Buying soon need some advise

PhxGuy520 · Joined: 08 Aug 2006 Posts: 38

I would REALLY like to buy a house when my lease is up in December however using some of the calcultors I find I am very discouraged. I am hoping someone might be able to tell me what my options and chances are.

I have decent to good credit. No BK's, Judgements, I have one 30 days late in the last year or so. I think my FICO is about 650, but is dragged down due to many inquires.

I make about 63k my fiance about 45k, but her credit is horrible (judgement) so I dont see how I can use her income.

I used a "required income" calculator and it said to qualify for a 300k house I would need 100k in income???? At 63k it said I could only buy a 100k house. That is next to impossible in Arizona.

I would rather not do an ARM or Intrest only unless I have no choice.

What loan options can I do? Can I not state my income? How badly is that going to jack up my rate?

Thanks in advance!

m2c · Joined: 03 Aug 2005 Posts: 937

Your FICO is below average but OK for most conforming programs. At 63K, don’t know how the “calculator” came up with a purchase of only $100 unless you have a ton of other debts. I’d go to a local broker and see if they will run you through DU or LP. Truly amazing stuff is being spit out of these automated systems – not unusual to see 50 to 60 percent total debt ratios with no money down at your FICO level. Your fiancé’s judgment would likely be a title issue but would devastate credit underwriting.

Certainly you could go “stated” but you’d be talking the same income ($63K) unless you’re willing to commit fraud. FICO is a bit low to go "no ratio" on a conforming (a way to avoid the risk of a stint in jail)Remember “stated” is EARNED income and there are “reasonableness” cross checks.

Real estate tax rates vary greatly by community and this is where a local broker could supply current information. Whereas $100K seems at first glance too low, $300K may well be a pipedream. Much depends on your “other debt” load.

PhxGuy520 · Joined: 08 Aug 2006 Posts: 38

Hey I really appreciate the reply. I have a couple question...

1) What is no ratio?

2) "Your fiancé’s judgment would likely be a title issue but would devastate credit underwriting."

She is my fiance but I am not sure when/if we will get married. We have been together for 10 years, two kids just never did the marriage thing. Our plan was not to put her on the application due to the judgement. More or less seperate her from the process. Is there any way to include part or all of her income without putting her on the title? (I'm sure its doubtful)

Any other concerns here?

We have rented at almost 2k a month in the past with less income so I am pretty sure we would to survive if we go a little over 2k a month. (Which is what I am estimating for my PITI @ 300k). I just need to find a way to get someone to give me the loan.

chow · Posted: Wed Aug 09, 2006 7:28 pm Post subject:

Since she isn't married and you're planning on not getting married until after the house is bought, that is a good thing-otherwise if you're in a community property or dower state she would go on title and that judgement will pop on as a lien. How much is it? how old, and who has the judgement? FHA will even give you both a loan if the judgement isn't anything too big. IRS judgements are accepted by FHA underwriters on a daily basis. A qualified loan officer would have to look at the whole picture for you. Quit shopping for credit and settle in with one person who will give you some sage advice.

PhxGuy520 · Joined: 08 Aug 2006 Posts: 38

chow wrote: Since she isn't married and you're planning on not getting married until after the house is bought, that is a good thing-otherwise if you're in a community property or dower state she would go on title and that judgement will pop on as a lien. How much is it? how old, and who has the judgement? FHA will even give you both a loan if the judgement isn't anything too big. IRS judgements are accepted by FHA underwriters on a daily basis. A qualified loan officer would have to look at the whole picture for you. Quit shopping for credit and settle in with one person who will give you some sage advice.

No we wont be married before we buy the house. The reason I have not gone the preapproval route yet is because I just disputed a CO which I am 99% sure will be fixed. I dont want to get another inquiry, be told I need to fix that charge off. Wait a month for that to be removed and then try again. I an trying to limit inquires unless I am sure they will all be within one month.

Also I have about 4 months until my lease is up. Isnt it a little soon to get approved? Thanks for your time.

Ohhh and to answer your question. The lien is for some 5-6 year old CC debt that some CA bought and took her to court for. I think its around 15k after they added all their interest and fees. It just happened so its only a couple months old.

m2c · Joined: 03 Aug 2005 Posts: 937

With a no ratio mortgage, the borrower does not indicate income level at all – just list where (s)he has been employed for the past two year period. Not much of a bump in effective rate for the “over 700” crowd. It provides a safety net to the broker – no representation of monthly income is given and therefore the broker could not have been a coconspirator in fraud. I strongly encourage my LOs to use “no ratio” instead of “stated income”. My fear is that some LOs out of greed (commissions) might encourage applicants to state the “needed” income amount. Even if they don’t and the applicant is the sole party to fraud, love can turn to hate and the applicant can later claim “confusion” and point to the LO in an attempt to shift blame. Not worth it from the broker’s point of view but I own part of the business, so my opinion might be more radical than others.

Jumped a bit on my reasoning on your fiancé. If she were brought into the underwriting tent, we’d probably want her as a comortgagor, i.e., on title. If she’s on the title, most likely the judgment would either automatically attach to the property as a prior lien or could attach later as in a secondary position. A lot of this would depend on state real estate law. For example, in my state we’d not require her to be on title IF YOU WERE MARRIED. But then there’s the credit underwriting issues …………

A P&I is hard to estimate without knowing what “hits” there might be for loan-to-value or whatever. Just to give you benchmark, a 30-year P&I at 6.5%, $300K loan, would be $1,896.20.

Take thee to a reputable local broker who can give you more precise data based on local and state factors. As I said, weird stuff is getting “approved” (technically a recommendation with waiver or reps and warranties) under DU. In your case I wouldn’t feel bad with a high-ratio approval based on solely your income since there’s other “household” income in the true mix.

PhxGuy520 · Joined: 08 Aug 2006 Posts: 38

WOW...Great site. You guys are awesome. Now the big question...

"Take thee to a reputable local broker who can give you more precise data based on local and state factors."

How do I know they are reputable? Is this simply a Word of Mouth thing?

chow · Posted: Thu Aug 10, 2006 12:05 am Post subject:

Word of mouth from other homeowners. We have a goofy member in the member list you can email for help. #16 Desert Duck. They live in that area and can offer you some local LO information.

Bankxp · Joined: 31 Aug 2006 Posts: 2

Hello,

Don't discourage about this.You said that, "required income" calculators are showing different values.But it depends on places where u were living.In Arizona it is difficult to qulify for 100k house.

In my view go for ARM. It is very useful for your investment.

mortgagedepo · Joined: 02 Nov 2006 Posts: 2

Your post has been edited.

Please refrain from posting advertisments in this area.

chow

gte843k · Joined: 24 Jan 2007 Posts: 4 Location: Norcross, GA

:D :D :D one thing that I advise FIRST AND FOREMOST is to repair your credit and bring up your credit. When you're ready to purchase the home, you'll be in much better situation to bring down the interest rates and payments. I've helped lots of people repair their credit prior to purchasing or refinancing.

Just think: when you repair your credit, you WILL SAVE TONS OF MONEY OVER THE life of the loan because you'll be in much better loan program with much better interest rates.

Don't ever just try to find a loan for your situation. FIX YOUR situation first and then find a loan program.

My two cents.