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Old 01-03-2019, 12:39 PM
 
304 posts, read 2,189,140 times
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This past summer, my wife & I moved to a new state to be closer to family. Sold our old home and made some decent equity. We're staying with family and scoping out the new area, visiting open houses, etc.... so we are in a good position as buyers when ready. One of us has a new full time job, the other freelancing but looking for full time work.

We'd like to buy this spring so our child is situated for school. With our savings and equity earned, we could potentially pay for a house for cash and still have some liquid savings, but we're thinking it might be wiser to not pay all cash for a house... maybe a 70% cash 30% loan mix... so we hang on to more liquid cash. If we paid all cash, we'd essentially be taking what was earned from the house sale (recoup of our downpayment + equity) and putting it into a new home.

Are we likely to get a loan from a bank given one of us has a job that is new and the other is looking for full time work? Will the bank care, given our credit score is solid and we technically have the funds in the bank to cover the loan if it needed to be paid off.

Is paying all cash generally not advisable? Another reason we moved and are not looking to take on a heavy mortgage was so we can improve our quality of life and spend less hours at the office.

Thanks in advance for your input.
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Old 01-03-2019, 01:01 PM
 
3,806 posts, read 8,266,682 times
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Quote:
Originally Posted by motifone View Post
This past summer, my wife & I moved to a new state to be closer to family. Sold our old home and made some decent equity. We're staying with family and scoping out the new area, visiting open houses, etc.... so we are in a good position as buyers when ready. One of us has a new full time job, the other freelancing but looking for full time work.

We'd like to buy this spring so our child is situated for school. With our savings and equity earned, we could potentially pay for a house for cash and still have some liquid savings, but we're thinking it might be wiser to not pay all cash for a house... maybe a 70% cash 30% loan mix... so we hang on to more liquid cash. If we paid all cash, we'd essentially be taking what was earned from the house sale (recoup of our downpayment + equity) and putting it into a new home.

Are we likely to get a loan from a bank given one of us has a job that is new and the other is looking for full time work? Need a LOT more information. Will the bank care, given our credit score is solid and we technically have the funds in the bank to cover the loan if it needed to be paid off. Yes.

Is paying all cash generally not advisable? Another reason we moved and are not looking to take on a heavy mortgage was so we can improve our quality of life and spend less hours at the office.

Thanks in advance for your input.
Need to know all debts as listed on credit report, how much base pay the full time job pays, price range and tax base of homes you are looking at.
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Old 01-03-2019, 01:11 PM
 
Location: Long Island
9,438 posts, read 20,213,332 times
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Talk to a loan officer and find out how much they will lend you (if anything). That should help you make a better decision.
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Old 01-03-2019, 04:34 PM
 
199 posts, read 95,767 times
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You'll be qualified for the loan based primarily on your debt-to-income ratio using an acceptable source of income, and your credit score.

The one of you who has a new job - is it in the same industry as your previous job, and is the pay comparable to the last job? Is there a minimal gap between jobs? If you've taken a parallel position without a gap more than what would be reasonable for relocation, that should be acceptable income.

Add up all your current payments that would appear on your credit report (credit accounts and installment loans such as student loans and car loans), and the estimated loan payment (including taxes and insurance) for the new house. You can find this number with any online mortgage calculator.

Divide your total expenses by your current gross monthly W-2 income; don't count the freelancing income. If you get a number under 45%, you're likely to be approved for a conventional mortgage without the other spouse having secured a job.

Since you've positioned yourselves well to buy when you find the right house, I'd meet with a loan officer or mortgage broker now to go over options. S/he may recommend you wait until you both have established employment, but depending on the size of the loan you're looking at, it's very possible it won't be necessary.

Good luck in your search, and congratulations for making a more balanced lifestyle possible!
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Old 01-05-2019, 03:21 PM
 
304 posts, read 2,189,140 times
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Quote:
Originally Posted by docwrangler View Post
You'll be qualified for the loan based primarily on your debt-to-income ratio using an acceptable source of income, and your credit score.

The one of you who has a new job - is it in the same industry as your previous job, and is the pay comparable to the last job? Is there a minimal gap between jobs? If you've taken a parallel position without a gap more than what would be reasonable for relocation, that should be acceptable income.

Add up all your current payments that would appear on your credit report (credit accounts and installment loans such as student loans and car loans), and the estimated loan payment (including taxes and insurance) for the new house. You can find this number with any online mortgage calculator.

Divide your total expenses by your current gross monthly W-2 income; don't count the freelancing income. If you get a number under 45%, you're likely to be approved for a conventional mortgage without the other spouse having secured a job.

Since you've positioned yourselves well to buy when you find the right house, I'd meet with a loan officer or mortgage broker now to go over options. S/he may recommend you wait until you both have established employment, but depending on the size of the loan you're looking at, it's very possible it won't be necessary.

Good luck in your search, and congratulations for making a more balanced lifestyle possible!
Thanks for the supportive words! Yes, for the one that has the job, it is in the same industry, same pay, no employment gap with the relocation. Credit scores very good. No "debt" save for a $300/month car payment. So dividing total monthly expenses (monthly PITI for 100k loan & car loan) by the single gross monthly full time salary, we are under 45%. So yes, we may qualify by their terms, although when you starting adding in monthly utilities/needs/grocery, more salary is needed to remain in the black monthly, but I know the banks don't really look at those expenses, just debt expense.

We will schedule an appointment with a loan officer to get more specifics and see where we stand.
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Old 01-05-2019, 07:03 PM
 
Location: Phoenix, AZ
2,855 posts, read 1,340,110 times
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Quote:
Originally Posted by motifone View Post
With our savings and equity earned, we could potentially pay for a house for cash and still have some liquid savings, but we're thinking it might be wiser to not pay all cash for a house... maybe a 70% cash 30% loan mix... so we hang on to more liquid cash.

Is paying all cash generally not advisable?

Buying a house for cash is a good thing. Avoids becoming a slave to the mortgage company vultures and their draconian requirements.


As long as you have some liquid savings left, go for it.


What will happen is that the money you don't spend on mortgage payments every month goes right into the bank and builds up rather quickly as long as you control yourself and not spend it.
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Old 01-06-2019, 09:22 PM
 
462 posts, read 325,363 times
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We qualified for a loan when we relocated for my husband's job and he took a significant pay cut. We did move to a lower cost of living area. We had no issues and we were putting only 20% down.
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Old 01-07-2019, 03:58 AM
 
Location: Cary, NC
36,201 posts, read 63,021,986 times
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Quote:
Originally Posted by motifone View Post
Thanks for the supportive words! Yes, for the one that has the job, it is in the same industry, same pay, no employment gap with the relocation. Credit scores very good. No "debt" save for a $300/month car payment. So dividing total monthly expenses (monthly PITI for 100k loan & car loan) by the single gross monthly full time salary, we are under 45%. So yes, we may qualify by their terms, although when you starting adding in monthly utilities/needs/grocery, more salary is needed to remain in the black monthly, but I know the banks don't really look at those expenses, just debt expense.

We will schedule an appointment with a loan officer to get more specifics and see where we stand.

Pay cash and do a cash out refinance?
Pay cash and open a Home Equity Line of Credit to tap if you later find you strapped yourself for cash?


One point to consider:
Cash offers are usually considered stronger than offers indicating need for a loan. A cash offer may help you get a house you really want if you are in a competitive multiple offer situation.
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Old 01-10-2019, 12:33 PM
 
3,045 posts, read 5,975,464 times
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You should talk to a banker about your specific situation.

At the same time, ask if a 30% mortgage is too small for them to bother with.
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Old 01-11-2019, 09:18 AM
 
304 posts, read 2,189,140 times
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Met with a lender for initial consult, no pressure. Items confirmed, from this lender:

1. Banks don't really care about your savings, they care about your debt to income ratio (as mentioned earlier) when considering you for a loan. They want to look at your income sources (preferably W2) in contrast to your PITI + Any other debt (car), and see if that total is less than 45%. Even if you have the savings to pay off the loan you are asking for, the banks really want to understand your income situation as it relates to your debt.
2. Length of time in new job doesn't matter as much, though stability helps. They are looking to see a paystub.
3. Asked lender what they thought about paying all cash, reply "yeah, probably don't want to do that". Seems expected, otherwise what's in it for them?

Bottom line is if we have the savings to pay off the off and still have a sizable liquid chunk left over in savings, I think we will go all cash. I'm not really interested in investing in the market right now beyond our 401k.

Key here now is to really look closely at properties and keep true to our budget, maybe even purchasing a property lower in price and spending less cash. By keeping our debts low, we can keep on track on having more work life balance.
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