We recently were approved for a VA home loan and are going to close Dec 15th. I was looking through the liabilities report that listed our current credit card debts and noticed that one credit card had an amount owed that is actually $3000 more than the credit report listed. I have the cash to pay the debt to the original amount that the home loan was based on, but I am wondering if I am just being paranoid, or if I should pay the 3000 to the card? If I do pay the amount, will the final credit check (that is usually done from the lender right before closing) even reflect the payment? I ask, because when we applied for the loan the $3,000 purchase was made in October, and we did not apply for the loan until about three weeks ago which as mentioned earlier was not reflected on the liabilities section for consideration. My lender is not back in the office until Monday, but we are worried that this will fall through just because of this! Help!
I assume that when you mention the "liabilities report" you are referring to Section 6 "Assets and Liabilities" of the Uniform Residential Loan Application (Form 1003).
If you provided true and correct information as of the date you signed Form 1003, then from a legal perspective you have no issues with the loan originator or the VA.
As a practical matter, lenders realize that credit reports are imperfect snapshots of a debtor's history that are 60 to 90 days out of date.
However, if the $3,000 debt changes your debt-to-income (DTI) ratio in a significant manner you may have harmed your ability to get a loan. Let me illustrate my point with two hypothetical situations. Let us say you earn $5,000 per month. You have no debt. Lenders like to see potential customers stay at or below 33% in their debt-to-income ratio. With a $5,000 monthly income and no debt you can afford a $1,650 mortgage and stay at a 33% DTI. Now let us add in a $3,000 debt, which results in a $200 monthly payment. The two debts push your DTI to 37%, which may cause the lender to scrutinize your loan application warily. Will this result in you not being approved? I do not know because you did not include the size of the loan, how much of a down payment you are providing, your monthly income, or your other debts.
All things being equal, it would be better for you to have less debt than more right now.
If you are still shopping for a loan, see the Bills.com mortgage savings center for no-cost mortgage quotes from up to four pre-screened lenders.
I hope this information helps you Find. Learn & Save.