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My wife will be graduating from law school in a couple weeks. She is accepting a job as an attorney with the federal gov't. Without her income mine would never be enough to justify the mortgage. With her income its close but still borderline. So will any bank consider her income even though she probably would not start her job until a week after close. I'm sure we can get an offer letter but I'm not sure about anything else.
With her income we would be at 98K. Looking for about 340K house with 5% down. we have 700ish credit each. no car payments or credit card debt. But togehter we have about $1100 in student loan payments.
If we can't get it done we will rent for 12 months and revisit the issue then. But I was thinking with the low rates and tax credit this might be a good time to buy.
stan4, why would you advice them to wait for a larger downpayment to buy? That is very safe advice but bad advice. If they followed that advice, where would they live? Oh, rent? How much money will they be throwing away renting until the save up 20%? Lets say it takes a year and rent in there area is $1500. Well, they just threw away $18,000. If rent is $2000, than $24,000 down the drain.
Also, housing is at or near its bottom, so while they save up the extra downpayment, what if the house they want now costs $350k, they threw away even more money. And, interest rates are as low as they have ever been. What if they wait and now the mortgage rate goes .50% higher, which is very possible, how much more will the house cost them? And the tax credit that they might lose out on if they wait til next year.
Hindukid, get out and buy, it is a great time to buy a home. You might have a tough time using the wife's income, but if you have a offer letter some lenders might except. Contact a mortgage professional in your area that has access to multiple lenders and they will be able to let you know if they will accept your wife's income. I have done many loans in the past with an offer letter, but guidelines change often nowadays.
On a side note, i think you may be buying a little too much home. You should really have your debt payments under 50% of your gross. With that size home and the student loan payments, you will be pushing the 50% area. But with your scores your loan would most likely get approved though.
We just went through the process. If I were you, I'd wait until you had 20% and your wife starts working. That's just a personal opinion, not a professional one.
We got quotes from three different lenders. Two of them we had no problem. The third, didn't want to put me on the loan b'c I didn't have at least two years of work history. That's what the mortgage guy told me anyway. Sounds ridiculous to me but whatever - we got approved regardless. The company we ended up using asked us for our paycheck stubs twice: once to get pre-approved and once again after we got a contract.
I think it'll just make it all "look better" for lenders if both are working and can prove it. Gone are the days where you can just "tell them" how much you make. They want evidence!
Victor, it is safe advice, and after all that's happened lately, it certainly behooves people to be a little more conservative about these kinds of purchases, don't you think?
Renting is not necessarily throwing away money. With 5% down, do you know how long it will be before this poor guy actually starts significantly paying down his principle? You don't think PMI is throwing money away? You don't think all the additional interest on the extra 15% he's taking out as a loan is throwing money away? Over 10 or 30 years, that interest may well add up to more than all the rent he might pay in the interim.
They obviously are living somewhere right now. If their income will be almost 100k, it should not take them long to save a good, solid down payment given they can afford to rent just on his salary.
Victorburek, I do get some of your main points. However, I think Stan's advice the by far the wisest advice.
Owing a home is a privilege, not an entitlement. People in the United States need to get this. I can't believe even after this financial crisis, people still "feel entitled" to get into a home as soon as they can. The tax credit is just a teaser...just like a 3.75% 2 year ARM mortgages some people got during the heydays. You will end up killing yourself financially if you are buying a home just because of the tax credit. Plus mortgage rates will stay around this low level for at least another 6 months. Even looking into the 12 month outlook, the most if will hover around will be 5-5.5%. Housing prices will not skyrocket for the foreseeable future. It will stay flat for the next 2-5 years. The same or similiar home will be available 12 months from now with almost the same mortgage rates (may a little higher) but you will be in for better financial shape to own a home.
So do not over extend yourself.
I think everyone has this mentality that they are "just throwing money away with rents." They are not. You cannot put a price on the flexibility being able to pick and choose where you leave when your lease expires. With a home, you are stuck until it resells or if you get lucky, able to find a renter. There are unknown costs in owning a home. You pay for your own repairs. States will (once the financial crisis resolves) start increasing property taxes.
I dont' know the answer, but Stan's advice makes the most sense. Since you are getting something for your rent money, a place to live, and piece of mind.
If people learned anything from the past 8 years of buying on Hope, instead of collateral, I would think logic, concern for your fellow citizens and commonsense would dictate you to at least wait until your wife has her fist paycheck, god darn it!!
holy mackeral!
Quote:
Originally Posted by stan4
Victor, it is safe advice, and after all that's happened lately, it certainly behooves people to be a little more conservative about these kinds of purchases, don't you think?
Renting is not necessarily throwing away money. With 5% down, do you know how long it will be before this poor guy actually starts significantly paying down his principle? You don't think PMI is throwing money away? You don't think all the additional interest on the extra 15% he's taking out as a loan is throwing money away? Over 10 or 30 years, that interest may well add up to more than all the rent he might pay in the interim.
They obviously are living somewhere right now. If their income will be almost 100k, it should not take them long to save a good, solid down payment given they can afford to rent just on his salary.
stan4, why would you advice them to wait for a larger downpayment to buy? That is very safe advice but bad advice. If they followed that advice, where would they live? Oh, rent? How much money will they be throwing away renting until the save up 20%? Lets say it takes a year and rent in there area is $1500. Well, they just threw away $18,000. If rent is $2000, than $24,000 down the drain.
You do realize that you "throw away" money when you buy too right? Do you get the property taxes back? The insurance money back? The money spent on maintenance back? The interest back? Nope....
A $340k mortgage with an income of $98k is already pushing it (especially in states with high property taxes). But with $1,100/month in student loan payments? Forget about it.
You do realize that you "throw away" money when you buy too right? Do you get the property taxes back? The insurance money back? The money spent on maintenance back? The interest back? Nope....
A $340k mortgage with an income of $98k is already pushing it (especially in states with high property taxes). But with $1,100/month in student loan payments? Forget about it.
You do get some of that "back" in the form of deductions on your tax returns.
I do agree that the loan amount is too high given the income with the student loans. I'd suggest finding a home in the $225-250 range. Keep in mind that with only 5% down the PMI on a loan that large will be close to $250 a month--and that's not tax deductible.
One other thing to note, FNMA/FHLMC/FHA will use college or education in lieu of job history as long as the employment is in the same field as the education. Underwiting will generally request a copy of a degree or transcript to verify.
You do get some of that "back" in the form of deductions on your tax returns.
Sure, whatever you can itemize above and beyond your standard deduction. You are also paying down the principle. Anyhow, the point is that you can't simply add up the rent and say that's what you are "throwing away". You need to subtraction from the rent all the money you are "throwing away" on ownership first. In some areas, you may actually be gaining money. Where I am, its still cheaper to rent.
Quote:
Originally Posted by annerk
One other thing to note, FNMA/FHLMC/FHA will use college or education in lieu of job history as long as the employment is in the same field as the education. Underwiting will generally request a copy of a degree or transcript to verify.
Hmm....I would be surprised if this was true. It seems pretty stupid.
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