First time homebuyer/Can I qualify for a mortgage

jknapek · Joined: 28 Jul 2009 Posts: 4

Hi

Our Stats are

72000 per year in income
231.00 car payment
350.00 per month student loans
no credit card payment

We're looking at a house for 79000 it was last appraised for 160000 but it's foreclosed on.

Our ficos are middle 590-610. We have not had a late payment on anything in 2 years, although we do have a few collections that are due to come off soon.

We've had on time rent payments for 8 years and currently pay rent of 1325 for a two bedroom apt in northern virginia, we figure with the mortgage payment and ins on this house our payment would be around 600-700 dollars a month, a substantial savings for us, which is why we'd really like to get into a home now

We have about 3000 for a down payment and my parents have offered 2000 in a gift

Is it possible to get a loan for that amount with our income and credit history

Thanks so much in advance

Jen

m2c · Joined: 03 Aug 2005 Posts: 937

You look like a FHA candidate with some closing costs paid by seller. Problem is that I don’t think you’ll find anyone who will touch your FICO scores. 620 is (or was) the minimum but many are moving to 660.

Hard to believe with your income/debt structure you let things get so bad. Sorry, there is a consequence for past “sins”. Time and responsible attitude toward your debt obligations will get you back on track OVER TIME but then the house may not be there. Maybe the seller will go let you rent the property until you get to the straight and narrow. Doubt it though. You’ll problem just have to live with your current renting condition for some time.

jknapek · Joined: 28 Jul 2009 Posts: 4

after we graduated from college we had some financial difficulties. My husband for the last 3 years has only made about 30000 per year but he just graduated from law school last year and now has a good paying position, but the rent out we're paying now doesn't allow us to save, which is why we're looking to buy

jknapek · Joined: 28 Jul 2009 Posts: 4

My father has offered to cosign since we've showed him our credit reports and how we've learned our lessons from the past. Since the house is easily affordable for us do you think we'd be able to get something with our credit scores and my father (810 FICO) cosigning?

The seller is also offering 3.5% closing cost assistance and 3% buy down points

m2c · Joined: 03 Aug 2005 Posts: 937

Couple of things to bear in mind assuming you will use FHA financing:
• There’s a 6% “cap” on seller concessions. You’re talking 6.5% which is fine but the excess comes off “value”.
• Barring more political meddling, FHA should go back to “risk based” MIP on 10/1/09. Who knows – when a government agency does something responsible, congress is can always be counted on to do something bizarre. There may be another moratorium but Barney Frank has enough egg on his face and if risk based comes in effect, this could have a dramatic cost effect on you. Morale is get you FHA case number before the end of September.
• Cosigner will help in debt ratio qualification but not FICO – the number used is the lower or lowest of the midscore for everyone. One sneaky possibility if your FICO is decent – try “kiddie condo” route sign your father and leave husband off the deal. “Kiddie condo” is a term your LO will recognize but is passé since it does not fit new FHA condo rules.
• There are “credit salvage” and “rapid rescore” firms out there. As a LO I won’t touch anyone I know that used these “services” but you’ll find some LO who’s hungry enough to assist you will this avenue. My objection is that these “services” are gimmicking the system and therefore undermine the meaning of FICO. Also I know some of the techniques used to “improve” scores and my view is there a bit unethical. One the other hand your husband is a lawyer – a humorous sarcastic comment but with a grain of truth.
• Your estimate of monthly mortgage payment is roughly correct depending on real estate tax and insurance rates in your location. Yes, there is potential “savings” but remember when you own you pick up maintenance costs. Nothing wrong with renting while FICO improves but I not sure you’ll see housing discount this low after the next year or so. Have a LO run your gross income number against stat first time homebuyer programs and/or Welcome Home Fed Home Loan Bank programs. Later is probably out of money and your income may be too high for either program but it could be a way to offset higher house price if you elect to wait.

jknapek · Joined: 28 Jul 2009 Posts: 4

thanks for all your help. We're just concerned with prices out here the way they are in a year or two we will most likely be priced out of the market. I'm hoping to find a lender who will take into account our 2 years of responsible behavior and our income. We were also planning to take the first time homeowner tax credit and just put that into savings should the house need anything down the road. My score is 610 so hopefully it'll work out if they take into account our income and recent history, wish me luck