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Old 05-10-2017, 11:28 AM
 
Location: Texas
44,256 posts, read 64,176,606 times
Reputation: 73921

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Quote:
Originally Posted by TimtheGuy View Post
So, you think there are a lot of mortgage lenders who deny approve-able deals?

Sure the good lenders will counsel the borrowers, but when a deal easily meets guidelines, I don't think too many are going to deny based on their personal thoughts of....these folks probably shouldn't be buying this much.
I think that if things technically work and sometimes even if they don't, people who only care about their own bottom line will take advantage of the situation.

However, if you are enough of a grownup to get a mortgage, then you should be aware of this.
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Old 05-10-2017, 11:30 AM
 
Location: Texas
44,256 posts, read 64,176,606 times
Reputation: 73921
Quote:
Originally Posted by emm74 View Post
I think a lot of people here are much more conservative than average in terms of what they consider an affordable monthly housing payment, and in a lot of cases, they live in lower cost areas and have no idea that you can't actually buy something for the kind of payment they consider affordable.

However, having said that, I think 300K when it comes with 9000 in taxes is pushing it. I mean, yes, you'll likely get approved, but it's still going to be a very tough budget.

As for the whole "live on one income" idea - single people supposed to what, then? Not live at all? If two people are income earners, it's not unreasonable to base their lifestyle on both of their incomes. If something happens, they will figure out ways to make it work, just like a single person does. Sure, it's nice when one person in a couple earns enough to support the family and the second income is "extra" but that's not reality for a lot of people unless that person is a very high earner or you live in a low cost area or some combo of the two.
I don't think anyone is actually saying that you should base your entire lifestyle on 1 salary if it's completely unreasonable.

But you should be a lot more conservative and not be topping out what you can afford with both salaries. Which is what the op is doing.
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Old 05-10-2017, 01:31 PM
 
5,340 posts, read 14,097,400 times
Reputation: 4699
Quote:
Originally Posted by convextech View Post
Are you insane? Of course there are.

No decent lender is going to sign a $300k home over to a couple that makes less than $100k combined and is only putting 5% down. Not to mention that $8k credit card balance.

They're not going to take that chance.
Insane...hardly. I am a mortgage lender. I know and understand the industry very well. The DTI (that would be debt to income ratio) is under 45% and would be totally acceptable industry wide. What would you propose a lender deny them for? "A gut feeling" is not one of the options. I would go so far to say that unless a mortgage lender has a specific policy like WE DO NOT SURPASS 36% DTI and used that guideline across the board for all borrowers, that the lenders COULD NOT deny the OP's loan. It would be
discrimination.

You obviously have no clue how the mortgage industry works/operates. #getoffthehighhorse
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Old 05-10-2017, 02:40 PM
 
Location: Southwestern OH
247 posts, read 361,034 times
Reputation: 513
Quote:
Originally Posted by Futurehomeowner1 View Post
Me and my wife are getting ready to buy our first home. Currently, we rent (1,600 a month) and have saved $21000. 15k of this will be for the down payment and the rest for closing costs. I imagine we will need 2 months asset payments which we have too.

We plan on buying a home between 295k-300k, with taxes on the properties at about $8500-$9500 annually.

...

So, total combined income is 98k, but lets round down to 95 just top safe!

...

total monthly debt = $727

...

My wife has been working at her job (teacher) for 3 years

...

My credit score is 730 and hers is either 767 or 777, i cant remember, but we both have great Fico scores with no past dues, lates or anything bad on our reports.


With everything i mentioned above, do you think we will be good to go when buying a home? We have enough for a down payment (less than 20% but will is at least the 5% min for standard), we make good money and have strong Fico scores..
Something no one has mentioned...have you looked into the options for teachers? This website, for example: Official Teacher Next Door Website - HOME Updated 5-1-17 This could help you raise your down payment enough to keep some in savings. Also, there might be local programs that are even better.

So, my husband and I make about $50K more than you per year, with similar credit scores (mine is the lower one, 720). We're putting 5% down on a VA loan, but we have $32K saved in one account, $13K saved in another, and $3.5K saved in yet another (we designate them for specific goals). That gave us a VERY good margin for downpayment, closing costs, and still thousands in the bank for reserves and the wonderful surprises that can befall a homeowner. The biggest difference is our current total monthly debt, $2,832. A majority of that is our current home and HOA costs, which will leave us with only $563 for a car payment after we sell. We also put a total of $839 in IRA accounts each month.

We capped ourselves at $300K because the area we're buying in is not expensive BUT it does have high property taxes in some areas. We were starting to get worried in the areas that had $10K taxes for a $275K home, and we decided to pass on those eventually because our payment would have been over $1800 a month with taxes and insurance, and we wanted to limit the monthly payment to $1800 max in the beginning since taxes ALWAYS go up and raise the monthly payment, sometimes every year but at least every couple years. Insurance can also go up.

In the end, we're buying a $275K home with $4.5K-per-year taxes. ~$13K down payment. ~$16K cash to close BECAUSE we negotiated a $3K credit with the seller. Payment: $1750.

There are hidden costs to that home, though. The roof has about 3-5 years of life left on it, which we didn't know until our inspection because it looks fantastic from the ground. But in the area we're looking at for a ranch-style house's roof, that's $10K to $20K to do a complete tear off and re-shingle, which the home inspector said it would need since it has dimensional shingles and you can't just shingle over them.

The dryer vent lets out into the garage, not outside like it properly should, apparently something that was done in the 90's because builders were lazy. It's survived so far, but we're extending the vent out. I'm estimating $5K and hoping that's enough between the vent itself and then drywall framing and painting around it so that there's no exposed vent in the area that will be a workshop/woodshop.

The basement "bedroom" doesn't have an egress window, which is terrifying when you think that the people living there now have been using it as a bedroom for one of their children. $6K max according to the Interwebs.

The gas furnace is original to the house. It's probably going to need replaced fairly soon. Another $6-7K. All of that totals $39K, more than we'd have left in savings, although thankfully only the vent needs done right away. And that's all BEFORE the cosmetic stuff we want to redo and the area we want to finish in the basement. We plan to put $1K a month into savings to keep up with all the stuff we want to do.

I think for you, if you DO decide to go this route with that price range, new build or a darn good inspector will be key. At least you'll have a warranty or know what to expect.
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Old 05-10-2017, 02:47 PM
 
903 posts, read 857,834 times
Reputation: 2501
You'd be willing to pay someone $5k to extend and then frame in dryer ducting? Are you having the vent installed in your slab foundation? I'm seeing $50 in 2x4s, $50 in rock, $50 in paint/mud/tape, and a couple hundred labor. Your estimates for a roof on a ranch sound outrageous.

Sorry to hijack the thread but please get some other bids on those projects. Asphalt shingle on a ranch is just under $30/square out the door in Chicagoland.
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Old 05-10-2017, 02:56 PM
 
Location: Southwestern OH
247 posts, read 361,034 times
Reputation: 513
Quote:
Originally Posted by Campfires View Post
You'd be willing to pay someone $5k to extend and then frame in dryer ducting? Are you having the vent installed in your slab foundation? I'm seeing $50 in 2x4s, $50 in rock, $50 in paint/mud/tape, and a couple hundred labor. Your estimates for a roof on a ranch sound outrageous.

Sorry to hijack the thread but please get some other bids on those projects. Asphalt shingle on a ranch is just under $30/square out the door in Chicagoland.
(Small hijack, sorry!) Actually, I have NO idea how much to estimate for the vent, which isn't going through foundation but IS going through brick that I really, really like and don't want to mess up too much, so we will be hiring a professional with a great reputation. Couldn't find the vent on Homewyse, which is where I found the estimates for the other stuff. I'm not sure how much square footage to give the roof over and above the square footage of the house, but it'll be dimensional shingles and a complete tear off, which apparently drives up the price?

We haven't contacted any contractors yet. Roof and vent were just me being conservative based on the highest costs I could find.

I figure if it's not much for labor and such for the vent, then I have some extra money to play with! Actually, it would be GREAT if it's not that much because then I could re-carpet sooner. And I don't want to get estimates on the roof until it's closer to time for needing it, probably in three years. I've heard the shingle prices can fluctuate a lot.
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Old 05-10-2017, 03:46 PM
 
3,805 posts, read 9,297,000 times
Reputation: 4978
Quote:
Originally Posted by TimtheGuy View Post
Insane...hardly. I am a mortgage lender. I know and understand the industry very well. The DTI (that would be debt to income ratio) is under 45% and would be totally acceptable industry wide. What would you propose a lender deny them for? "A gut feeling" is not one of the options. I would go so far to say that unless a mortgage lender has a specific policy like WE DO NOT SURPASS 36% DTI and used that guideline across the board for all borrowers, that the lenders COULD NOT deny the OP's loan. It would be
discrimination.

You obviously have no clue how the mortgage industry works/operates. #getoffthehighhorse
Yep.

OP can actually qualify with as little as 3% down.
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Old 05-10-2017, 04:44 PM
 
Location: Texas
44,256 posts, read 64,176,606 times
Reputation: 73921
Quote:
Originally Posted by Pfhtex View Post
Yep.

OP can actually qualify with as little as 3% down.
I don't doubt someone will give him the loan.
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Old 05-11-2017, 07:36 AM
 
Location: Rural Michigan
6,343 posts, read 14,630,192 times
Reputation: 10548
Quote:
Originally Posted by spider07 View Post
We will just have to agree to disagree. I do not think it is reality at all for most people to base their home buying on one income, nor should they if there are two income earners. Yes, someone could get sick, some one could lose their job, someone could die, OR, none of that could happen. These are the chances we take, its called living life. Now, I am not suggesting anyone should buy above their means, but really, everyone has to decide what that is based on their lifestyle. I choose to drive an older car, take only 1 vacation per year and never use credit cards for anything so I can save more money and own a nice place that I call home and this safe for my kids with a good education center. Now if I still lived in Mississippi and we made the same money we do now, it would be very feasible to buy a decent house based on one income. In Houston Texas, not so much when the average cost of a house in our area is 344K (i brought this number down, i didn't buy near that price point).
You're employing a fallacy in your argument to justify overspending- "everybody is doing it" - that's just not true. Across the country, on a fairly consistent basis, 30% of the people rent, 30% own their homes free & clear & 30% have a mortgage. Of those with a mortgage, the balances & terms vary widely. you can't point to the current "median" home price & assume that "everyone" in that city has a $3k monthly housing nut, because they absolutely do not. Some bought their homes 25 years ago & have five years left on a tiny mortgage, some put half down & others bought at half the current price.

There's no malice or ill-will attached to advising new homeowners to look at the bottom of the range that they can "afford", quite the contrary. Having lived with a huge mortgage & a tiny one, having lost a job when two were needed to cover the monthly nut, having "life happen" when it wasn't convenient, I can say based on my own experience that buying less gives you a lot more enjoyable life. A huge mortgage means your employer "owns" you & frequently today, employers aren't "nice" people.

Spending every nickel that comes in as fast as it comes in is a pretty stressful lifestyle. And the O.P. doesn't *have* to live that way - they have a great combined income & a couple years of living "lean" could make the next thirty years a hundred times more comfortable & enjoyable. The number one cause of marital strife is finances - why take on a mortgage that is guaranteed to be overwhelming if you don't have to? It's a whole different animal if you make half as much & really don't have any other choice, but the O.P. does have a choice.
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Old 05-11-2017, 08:09 AM
 
156 posts, read 153,951 times
Reputation: 187
Quote:
Originally Posted by Zippyman View Post
You're employing a fallacy in your argument to justify overspending- "everybody is doing it" - that's just not true. Across the country, on a fairly consistent basis, 30% of the people rent, 30% own their homes free & clear & 30% have a mortgage. Of those with a mortgage, the balances & terms vary widely. you can't point to the current "median" home price & assume that "everyone" in that city has a $3k monthly housing nut, because they absolutely do not. Some bought their homes 25 years ago & have five years left on a tiny mortgage, some put half down & others bought at half the current price.

There's no malice or ill-will attached to advising new homeowners to look at the bottom of the range that they can "afford", quite the contrary. Having lived with a huge mortgage & a tiny one, having lost a job when two were needed to cover the monthly nut, having "life happen" when it wasn't convenient, I can say based on my own experience that buying less gives you a lot more enjoyable life. A huge mortgage means your employer "owns" you & frequently today, employers aren't "nice" people.

Spending every nickel that comes in as fast as it comes in is a pretty stressful lifestyle. And the O.P. doesn't *have* to live that way - they have a great combined income & a couple years of living "lean" could make the next thirty years a hundred times more comfortable & enjoyable. The number one cause of marital strife is finances - why take on a mortgage that is guaranteed to be overwhelming if you don't have to? It's a whole different animal if you make half as much & really don't have any other choice, but the O.P. does have a choice.
A couple things: the OP never asked for anyone's thoughts on whether or not he/she SHOULD do it. The question was, could they be approved. The answer to that is Yes. But as it was pointed out by everyone that actually replied to the question is that even though they would be approved, it would be at the higher end and they need to think about that.

I never said "everyone is doing it". My argument is that it's not really practical to use a generalized statement as "you should only buy a house based on one income". In some areas of the country that is fine and doable. In others, it just won't work. You can't use a generalization to fit everyone. I was raised and lived in Columbus ms for the better part of 25 years. That is all I knew. I bought my first house in 2000 for 75K, a 2000 sq foot home 3 bd 2 bath built in 1970. I paid 600 a year in property tax and I did that with just my income, that's all I had at that time. I sold that house 6 years later for 97000 and moved to Texas. I bought a 1600 sq foot house for 175K in Alvin TX and paid 4000 in property tax. I was making essentially the same money, so it took my wife's salary too just to get a house. Different places have different COL and in the Houston Metroplex, the housing cost is exploding and going up every year. I don't see anything wrong with people that look at their own finances and say, this is what we can afford. It's not my place, your place or anyone else's place to say they are stupid or lack foresight or whatever. It's their money and their life. Now would I ever buy a house that would push my DTI to 43-45%, nope, would never even consider it. But that's me and what I want. Doesn't mean someone who does is being stupid.
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