The Mortgage Application Process Resumes

Nearly six months ago, I mentioned the possibility of getting a VA Loan. The VA has a provision where they can waiver the two-year post-bankruptcy waiting period under certain circumstances, and that's what I was hoping for. Unfortunately, that didn't happen.

Our bankruptcy will reach it's two year maturity date on August 4, less than one month away. I contacted the same lender I spoke with in January and we met on June 10 to start the process in preparation of the maturity date. Having completed the entire loan application, the Loan Officer said he wouldn't collect the $325 application fee until the underwriter had indicated an approval.

I must say, I have been less than satisfied with this particular Loan Officer. It took nearly a month for me to receive any word through him from the underwriter, and at that time, the response wasn't exactly what I had been hoping for. The underwriter had a couple of concerns.

• The $5000 rent credit we're receiving from the seller of the home cannot exceed the difference between what we paid and what the fair market rent value for the home is. In other words, the home has to be appraised in order to determine the fair market rent value before we can proceed. By my calculations, the fair market rent value cannot exceed $920 per month for the underwriter to accept our $5000 rent credit toward the down payment. Of course, the requirement to appraise the home has changed the Loan Officer's flexibility about the application fee. He said he would need to collect the application fee in order to send out the Appraiser.
• The underwriter was concerned that we have not established several new lines of credit since the bankruptcy. The one credit card account I have opened is apparently not enough for him to be satisfied that we are now credit-worthy. The Loan Officer asked me to email him an explanation for why we haven't opened additional lines of credit. As if going through the bankruptcy in the first place isn't enough reason not to open several new lines of credit.
• In addition to the above, the last time I spoke with the Loan Officer to lock in our mortgage rate at 5.25%, he mentioned (for the first time) that there would be an additional fee of $325 required to get the rate because of our current credit score. No mention of that fee before.

My concern is that this lender had shown now sense of urgency about our loan, has sprung undisclosed fees upon us, and that the underwriter isn't happy with our existing open lines of credit and isn't certain he can accept the rent credit as a down payment.

What makes this funny is that I have not yet emailed the Loan Officer with the explanation he requested, and I have not given him the application fee, yet I have heard from the Appraiser twice trying to schedule a time when he can come to the house to do the appraisal. I am putting him off until I decide how to proceed.

Needless to say, I have contacted a new lender and begun the process anew, assured (so far) that we should be able to close in approximately thirty days. We'll see how that goes, and how the entire situation pans out.

The lesson learned in this is that it isn't always best to go with your first lender choice. It really does pay to shop around to different lenders, as they all set their own mortgage rates, their own fees, their own guidelines for things like rent credit, and some are more aggressive in obtaining approval than others.

Stay tuned for updates soon.