No doc in current market- so cal 1st time buyers

mlbubeena · Joined: 08 Dec 2007 Posts: 7

Hello,
I am doing some research to prepare to hopefully purchase our first home this year. I am a bit new to mortgages, so I really need to be educated.
Here is our situation-
We are self employed and have an approximate net yearly income of 160K.
Our monthly debts are approx. $1200 not including our rent, but we will no longer have rent if we buy!
My husbands credit score is approx. 700, mine is somewhere in the 640 range.
We will have a maximum of $100k to put down... would prefer to put no more than 10-15% down to keep some extra cash on hand for improvments, etc.

We will need to do a no doc/stated income loan.

We are looking to purchase a single family home in the $500-600K range in southern california.
Will this be feasible? What type of programs are available for this situation?
I have heard that nowdays lenders are much less likely to give these types of loans.
Thanks!!!
Beena

liverichly · Joined: 10 Feb 2005 Posts: 199 Location: Orange County, CA

Hi Beena,

If the amount you are financing is above $417k, using stated income you will likely have to put 20% down as non-conforming/jumbo loan amounts for stated income are already capping out at 80% with most lenders. More and more lenders are completely eliminating stated income as well.

If you net $160k why are you needing to do a stated income loan?

$600k sales price, 10% down, as long as you have a 660 score, you should be able to get a 30-year fixed rate around 6.5%... with property taxes/homeowners insurance/mortgage insurance, and the $1,200/mo in other debt payments, I calculate your debt to income ratio to be right around 41-42%, which would easily qualify for the new "conforming jumbo" loan program that has come out. Or you could save more of a down payment by utilizing the FHA jumbo guidelines, just 3% down is required (some are requiring another 5% down if it's in a declining market - which pretty much all of SoCal is).

mlbubeena · Joined: 08 Dec 2007 Posts: 7

Hi Shane,
Thanks so much for your help. We are still trying to decide if we should maybe wait until fall... house prices are likely to continue to drop....

However, we stumbled upon a house that we love (by accident). Asking 580K (a bargain if you ask me, last year probably 800K+) If I put $100K down, am i better off just getting a conforming loan for 417, and then a second for the rest? Is that possible?

I am a little unclear-

"$600k sales price, 10% down, as long as you have a 660 score, you should be able to get a 30-year fixed rate around 6.5%... with property taxes/homeowners insurance/mortgage insurance, and the $1,200/mo in other debt payments, I calculate your debt to income ratio to be right around 41-42%, which would easily qualify for the new "conforming jumbo" loan program that has come out. Or you could save more of a down payment by utilizing the FHA jumbo guidelines, just 3% down is required (some are requiring another 5% down if it's in a declining market - which pretty much all of SoCal is)."

Is this with no doc???
Thank you again.
Beena

liverichly · Joined: 10 Feb 2005 Posts: 199 Location: Orange County, CA

It'll be interesting to see what prices do this summer as it's a big time for people to move since kids are out of school. With the new Conforming Jumbo & FHA Jumbo loan programs I have a feeling this summer will see more activity than last summer, whether prices will stabilize or not is another question though... I have a feeling we'll still see prices fall further through the end of the year.

2nd mortgage lenders are no longer doing stated income from what I know, so if you do go the stated income route then you are going to need to finance everything into a 1st mortgage... if that first mortgage is above $417k, you will have to put down 20%. So on that $580k home, you are going to have to put down 20% ($116k), which with your $100k max down payment, it doesn't appear it's going to work out.

You didn't answer my question on why you are looking for a stated income/no doc loan program when you say you net $160k/year. I get skeptical, as should all loan officers, when someone asks for a stated income/no doc loan program. What does line 37 say on your IRS-1040 for 2007 & 2006?

liverichly · Joined: 10 Feb 2005 Posts: 199 Location: Orange County, CA

Hi Beena,

I did a little research for you today and found a lender who can do an 80% 1st, 10% 2nd, for stated income/verified assets.

90% CLTV 2nd, 680 minimum score, up to a $200k loan amount... so on the $580k sales price, you could do the 1st at $417k, 2nd for $105k, and be able to qualify that way.

mlbubeena · Joined: 08 Dec 2007 Posts: 7

Hello Liverichly,
Thank you!
To answer your question why we have to do a stated loan... we are self employed! We have owned our business for 8 years now. Our business has been licensed since the day we started in 1999, and we have bank statments also. I think my mistake was when I said I net 160K, actually this is our gross prior to adjustments etc.
After looking at the payments, etc, we have decided that we would would probably rather stick to a loan under $417K and pay it off early, double up on payments when we can... it looks like we could actually find a decent home in that price range!
I am currently selling some of our assets to get more money... I should be comfortable with 15-20% down within 90 days... hopefully these loans will still be available!
This loan you are reffering to... what is the interest rate? What type of documentation will I need to have in order? Do they require a 4506?
What type of assets are verified? How are they verified? I need to make sure I have all my ducks in a row!!!

Beena :D

liverichly · Joined: 10 Feb 2005 Posts: 199 Location: Orange County, CA

Keep in mind rates change on a day to day basis but today it's currently at 6.125% for a 30-year fixed 1st and the 2nd is at 9%.