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USDA loan denied...now what?

My credit scores are on the low side but I was pre-approved & pre-qualified. I put in an offer on a house, signed all the papers and the underwriter denies my loan. My scores are 606, 650 & 658. I only have one 30 day late payment 10 months ago and prior to that I have 23 months of solid payments on my car and student loans. I have been reading so many sites and it seems like I should be able to get approved and if manually underwritten. What do I do now. Should I reapply? The sellers just retired and are moving to FL in two weeks. We were supposed to close on Sept 10th. I am so stressed and don't know what to do. by VMM693 from Cranberry Township, Pennsylvania. Aug 30th 2014 Reply


IRIS CRESPO (icrespo@americanfsb.com)
#96 ranked lender in Pennsylvania - 16 contributions

If you have money to apply towards the home loan we could Try getting you approved for another loan type. However we would need to act fast p. time in your case is of the essence. Give me a call 484-881-3260

Aug 31st 2014
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Brian Devlin (briandevlin)
#103 ranked lender in New Jersey - 12 contributions

Hello, None of the examples you gave are reason for getting denied. There must be something else. You really need to speak to another loan consultant to go through your options. Besides on Oct 1st USDA will be changing there maps so you need to check to see if will be an option in the next 30 days. If you have 3.5% to put down FHA might be your best option.

Aug 31st 2014
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Kathleen Smith (info@superjumboloans.info)
#231 ranked lender in Florida - 25 contributions

you can visit our website for details on un-conventional lending products. feel free to email or chat us online anytime. also see our intro to private banking video for more detail on how we do what conventional lenders cant. Kathleen, Private Client Serviceswww.superjumboloans.info

Sep 1st 2014
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From your disclosed information something is missing. Like the others posted you need to speak with another lender asap

Sep 1st 2014
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Andrea Varvolis (AndreaVarvolis)
#82 ranked lender in Pennsylvania - 20 contributions

Hi, We have lenders that would be able to finance an USDA loan with your scores. Email me or give me a call. andrea@monumentmortgage.net or 215-272-1157Thanks,Andrea

Sep 1st 2014
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Joe Metzler (JoeMetzler)
#19 ranked lender in Minnesota - 3,754 contributions

The first thing to do is ASK WHY you were denied, then let us know here so we can help with answers. There is always a reasons... next, everyone needs to understand that "pre-approved" really doesn't mean approved. It means that you looked OK to the Loan Officer - but your full approval is only done by an underwriter.

Sep 1st 2014
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,428 contributions

Sorry to hear about all your troubles.. typically, USDA files are underwritten twice.. First, your file is submitted to USDA for underwriting and second, your lender will also underwrite it as well. This usually happens at the same time.. so when you state that underwriting turned it down, we need to know " Who " turned it down. USDA or the lender.. Regardless of who, you should know the reason why.. and once you know that, you can work on getting it corrected.. Since your 9 days away from closing, it's probably too late to consider moving your loan to a different broker. Plus if you did move your loan, most lenders would require you to pay for another appraisal, adding even more time to close.. I would get on the phone and insist that your loan officer take your call.. if he doesn't, ask for his boss, and have him explain where you are exactly in this process.. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Sep 2nd 2014
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,232 contributions

If you were denied by the lender, it's certainly possibly to have lender look it over but of course there is no guarantee. It really depends on why the 1st one didn't approve and submit you to USDA for final approval. Starting over with another lender will likely delay your closing up to a month - partly depending on the turnaround time at the USDA office. Good luck!

Sep 4th 2014
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,232 contributions

It is always the overally picture that makes a difference and the details matter. It also depends whether you were denied by the lender you appllied to or by USDA. If it was the lender you can definitely try another lender but if it was USDA you wll need to work on your qualifications before trying to get an approval. It may be your DTI, reserves, or other information and without knowing those it is difficult to give suggestions. FInd out the specifics and then check with another lender. September 10 isn't going to be possible and the sellers should be told that so they can make plans.

Sep 1st 2014
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Thanks for all the feedback. I'm still waiting on my LO to get back to me (I'm stressing because he was great at first - quick at getting back to me and answering all my questions. Now I haven't heard from him in a week). He did say he was going to resubmit to another lender/underwriter. He stated I should hear something today or tomorrow...but nothing yet. He said he felt I should have been approved. So thinking about your questions, I did have really bad credit when I was younger but I've spent just shy of two years trying to rebuild it. One thing I know that was on my credit report was a repossession of my car 4 years ago. However, I paid the amount that I was behind and it was reinstated. I got my car back the next day. When my lease was up I refinanced and bought the car. I still have the car to this day.

Sep 2nd 2014
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I also have 10,000 to work with for upfront costs, closing etc. I had a home inspection and it was good. They did an appraisal and that was fine. I'm giving him until tomorrow and then I'm calling around. If you left me your information, I'll probably be in touch!Thank you all so much!

Sep 2nd 2014
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,232 contributions

The extra $ will also be helpful in getting you approved but sometimes causes unexpected other issues. Hope he is able to work it out, no one else is going to be able to get you closed in a week.

Sep 2nd 2014
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I realize we aren't closing in a week. I did let the sellers know. We are trying to work something out as quick as possible. So I'm hoping my LO gets back to me tomorrow.

Sep 2nd 2014
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What is the typical timeframe to start this process over? How long does it usually take to process a USDA loan (what is USDA turn around times?). The sellers accepted my offer on July 22. I signed papers with my LO and gave him all the docs he requested on the 28th (Bank statements, gift letter, rent verification, 401K, W2's etc.). I just got turned down last Wed by the underwriter. My LO said once it passed underwriting the USDA was on about 12 day turn around. But he hasn't met any of the timeframes he gave me. If I didn't mention, I'm a first time homebuyer and doing this on my own. The house was FSBO and I didn't use a Realtor so I feel totally alone in this process.

Sep 2nd 2014
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I was denied by a lender not the usda, thanks!

Sep 4th 2014
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CLYDE PENTON (GAlenderforheroes)
#90 ranked lender in Georgia - 27 contributions

The only thing I can think is that the initial lender goes with a zero derogatory credit in the last 12 months policy. Without more information it is hard to be certain. There are other lenders that will allow for a single 30 day late within the year. I have seen USDA loans approved/closed with an open automobile collection around 4 years old. That should not be the issue. I hope you were able to get this resolved. Let me know if you are still in need of assistance. Clyde Penton NMLS#979755 404.604.7013 CBC National Bank

Sep 11th 2014
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Corey Vandenberg (Coreyv)
#66 ranked lender in Indiana - 27 contributions

USDA RHS can be tough on credit and the home. Since you can't even get one unless your income and property match their eligibility requirements, it seems so improbable that after that you would be turned down. You need to find a lender as fast as possible that has more home mortgage loan options: www.phmc.com/coreyvandenberg

May 22nd 2018
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