Question regarding about Mortgage loan (Durham: foreclosed, credit report, loans)

[Liann85]

Hello everyone,

My first post but actually been reading for sometime now. I have a question for a friend regarding mortgage loans. and I'll try to make everything short.

A good friend of mine is Thinking about purchasing a home that is under 180k. Last year she only made 10k for net income and around 30k for this year. A couple thousand dollars of credit cards debt with no other payment/debt. credit score are in the low 600s.

do you think its possible for her to get an 80% to 85% LTV loan nowaday with that income and credit score?

[senalj]

I'm in the process of buying a house and the mortgage loan officer told me that in this market one would have to have at least a 720 to get a good loan. I think your friend will have a problem, but one thing to keep in mind is they take your gross pay, then calculate debt to income ratio from there. Your friend may have to talk to a mortgage loan officer herself to get a better idea.

[Liann85]

I think you're right, her debt to income is what i think she might not able to get a loan.
anyother infos are appreciated.

[huckdisc]

Yes DTI is the problem here, not so much the credit score. Unless something has changed markedly with her income stream that loan is a complete no-go.

[manettes01]

She should check out the North Carolina Housing Finance Agency. They offer low and no interest loans, first time homebuyer loans, downpayment assistance, etc. Also BB&T has a first time homebuyer loan that is really good. Self-Help Credit Union might also work. All of these will work with credit scores in the 600s, will allow some negative items on credit reports, require minimum downpayments (3% of purchase price or less). Interest rates can be in the 5-6% range for some of these loans as well.

Not sure what county your friend lives in, but the city of Durham has a second loan program that offers up to 20% of the purchase price at 2% interest.

Some of the first time homebuyer loans also have income limits (ie, you have to make less than a certain amount to be eligible), which means they are geared towards people with income like your friend's.

[wheelsup]

Call me crazy but:

180k home, 80% loan = 144k mortgage

$30k/yr is what, $1800/month after taxes? And the mortgage/PITI is around what, $1000/month?

Even with a credit score of 850 would a bank even loan this person money for this home?

[senalj]

Originally Posted by wheelsup

Call me crazy but:

180k home, 80% loan = 144k mortgage

$30k/yr is what, $1800/month after taxes? And the mortgage/PITI is around what, $1000/month?

Even with a credit score of 850 would a bank even loan this person money for this home?

In this market, no. Back when the good times were rolling, probably.

I think the friend needs to wait and pay off her debt, then try to get some extra income so she can at least get the 3.5% FHA is requiring as a down payment and go from there. In the process of paying off her debt she will also raise her credit score. Better to do that than to get into a house she can't afford and wind up being another foreclosed homeowner.

[dad2jules]

Originally Posted by Liann85

Hello everyone,

My first post but actually been reading for sometime now. I have a question for a friend regarding mortgage loans. and I'll try to make everything short.

A good friend of mine is Thinking about purchasing a home that is under 180k. Last year she only made 10k for net income and around 30k for this year. A couple thousand dollars of credit cards debt with no other payment/debt. credit score are in the low 600s.

do you think its possible for her to get an 80% to 85% LTV loan nowaday with that income and credit score?

I am a Loan officer and I can give your friend 1 piece of advice. You can still get approved for more than you may reasonably feel comfortable paying each month. DTI is not on a sliding scale, it is the same across all income levels. Max DTI currently is 50% of gross income, lower credit scores commonly get capped at 45%. It is alot more reasonable to spend 45-50% of your income if you have $10k monthly income than it is if you have $2500. It used to be 55-60% or just state your income, so beleive it or not this is tightened up.

$30,000/ 12 months= $2500 month
$2500 x 45% = $1125 month

It is quite likely they could get approved to buy this house, real question is should they- probably not unless the $30k is self employed income which we all know is lower than w-2 income.

[Charlton Dude]

I think your friend needs to spend more time working, paying OFF her debt and increasing her credit score. I don't care what a bank tells you what you qualify for. You need to stay with what you CAN afford. I keep my mortgage/taxes/ins UNDER 20% of my income, with NO debt and a credit rating OVER 800.

[JDJeep98]

Originally Posted by senalj

In this market, no. Back when the good times were rolling, probably.

.

...and that is precisely why this market is "this market".