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First about myself:
Divorced (court decree in hand) 42 yo guy, 2 little kids, no child support and no alimony as my x wife earns same as me and we share the time 50/50.
Plan:
1. To buy a 400-450k 3/2 house in San Diego (Yes, there are some houses there at this range).
What do I have:
Good:
1. 95000 basic annually. With overtime it's going to 125k (I have this overtime for the last 2 years).
2. 100k in stocks.
Bad:
1. An instalment loan for 30k (800 a month).
2. Car loan for 20k (300 a month)
3. Credit score 700.
My questions are:
1. Is it better to get rid of some of the loans and reduce/eliminate the monthly payment or is it better to keep those 100k as down payment to get approved for a conventional loan without mortgage insurance and all the FHA hassle?
2. What are my chances to get 15 years fixed/biweekly?
3. How are lenders see late payment (90 days) that happened 6 years ago?
You can probably get a conventional loan with 10% down - the interest rate will be a little higher than with 20% down, but you won't have to deal with PMI or FHA. As such, I think I'd pay off that $30k installment loan because that's a pretty hefty monthly payment. That leaves you $70k - so, $40k-$45k for a down payment plus $10-$15k for closing costs (not sure what they run in San Diego). If you can finance some of those closing costs into the loan via a seller assist, I'd try to do that just to keep extra cash in reserves. That's the biggest risk I see - you won't have a lot of cash left over, but since you will have freed up that $800/month installment loan payment, that should help you get those cash reserves back up.
As to the 15 year, I guess just run the numbers with a lender and see what you think. Personally, with interest rates as low as they are, I like to draw the term of my loan out as much as I can, so I tend to lean towards a 30 year.
Not overextending yourself into debt... even if the mortgage brokers will let you.
Reserve the rest of your income for other, often more important, purposes.
Some deeper reading on this very old concept: LINK
My questions are:
1. Is it better to get rid of some of the loans and reduce/eliminate the monthly payment or is it better to keep those 100k as down payment to get approved for a conventional loan without mortgage insurance and all the FHA hassle?
2. What are my chances to get 15 years fixed/biweekly?
3. How are lenders see late payment (90 days) that happened 6 years ago?
1. If the interest rate is about 5% (which I assume it is), it is better to pay this off even if it forces you into a PMI situation. PMI will go away with a conventional loan. (Conventional loans can be acquired with only 3% down.) Even with an FHA loan, you can refi to get rid of the PMI. Getting rid of the large installment loan should be your first priority.
2. Probably not good. A 30 year loan is probably attainable, but I highly doubt you could get a 15 year mortgage with your debt to income ratio. With a 30 year mortgage, you are still probably very close. I, personally, would not feel comfortable with that large of a mortgage on that salary.
3. The lenders will be able to see the late payments, but as long as everything has been good in the last few years, they shouldn't care too much.
First about myself:
Divorced (court decree in hand) 42 yo guy, 2 little kids, no child support and no alimony as my x wife earns same as me and we share the time 50/50.
Plan:
1. To buy a 400-450k 3/2 house in San Diego (Yes, there are some houses there at this range).
What do I have:
Good:
1. 95000 basic annually. With overtime it's going to 125k (I have this overtime for the last 2 years).
2. 100k in stocks.
Bad:
1. An instalment loan for 30k (800 a month).
2. Car loan for 20k (300 a month)
3. Credit score 700.
My questions are:
1. Is it better to get rid of some of the loans and reduce/eliminate the monthly payment or is it better to keep those 100k as down payment to get approved for a conventional loan without mortgage insurance and all the FHA hassle?
2. What are my chances to get 15 years fixed/biweekly?
3. How are lenders see late payment (90 days) that happened 6 years ago?
Thank you
If the lender lets you use the $125,000 with your current debt (assuming no more) you can't get to that price point, I don't think. You could if you did a 30 year. Conventional loans allow a 45% debt to income ratio. FHA can go up to 50%, but I don't know what the FHA limit is in SD.
What you qualify for depends on what property taxes are in your area which I don't know.
If the lender lets you use the $125,000 with your current debt (assuming no more) you can't get to that price point, I don't think. You could if you did a 30 year. Conventional loans allow a 45% debt to income ratio. FHA can go up to 50%, but I don't know what the FHA limit is in SD.
What you qualify for depends on what property taxes are in your area which I don't know.
You can make an artificial 15 year with extra payments. I would go with the safer option, and then manipulate the amount you send.
So, I'm taking the 30 years and then instead of paying 1800 a month I will pay 2500 (for example)? Are the lenders allow this kind of manipulation?
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