Letter of Explanation Help – 1st Time USDA Buyer

QuestionsLetter of Explanation Help – 1st Time USDA Buyer
Kassie Beattie asked 4 years ago

Hello all, I know there are alot of threads like this, but I am hoping someone may be able to help with some ideas.  I recently started working with a local mortgage broker on a USDA Guaranteed Loan.  I am a first time buyer, married but applying for loan only in my name.  Heres some background:  Filed Ch. 7 in 2009, current scores as pulled by broker are 630/632/648.  Credit Karma shows 668/TU, 659/Eq.  Currently I have 3 CC’s with a total balance of $ 3100.  One auto loan with about $ 8k owed, and 1 student loan with about $ 7k owed.  Have had no employment gaps since 2006 and currently my salary is $ 78k plus annual bonus.


Based on the 632 middle score, broker decided not to submit through GUS and sent direct to manual underwriting which they offer in-house.  While waiting, he submitted to automatic system for FHA and got Approve/Elligible.  That is good news, but I really want to go USDA as we wouldnt be able to come up with the 3.5% DP for FHA.


Just got the report back today for USDA and decision was Refer/Eligible.  They are asking for a letter of explanation for a few late payments in late 2015 and one in Feb 2016.  Here is where I am stuck, I dont really have a good reason why I was late.  The real reason ashamedly is poor money-management and bad decisions.  I really had no roadmap for how to budget and sometimes due dates would pass and I just didnt have the funds at the time it was due.  Then the minimum payments would snowball and I felt I couldnt pay.  To get current at the time, CapOne put me on a 90 day catchup Nov/Dec ’15 and Jan 16′, then I slipped up and missed in Feb ’16.  Last February I decided enough was enough and I had to get this figured out.  I set myself up a spreadsheet to keep track and have not had a late payment since.  I totally changed my outlook on how to pay the bills.  Now, when I get my paycheck, I pay the bills first and then budget what is left for incidentals, etc.  It is really embarassing to admit all of this, that it took me until I was 35 to figure it out, but so goes life I suppose.  I finally have the will and fortitude now to never return to my old ways.  I know I will prosper and be successful from here on out.


I am married and we have 2 daughters ages 6 and 10.  All I want is to provide them with a nice place to call home and make memories.  We’ve been renting a house for the last 10 years and our landlord recently gave us notice that he wanted to take the house back over for his grand daughter to live in and is giving us until May 1 to move out.  


So thats pretty much it… How do I explain late payments when I was just being lazy/scared/stupid/lost?  I hate that part of my past but it seems this is the final hurdle to get where I want to be.  


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