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Old 12-29-2017, 08:01 PM
 
981 posts, read 938,936 times
Reputation: 671

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I'm starting to think about buying, here in NYC, and it's a bit overwhelming. I started looking into FHA loans, as a full 20% down payment would likely be difficult.

I'm late 30's, credit is low 600s but increasing every month (currently low due to high utilization, working on paying balances down to increase scores. Any prior lates/delinquents have fallen off.) I make a good salary (between $70-$80, likely will be higher by the time I actually try to buy). I'll have been at my job for a year in May and it's as stable as private enterprise can be (lol), but have a steady employment history with no gaps of longer than 3 months for the past 5 years.

From everything I've seen, I think I have a good chance of being approved but interested to hear others' opinions? I'd also love to take advantage of down payment assistance programs if available, because hey....free money. Anything I buy would be for me to live in.

My mother has expressed the possibility in gifting me down payment money, OR going in on a multi family together. Am I correct in understanding that if we purchase together, I am not eligible for any first time homebuyer programs since one of the buyers has been a homeowner for 40 years? Seems obvious but you never know with the nuances.

Looking for any resources that are good to check out, I tried Googling but the results are numerous and frankly all seem like ads. I just want to learn about this for now, as I think figuring out what my options are will help shape what I decide to go for.

Thanks in advance for any insight!
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Old 12-29-2017, 11:45 PM
 
Location: Phoenix, AZ
1,108 posts, read 416,631 times
Reputation: 2601
I live in Phoenix but I am an ex-NYer and my sister lives in Manhattan and has been facing the same housing issues as you will be.


I think you are being too optimistic.


1 - Your credit score. You aren't going to qualify for competitive rates until your score is between 750 and 800. That's likely to take 1 to 2 years to get to. A score in the low 600s means you've had some significant credit problems. It's going to take a while to dig your way out of them.


2 - Your income. Let's say you make 80,000 by the time you're ready to buy. That's about 6600 per month which means your take home is about 4500 per month. Your mortgage payment shouldn't be more than a third of your take home pay to give you a margin of safety and the ability to save part of your income to handle the unexpected.


So, 1500 for PITI (principle, interest, taxes, and insurance) leaves about 1300 for just PI. At 4% interest for 30 years that's a loan of about 270,000. I believe that the down payment for an FHA loan is 3.5%. That's about 10,000 down on a 280,000 purchase price.


That might get you a co-op or condo in the outlying boroughs, a house would be iffy and you can forget Manhattan.


3 - Down payment assistance programs. If you need them, you have to grovel for them and your financial and personal life becomes an open book. If you and your Mom buy together, whether you lose the opportunity or not depends on the program so that's where you have to ask the question about qualifying.


4 - Buying with your Mom is a bad idea. You're in your upper 30s so she's, what, in her upper 50s, maybe low 60s. Too much risk for her to be saddled with more debt at her age. Keep in mind that, with a joint loan, if you go belly up financially, she has to pay the loan or go belly up financially herself. It could be catastrophic for her.


5 - Multi-family home - 2 or 3 family - if your Mom doesn't live there you won't qualify for the subsidy and you become a landlord. Take it from me, a former landlord, you don't want to be in the landlord business.


6 - Your Mom gifting you a down payment for your own place. That's probably the best idea of all of the above as long as she can afford it. And, of course, the bigger the down payment the better the financing deal, even with FHA.


My recommendation: Spend the next year or two getting all your old debts paid off and your credit score up over 750. At the same time save as much cash as possible. You should have at least 10% of the house price in the bank even if you only have to put 3.5% down for an FHA loan. Too many people don't believe that and end up losing their homes because they don't have a cash cushion.
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Old 12-30-2017, 01:28 PM
 
981 posts, read 938,936 times
Reputation: 671
Quote:
Originally Posted by adjusterjack View Post
I live in Phoenix but I am an ex-NYer and my sister lives in Manhattan and has been facing the same housing issues as you will be.


I think you are being too optimistic.


1 - Your credit score. You aren't going to qualify for competitive rates until your score is between 750 and 800. That's likely to take 1 to 2 years to get to. A score in the low 600s means you've had some significant credit problems. It's going to take a while to dig your way out of them.


2 - Your income. Let's say you make 80,000 by the time you're ready to buy. That's about 6600 per month which means your take home is about 4500 per month. Your mortgage payment shouldn't be more than a third of your take home pay to give you a margin of safety and the ability to save part of your income to handle the unexpected.


So, 1500 for PITI (principle, interest, taxes, and insurance) leaves about 1300 for just PI. At 4% interest for 30 years that's a loan of about 270,000. I believe that the down payment for an FHA loan is 3.5%. That's about 10,000 down on a 280,000 purchase price.


That might get you a co-op or condo in the outlying boroughs, a house would be iffy and you can forget Manhattan.


3 - Down payment assistance programs. If you need them, you have to grovel for them and your financial and personal life becomes an open book. If you and your Mom buy together, whether you lose the opportunity or not depends on the program so that's where you have to ask the question about qualifying.


4 - Buying with your Mom is a bad idea. You're in your upper 30s so she's, what, in her upper 50s, maybe low 60s. Too much risk for her to be saddled with more debt at her age. Keep in mind that, with a joint loan, if you go belly up financially, she has to pay the loan or go belly up financially herself. It could be catastrophic for her.


5 - Multi-family home - 2 or 3 family - if your Mom doesn't live there you won't qualify for the subsidy and you become a landlord. Take it from me, a former landlord, you don't want to be in the landlord business.


6 - Your Mom gifting you a down payment for your own place. That's probably the best idea of all of the above as long as she can afford it. And, of course, the bigger the down payment the better the financing deal, even with FHA.


My recommendation: Spend the next year or two getting all your old debts paid off and your credit score up over 750. At the same time save as much cash as possible. You should have at least 10% of the house price in the bank even if you only have to put 3.5% down for an FHA loan. Too many people don't believe that and end up losing their homes because they don't have a cash cushion.
Thanks, Jack. I know I won't qualify for the best rates and I'm trying to improve my score as much as I can between now and the time I'm looking to buy - I just started thinking about this so I'm asking as many questions as I can to give me time to make adjustments etc.

I have no interest in buying in Manhattan - been there, done that, as far as living there, and no thanks. I'd be looking to buy in Queens.

I pretty much ruled out any down payment assistance programs, I make way too much (so I guess they ruled me out lol). I just figured they were worth thinking about, but...thought about it and we're done.
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Old 12-30-2017, 02:45 PM
 
3,558 posts, read 1,503,854 times
Reputation: 10306
Quote:
Originally Posted by adjusterjack View Post
I live in Phoenix but I am an ex-NYer and my sister lives in Manhattan and has been facing the same housing issues as you will be.


I think you are being too optimistic.


1 - Your credit score. You aren't going to qualify for competitive rates until your score is between 750 and 800. That's likely to take 1 to 2 years to get to. A score in the low 600s means you've had some significant credit problems. It's going to take a while to dig your way out of them.


2 - Your income. Let's say you make 80,000 by the time you're ready to buy. That's about 6600 per month which means your take home is about 4500 per month. Your mortgage payment shouldn't be more than a third of your take home pay to give you a margin of safety and the ability to save part of your income to handle the unexpected.


So, 1500 for PITI (principle, interest, taxes, and insurance) leaves about 1300 for just PI. At 4% interest for 30 years that's a loan of about 270,000. I believe that the down payment for an FHA loan is 3.5%. That's about 10,000 down on a 280,000 purchase price.


That might get you a co-op or condo in the outlying boroughs, a house would be iffy and you can forget Manhattan.


3 - Down payment assistance programs. If you need them, you have to grovel for them and your financial and personal life becomes an open book. If you and your Mom buy together, whether you lose the opportunity or not depends on the program so that's where you have to ask the question about qualifying.


4 - Buying with your Mom is a bad idea. You're in your upper 30s so she's, what, in her upper 50s, maybe low 60s. Too much risk for her to be saddled with more debt at her age. Keep in mind that, with a joint loan, if you go belly up financially, she has to pay the loan or go belly up financially herself. It could be catastrophic for her.


5 - Multi-family home - 2 or 3 family - if your Mom doesn't live there you won't qualify for the subsidy and you become a landlord. Take it from me, a former landlord, you don't want to be in the landlord business.


6 - Your Mom gifting you a down payment for your own place. That's probably the best idea of all of the above as long as she can afford it. And, of course, the bigger the down payment the better the financing deal, even with FHA.


My recommendation: Spend the next year or two getting all your old debts paid off and your credit score up over 750. At the same time save as much cash as possible. You should have at least 10% of the house price in the bank even if you only have to put 3.5% down for an FHA loan. Too many people don't believe that and end up losing their homes because they don't have a cash cushion.
Agree! Wayyy too much.
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Old 01-02-2018, 10:47 AM
 
3,282 posts, read 7,119,791 times
Reputation: 4016
Quote:
Originally Posted by LizfromtheBronx View Post
I'm starting to think about buying, here in NYC, and it's a bit overwhelming. I started looking into FHA loans, as a full 20% down payment would likely be difficult.

I'm late 30's, credit is low 600s but increasing every month (currently low due to high utilization, working on paying balances down to increase scores. Any prior lates/delinquents have fallen off.) I make a good salary (between $70-$80, likely will be higher by the time I actually try to buy). I'll have been at my job for a year in May and it's as stable as private enterprise Private Enterprise? Do you mean that you are now self-employed? can be (lol), but have a steady employment history with no gaps of longer than 3 months for the past 5 years.

From everything I've seen, I think I have a good chance of being approved but interested to hear others' opinions? I'd also love to take advantage of down payment assistance programs if available, because hey....free money. Anything I buy would be for me to live in.

My mother has expressed the possibility in gifting me down payment money, OR going in on a multi family together. Am I correct in understanding that if we purchase together, I am not eligible for any first time homebuyer programs since one of the buyers has been a homeowner for 40 years? Why would you need a first-time/Down payment assistance loan if she is gifting you the down payment? Seems obvious but you never know with the nuances.

Looking for any resources that are good to check out, I tried Googling but the results are numerous and frankly all seem like ads. I just want to learn about this for now, as I think figuring out what my options are will help shape what I decide to go for.

Thanks in advance for any insight!
Describe your income - - are you self employed? If so, less than 2 years, it won't work without Mom.

Down payment assistance programs that gift the down payment carry a 5-5.25% rate. That is steep for FHA. You get a considerably lower rate with a gift from moms.

Talk about your income.
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Old 01-05-2018, 12:14 AM
 
Location: Back in the Mitten. Formerly NC
3,806 posts, read 4,744,662 times
Reputation: 5181
I agree with most of this except for this paragraph.

Quote:
Originally Posted by adjusterjack View Post

1 - Your credit score. You aren't going to qualify for competitive rates until your score is between 750 and 800. That's likely to take 1 to 2 years to get to. A score in the low 600s means you've had some significant credit problems. It's going to take a while to dig your way out of them.

750 is totally not necessary. 700, maybe 720 and you are fine. As for getting from low 600s to 750- it will be more like 2-3 years AFTER the debt is paid off. It doesn't move much until the debt is gone. I know this from first hand experience.



OP- you can get a conventional loan (non-FHA) for 3% down, but you will need to work on that credit score first. FHA is easier to qualify for, but conventional is more competitive when trying to purchase in a hot market.
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Old 01-08-2018, 11:16 AM
 
Location: New York
2,251 posts, read 4,106,079 times
Reputation: 1606
.

Agree work on your credit score first.

Suggest you get a free copy on annualcreditreport.com Not going to show the actual score, but it can give you information what you need to work on. Any derogatory information can be cleaned up in about 2 to 4 weeks.

Here is a webpage (not for mortgages) that tells your how to dispute your personal credit report on your own. Link - HOW TO DISPUTE YOUR CREDIT REPORT

Work on lowering credit card balances to less than 50% to credit limits. Recommend not to pay your credit cards off totally. If you do, nothing is being reported on to your report.

If you have installment debt (like a car payment). Send extra towards principle. Your get reported as more responsible and your score can go up.

Taking time to clean report and raise your credit score, you will pay less in the long term. Compared to trying to qualify for a mortgage with your current report and paying more.

Good Luck

.
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Old 01-09-2018, 07:41 AM
 
Location: MID ATLANTIC
7,519 posts, read 17,281,082 times
Reputation: 7945
I agree for the most part on what others are saying, but feel you can get into a decent program with a score of 680 (Google "Fannie HomeReady"). This program allows for a 3% down payment and the buyer gets lower than market rates and reduced mortgage insurance. The HomeReady program will give the buyer with 3% down the same rate as the buyer with 20% down, many times, even better. And, unlike FHA, the PMI is not for life. But there's another consideration not mentioned which would apply if buying a condo or co-op, the condo fee. Some of these run as much as $500 per month. This is counted when qualifying you for a mortgage and can reduce your qualifying by as much as $100K.

You are on the right road - keep asking questions and keep exploring options. The more you learn, the easier this process is to get through.
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Old 01-10-2018, 12:58 PM
 
Location: New York
2,251 posts, read 4,106,079 times
Reputation: 1606
Quote:
Originally Posted by SmartMoney View Post
I agree for the most part on what others are saying, but feel you can get into a decent program with a score of 680 (Google "Fannie HomeReady"). This program allows for a 3% down payment and the buyer gets lower than market rates and reduced mortgage insurance. The HomeReady program will give the buyer with 3% down the same rate as the buyer with 20% down, many times, even better. And, unlike FHA, the PMI is not for life. But there's another consideration not mentioned which would apply if buying a condo or co-op, the condo fee. Some of these run as much as $500 per month. This is counted when qualifying you for a mortgage and can reduce your qualifying by as much as $100K.

You are on the right road - keep asking questions and keep exploring options. The more you learn, the easier this process is to get through.
Well Said SmartMoney -
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Old 03-11-2018, 04:36 PM
 
6,125 posts, read 4,100,078 times
Reputation: 6955
Great thread. I am also in a similar spot to OP. I live in NYC and would like to buy a coop-condo in New Jersey.

I am 33. (80 to 92K salary range with job bonus and side jobs) I don't have any debt. I paid my student loans last April 2017. My credit score is 740 to 760. It used to be higher 800 to 820 when i had the student loan. (go figure!).

I am looking to buy a 1-2 bedroom at a value of 180K to 200K (Max). I am going to use the FHA; i am going to save up $7K for a down payment. (my goal is to save around 14 to 20K for everything, down payment, closing cost and moving fees).

Is the closing cost an amount that i can figure out or will it depend on the property that i buy? What else do i need to consider? I aim to buy in 2019 or 2020 (latest).
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