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We are in need of a much bigger home this year and any input you all had(especially smartmoney in particular) on my situation would be so helpful. I have only been through this process once and that was 10 years ago. So I don't remember much about the home buying process.
My income is $78,000 a year. I have been in the same field for almost 20 years and at the same job for 6 years. Spouse works but will not be on the loan (income is $40,000 yearly).
Monthly debt totals $1000. I can pay this down to about $800 if need be but would much rather use the money towards the down payment which will be $20,000. Credit score is 680.
I am looking to get the max fha loan financed which is 271,050 in my neck of the woods and the taxes are high in my area on houses of that nature as well......ranging from 7,000-9,000 yearly. The house I would like to purchase is a new construction and it is 285,000.
My question to you all is do you think that I can get approved for this loan on my income given these circumstances mentioned above? If not what could I do to improve my chances (other than adding my spouse on the loan)?
Last edited by Inneedofnewhome; 02-22-2016 at 03:11 PM..
Your best bet is to go and apply. You can find a mortgage broker and have them call you and give them your info over the phone and some can get you an instant preapproval. You don't need to put more than 3.5% down for FHA, if you are putting 20% down you might as well go with a regular mortgage, it will cost a lot less monthly with no FHA mortgage insurance which is high. But if you put less down you can pay off some debts.
Does the $1k a month include housing or is that just your minimum payment on outstanding debts? If you have a big car payment, student loans and other debt it will bring down how much you can borrow according to your debt to income ratio, but you can add your spouse and that will help.
Hi there - there's information missing, like credit score, complexion of income (salary?), city/state and the nature of the debts (revolving, installment, is the $1000 minimum due or is it what you're paying and so on).........but taking everything at face value, here is my 30 second analysis:
You would likely qualify for an FHA loan, with a 47%-48% back ratio, provided your lender obtained DU approval with a rate no higher than 3.25. That is dangerous, because new homes must be built. Look for a long-term lock to protect your contract. (estimated payment $2152)
I also ran it with a 5% down 3% 7/1 ARM (fixed for 7 years) and if you reduced monthly debt to $800 (you can do this while the home is being built), you squeak in w/ a 43% back ratio. (Estimated payment $2052, credit score should be above average = >680)
In both scenarios, you are on the edge of qualifying, so a local analysis would need to be performed. The fact that there is family income not being used makes me believe your situation would be tolerable, as long as your wife doesn't have excessive debts to cancel out her salary. If that is the case, stop, do not move forward. I would also recommend a 6 month lock. Many lenders offer a 6 month lock......the amount varies. We offer them for 1 point (in addition - not credited back) and others will charge 1 point and credit it back or give you free float downs. Your builder's mortgage company would likely have the best handle as to who has what in your area.
Finally, this is not a solicitation for a loan - only an opinion. If you move forward, do what you can to secure the rate. Just a little bump up in rates could mean the difference of getting a loan. Other things to consider, is there bonus income, can any of your debts be transferred into your wife's name only? Can any debts be refinanced, or consolidated?
@Smartmoney My income is hourly, we are in western NY and the debts are a car note, score is 680 and I am actually trying to decide rather to pay off 2 credit cards or a personal loan. With one of those paid off/low will bring my debt to $1,000. The loans and the cards are both high interest.
Do you think that maybe I should pay the cards down as low as I can and refinance the personal loan? Would that be more favorable in the eyes of the bank since the loans will obviously eventually be paid off?
To answer your last questions.....I have no bonuses and I don't believe that those particular debts are transferable right? How would debt consolidation help?
If you are hourly, you will need to have your hours either guaranteed or have a strong average for the number of hours you are using. If in the past two years, say you worked one week 40 hours, the next week 30, then back to 36 and on and on. For hourly workers, the hours counted must match the history or be guaranteed.
Your credit is where it can be manipulated. Are your credit cards at limit? Can you pay them down to just under 50%. Your score is fine, but scores drive the final interest rate you pay. A little tweaking can go a long way. On the loan, we use to say, pay it down to 10 months, but the noose has tightened on that. Now you are not supposed to be able to pay down to qualify. So in the past, I would say, pay the loan down to 10 months and put the rest on credit cards. (But on conventional, some will let you still do it). I think my vote would be to pay off the credit cards and then shop around to refinance your loan, just to make certain you have a good interest. And that's just a guess with what I know right now. what happens when you take your monthly debt payments (loans and credit cards, not utilities and other) and divide it by your gross monthly income? What is that number?
What city/state are you in? You really need to be evaluated by someone in your market-place before you leap off the bridge. If you were driving across the country, you would use a map or gps, right? Same happens when you meet /talk with someone. You need to know where you are starting from and which direction you should go in to get to where you want to be. This includes knowing why the wife is not on the transaction, it may alter any advice given.
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