a part time job.
Date of application - October 2011
Summary of Eligibility/notice of no funds available - December 13, 2011
Certificate of Eligibility Issued - January 26, 2012
Current Credit Scores: TU-687 Equifax- 660 Experian-678
Prior Credit Scores:
December 2009 - TU 577 Equifax 548 Experian 559
August 2010 -- TU 588 Equifax 569 Experian 571
December 2009 - Sent out prequalification application ((Note: My partner is the only one on the application because his credit is much better than mine.)) My name, however, will be added to the deed at closing)
February 2010 - Received letter from USDA stating too many accounts in collection. Medical collections were okay, but others needed to be taken care of. We could pay in full or make payment arrangements, but our loan originator didn't specify and left it to us. We paid for less than half of what we owed but should have, instead, arranged for monthly payments. A six-month waiting period to reapply was necessary either way, but paying monthly would have started showing our ability to pay on time.
August 17, 2010 - We reapplied using the full application this time.
September 22, 2010 - Some documents were missing information and we were asked to sign and return them. We followed all instructions and mailed everything back the following day.
October 19, 2010 - We called to find out how things were going. There was a delay in waiting on a verification from an income source.
November 22, 2010 - After waiting three long months we got the letter stating that we were denied based on insufficient credit and /or poor credit history. Very disappointing.
STEPS WE TOOK TO GET THINGS RIGHT
A lot of precious time was wasted in those six months after the first denial letter. If we had paid on those collection accounts on a monthly plan instead of paying a lump sum it would have at least shown we were able to make consistent on-time payments. We would be applying again but this time we knew we had to work on our credit reports and scores. My partner applied for a Walmart card in December 2010, and got approved with a $150 credit limit. It was a tiny amount but it was certainly a start in the right direction.
In January 2011, he applied for a Care Credit card for $1,300 worth of dental work that he had done. He was approved for $1,000 and we were happy about that. Now we had another credit card that will be counted toward our ability to pay on time and get those credit scores increased.
I acquired one of my own credit cards issued through Sears called Sears Solutions Mastercard. I had a $400 limit and that, too, was paid on time every month. In March 2011, I applied for and got another one with the same credit limit. Both have been paid on time and have never missed payments on any of our combined cards.
Establishing new credit was the key for us in getting our credit reports to look better and to show the USDA folks that we are credit worthy and responsible enough to be homeowners. Not only that but his credit with Walmart increased to $500 after five months, and is now up to $900 after a year of paying on time.
Even though I wasn't on the application my income had to be disclosed on the application. I also had to sign a form making it okay for USDA to check my credit report. They also required three months worth of bank statements from me, and copies of four weeks worth of pay stubs.
FAST FORWARD SEVEN MONTHS
October 20, 2011 -- We hand-delivered our application to our local USDA office. Everything was in place and now all we needed to do was wait. I would make sure to keep in touch more often this time around to inquire about our application status.
November 8, 2011 -- I called the office to make sure everything was okay and to make sure they didn't need anything else from us. Our loan assistant asked if we could check the address for our employer because the verification letter she sent to them was returned to her. Another delay but not by much. We called our employer and had them fax the information out to our loan assistant and she recieved it that afternoon. We were told there would now be a 3 - 6 week waiting period while it goes to underwriting. Talk about nerve racking.
December 5, 2011 -- We completed the Home Buyers Online Education Course. This needs to be done before you can close on the house.
December 12, 2011 -- Received a call from our loan officer asking a few questions about family size and how many will be living in the house. We were told a letter would be in the mail and we would receive it soon.
December 13, 2011 -- Letter arrived with an Eligibility Summary showing amount he qualified for, approximate monthly payments, and the note rate. There was no Certificate of Eligibility, though, so we were a bit concerned. The cover letter explained that there were no funds available and that we would be contacted as soon as funding arrived.
THINGS WE WEREN'T SURE ABOUT
We now have an eligibility summary, but we weren't at all sure exactly what that meant in the whole scheme of things. I called to inquire about that and was told that because there were no funds yet the Certificate of Eligibility would be delayed until the funds arrive. The Certificate of Eligibility is what is needed in order to start looking for a house. The letter we got is basically an approval and once funding is in place the certificate will be issued.
January 24, 2012 -- I decided to send a question to 'ask the experts' over on the USDA website to find out about the funding availability.
Januray 25, 2012 -- Got a response back from the USDA office to my question about funding. He stated that funds were available and that I should contact my local office to find out for certain. I called and was told the the Certificate of Eligibility would be put in the morning mail. Finally!
January 26, 2012 -- The Certificate of Eligibility arrived!! We headed down town and met with a real estate agent and started the process of looking for a house. Now the fun really begins!!