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ME:
Credit Score: ~750
Salary~$85k
Side Business ~$15k
Car and Student Loans Paid Off
I have a $350k home mortgage under my name, will rent out when we find a new place.
~$1k monthly expenses
Her:
Credit Score: ~800
Salary~$75k
Car and Student Loans Paid Off
No Mortgage
~$1k monthly expenses
What is the best way to start the process? Does it matter which bank we go to to get preapproved? Will the preapproval process affect my credit score?
Looking for something in Southern California for ~$400k
Options:
1) Should we go just under her name? Will she get approved for $400k?
2) I could sell the house to my parents (should be easily approved). Would that help?
3) Both us apply, my parents cosign (great credit/assets/cash)
No, getting pre-approved will not hurt your credit.
But ask yourself these questions
What do you have available for a down payment?
In regard to the house with a $ 350,000 mortgage. What is the total monthly mortgage, tax and insurance payment on it. Would the rent it might bring in, cover that expense with some left over ?
Will it appraise for over the mortgage amount ? In other words, is it an asset or a liability.
That house would be considered to be an investment property and a lender may want to see a signed rental agreement before offering you a mortgage, not at some point in the future.
Do not get involved with co-signers. Too many things can go wrong.
If your fiance bought on her own, does she have enough funds in her name for a sizeable down payment as a $ 75,000 a year income is likely not be enough for a $ 400,000 house in these days of rising interest rates.
Before getting pre-approved, just go talk to a few lenders. You're still in the chatting stage. Put your cards on the table, get their opinions. There should be some sort of consensus on how you should approach this new purchase.
But you are not really selling the house to your parents, just want to get around so you can get more mortgage? and rent out the house?
Yes, I feel like I will not get as much offered if I still have another house under my name. I actually already found a renter, planning on moving in with parents in the mean time to save up .
Quote:
Originally Posted by willow wind
No, getting pre-approved will not hurt your credit.
But ask yourself these questions
What do you have available for a down payment?
In regard to the house with a $ 350,000 mortgage. What is the total monthly mortgage, tax and insurance payment on it. Would the rent it might bring in, cover that expense with some left over ?
Will it appraise for over the mortgage amount ? In other words, is it an asset or a liability.
That house would be considered to be an investment property and a lender may want to see a signed rental agreement before offering you a mortgage, not at some point in the future.
Do not get involved with co-signers. Too many things can go wrong.
If your fiance bought on her own, does she have enough funds in her name for a sizeable down payment as a $ 75,000 a year income is likely not be enough for a $ 400,000 house in these days of rising interest rates.
Before getting pre-approved, just go talk to a few lenders. You're still in the chatting stage. Put your cards on the table, get their opinions. There should be some sort of consensus on how you should approach this new purchase.
We have enough to put down, ~20%-30% Cash on a $400k property
Properties are about 10% above the all time lows...I believe they will appreciate
Already have a renter
What could go wrong with a cosigner?
Quote:
Originally Posted by 399083453
Typically people find a job, then buy a house near the job. How can you afford this house by buying, then getting a job?
We both work about 15 miles from the area we are looking
You and fiance are not married. You split up- good luck with dividing up the house and the amounts each put into it. This doesn't fall under community property if you're not married, but as a partnership. All of you may have to buy out her portion, repay her by refinancing. More monthly expense for all. Keep fingers crossed that home prices continue to go up or you and your parents are underwater.
.
You or finance or both lose your jobs. Mon & dad are stuck with your mortgage payment or paying a greater portion than they intended.
Mom or dad pass on unexpectedly- say in an auto accident. Your house now becomes part of their estate. Have any brothers or sisters who want or expect a share of it ? You may be forced to sell your home. Speak to mom and dad about wills and who gets what.
Mom or dad have a serious, long term , life altering illness or accident. Hospital bills mount beyond what insurance pays. Liens are placed against the house or worse.
Co-signing is not something to be taken lightly. If you can do this on your own with your finance that is , IMO, the best way to go. Leave others out of it and take on the responsibility on your own.
You have a decent enough situation. You can work this purchase out with a good lender who will point you in the right direction.
"You and fiance are not married. You split up- good luck with dividing up the house and the amounts each put into it. This doesn't fall under community property if you're not married, but as a partnership. All of you may have to buy out her portion, repay her by refinancing. More monthly expense for all. Keep fingers crossed that home prices continue to go up or you and your parents are underwater. "
I so agree, and one of the biggest mistakes unmarried make...joint ownership. As for a cosigner, they would have to be nuts to sign on for this deal.
OK: Have you had the side business for 2+ years, and if so, what is the monthly average based upon Line 31 of your Schedule C's for 2012 and 2011?
You will not be able to use future rental income, and must include the full house payment including taxes and insurance - - what is that number?
Your parents may have great credit, but may also write off expenses to the point of presenting their own debt ratio issue.
After 20% down, the new house payment will be about $2200 + HOA if there is one.
Until we solve the side business income, you both bring in a total of $13,333 per month. cut that in half = $6666. Subtract your existing house payment (including taxes, insurance and HOA), and $2k monthly expenses (are these credit report accounts or cell phones and stuff?) =
You likely have enough room to qualify for the new place. Please answer the above questions so I can be more specific for you.
OK: Have you had the side business for 2+ years, and if so, what is the monthly average based upon Line 31 of your Schedule C's for 2012 and 2011?
You will not be able to use future rental income, and must include the full house payment including taxes and insurance - - what is that number?
Your parents may have great credit, but may also write off expenses to the point of presenting their own debt ratio issue.
After 20% down, the new house payment will be about $2200 + HOA if there is one.
Until we solve the side business income, you both bring in a total of $13,333 per month. cut that in half = $6666. Subtract your existing house payment (including taxes, insurance and HOA), and $2k monthly expenses (are these credit report accounts or cell phones and stuff?) =
You likely have enough room to qualify for the new place. Please answer the above questions so I can be more specific for you.
Im not too concerned about the Cosigning but understand your points.
Side business for less then a year. About $1200/month right now, estimating about $2000/mo at the end of the year. Net profit for 2012 was $2800, that was after 4months. That what I meant by $15k as a Net Profit for the side business. (I do Tax and accounting work, I should probably know a little more about my own question but just like to have as much info as possible)
House rental will about break even for mortgage and property tax. Mortgage/HOA/PropertyTax is about $2550, rent is $2500
As for your monthly takehome equation I would conservatively estimate Take home $14500 divided by 2 (WHY?) = $7250. Minus existing home payments -2550 = $4700 - 2000 Monthly expenses (CC Bills, Cellphone, insurance, food, utilities, entertainment) = $2700
So you are saying we could probably get approved for a loan where our payment would be $2700/month?
I'll address Options #2 & #3: Leave your parents out of it!
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