Financing in 96707>Question Details

Mkingery1, Home Buyer in 96707

Worrying that my bad habit will effect our chance of approval, will overdraft fees effect our chance, they only occur on one of our accounts

Asked by Mkingery1, 96707 Fri Nov 11, 2011

We have 4 accounts. One is our main distributing account, rent and savings are withdrawn from this one and whatever bill money is needed is transferred out to another account (same bank) to be put on hold until the bill is due. This account is usually taken down to a 0$ or low balance each week and whatever money is left over gets put into our last account at a different bank for savings. We are applying for an FHA loan and have PLENTY in annuity and 401K, have the down being gifted to us, credit is 655, and my husband brings in 150k per year. My only concern is that with this main account I sometimes tend to get busy and not balance my books and overdraw, the bank pays out to whomever (target, etc.) and I get charged a fee. It is always paid back within two days but over the course of a year my YTD for fees is 834 with 130 from this last month non from previous. We always have money to cover I never transfer it though bc I tend to not catch it in time. Will this hurt our chances?

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Mkingery1’s answer
Thank you all for answering. It is our only account (out of 4) that ever gets overdrawn and never by very much. We will let our lender know tomorrow and see if she thinks is will not be a problem or whether we should get a VOD. My husband says his friend just got a home loan and had NSF charges every month. Alot of them can be explained as lack of communication between my spouse and I, or like the charges this last month, a miscommunication between a merchant and the bank. In the last two months there have been 5 NSF charges but I am still nervous that they will look at YTD charges. In the beginning I would put money into that account manually instead of auto pay and that resulted in a cont. neg balance in march and april. We finally switched it over and have had little issues other than the occasional forgetfulness on my part. With two boys I would hope they understand that it hasn't effected our rent or car payments or credit cards, those are always on time. The charges were for mundane things, not usually charging over 15.00. Still have knots in my stomach though, hopefully since UW hasn't happened if she thinks it will be an issue we can just go with a VOD for that account.
0 votes Thank Flag Link Fri Nov 11, 2011
Hi Mkingery1,

Have your lender do a VOD instead of providing bank statements. A VOD is a Verification of Deposits. The lender will send your bank a form to fill out stating what your average balances have been over the last 2 - 3 months. (We need 2 months, but many times the bank will only provide a 3 months average balance).

When you use a VOD, bank statements are not review, so overdrafts are not seen. It becomes a non-issue.

Good luck with your purchase!

All the best,
Ros

Roswell Moore, CMPS
Certified Mortgage Planner
480-422-5095 direct
http://www.ezAZloan.com

We are a Direct Lender, Mortgage Bank where we originate, process, underwrite, fund, AND SERVICE our loans, in-house, FHA (starting at a 580 score AND only 3.5% down), FHA Streamline loans (no minimum credit score, no appraisal required) Go Green rehab loans, HomePath, Investor Friendly (10 financed properties), VA, USDA, Jumbo, Conventional, plus, we allow Escrow hold backs!
0 votes Thank Flag Link Fri Nov 11, 2011
It is going to be clumsy but might be okay. That many late fees are a signal you are not managing money as well as might be possible. It is roughly 1% of the net income which is a lot to pay in penalties on an ongoing basis. If you do not provide any bank statements it may not come up. Show only the 401k account and gift funds. Showing the 401k will add strength to the automated decision and the findings will not ask for documentation on the accounts that aren’t listed as an asset.

Have the donor wire the gift directly to the closing attorney or Title Company from their account. We require proof from the donor that they had the money to give anyway so use it to your advantage. Don’t deposit the funds in any of your checking accounts and the question may never come up. If you show any of your bank statements they are going to ask for the rest of them because you are moving money around which raises a red flag on its own.
Hope this is helpful,
0 votes Thank Flag Link Fri Nov 11, 2011
Hi there, talk to your mortage rep - the underwriters are mighty picky, so at minimum you will need to explain the situation very well. My suggestion would be to also remedy it particularly if you are planning to be reviewed for a mortgage. Though not a mortgage rep myself, I think that demonstrating that you are changing the behavior would help.

Good luck to you,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
0 votes Thank Flag Link Fri Nov 11, 2011
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