Possible to consolidate debt into 1st loan?

Gregg 00SS · Joined: 15 Apr 2008 Posts: 1

Here's my situation. Getting divorced and absorbed 100% of our debt = approx $20,000. Looking to purchase a modest brand new home in S. Fl listed at $130,000 in a gated community. This particular house is the only one still available at the initial advertised price, they are now selling them for $187,000.

I have a credit score of 680, make all my payments on time, etc... I gross about $3200 / mth and make another $750 or so each month in contracts through my employer on a self employed basis. The mortgage guy I have contacted through the builder of the home I'm looking at says the extra income may not be able to be counted as most lenders want to see a history of atleast 2 years before they will count any self employed and / or part time income. Is this true?

Is there anyway possible to consolidate my debt into a first time mortgage? I pointed out to him that the house I'm looking at buying for $130k is now selling for $187k, thinking there might be some equity in it right off the bat, but he seems to think it will appraise right around what I'm paying for it. I don't see how that can be. If I were to walk in there and purchase the exact same home at the current price (would need to be built) would it not then also appraise at $130,000?? And what bank would lend you $57,000 more than the appraised value?

Even though I could probably do it, I'm not sure I'm comfortable taking on a mortgage if I can't consolidate my bills, I just don't want to put myself into a bad situation later down the road. Anyone offer some suggestions?

I've been talking with this loan officer based out of convinience seeing he has a relationship with the builders. Would it be better to go to one of my local banks and talk to a loan officer there? Would it help for me to get the house appraised on my own dime and if the appraisal is substantially more than what I'm paying, use that to justify a consolidation?

liverichly · Joined: 10 Feb 2005 Posts: 195 Location: Orange County, CA

The mortgage guy I have contacted through the builder of the home I'm looking at says the extra income may not be able to be counted as most lenders want to see a history of atleast 2 years before they will count any self employed and / or part time income. Is this true?

Yes it is true, any self-employment or part-time 2nd job income needs 2 years history.

Is there anyway possible to consolidate my debt into a first time mortgage?

Nope, not anymore, awhile back there used to be purchase money mortgages that would go over the value of the home but those have been discontinued. On a purchase, lenders use the lower of the purchase price or appraisal.

Even though I could probably do it, I'm not sure I'm comfortable taking on a mortgage if I can't consolidate my bills, I just don't want to put myself into a bad situation later down the road. Anyone offer some suggestions?

The only way you could get your cake (buy the home) and eat it too (consolidating the bills) is after you purchase the home, do a cash out refinance using the new appraised value (which you say is $187k)... however if the home doesn't appraise out what you think it will, you have no options at that point. It's not something I recommend one do either - "speculative refinancing" is what it's called, and you are speculating that the market is going to be a certain way at a certain point in time. If it's not, then you have just lost the bet. So if the situation doesn't make you feel comfortable then don't do it. That is how most people got in over their heads, took on too much debt, couldn't keep up with the payments, and had to let something go into default and ruined their credit. Don't be another victim of putting the cart before the horse. If you have to wait a little bit, so be it, home prices in So. FL aren't going to skyrocket anytime soon.