My husband purchased a car in 2006 after returning from active duty in Afghanistan. Later that year he discovered that it was difficult to find employment. Ultimately, he stopped payment on the auto loan and the vehicle was repossessed in 2007.
He is now a full-time government employee (4 years) and his credit over the years has greatly improved, starting out in the 500s and now in the upper 600s. At this time we are ready to put an offer in on a home. Although my credit is spotless and superior to his, we applied for the mortgage leaving me out because although I have income equal to his, the bank won't recognize since it is a school-related fellowship and not income from employment. I am a Phd candidate and have been receiving my income this way since 2010. On the contrary, the bank WILL count my debts against us if I am listed on the loan.
The creditor already gave him a pre-approval for $250k; however, now that it's crunch time he's saying he mistakenly left out monthly payments from the car repo when he calculated the DTI ratio. If that is included he only qualifies for $150k and we can't find a decent home in Miami, FL at that price, let alone the one we have chosen.
The lender is asking him to contact the auto loan bank for a letter attesting that the car payment is no longer his responsibility. We've pretty sure that would NEVER happen. Is there any alternative we're missing that doesn't require him to restart the clock (7 years) on the repo?
Added (1). This will be a VA loan which is 0 down and the lender is giving more than $5000 towards closing costs, essentially making closing costs closer to $650 total (including prepaid items). He has another pre-approval as well that hasn't mentioned the car repo needing to be counted in his debt… YET.
Added (2). We are not renting because after looking for months we determined that it is too expensive to rent (monthly $500+ more than PITI on a home). I'm a Miami native as well and I'm so exhausted from searching. Although I personally don't want to Miami from Central, FL where rent is more reasonable, it is necessary for me to finish up my degree. We have a hard deadline to move by the end of August when my school's Fall semester begins.
Read more: Trying to get a mortgage with car repo on credit. What's the best move?
