have a lease purchase agreement

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My DH & I have got a lease purchase agreement. We will rent for the coming 5 months. Part of the rent we will pay will go towards closing cost or purchase price whichever way we like. The house is for sale at $190,000. We will be purchasing it after 5 months are over for $185,000. The purchase will be contingent upon inspection. We selected to go for lease purchase so as to save up for the down payment. Down payment we want to save up is $10,000 and we also want to wait for these few months to increase our credit scores.

Income, is at $72,000, fico - DH: 679(Equifax), My: 703(Experian).

Owe $5000 on chase card, which we plan to pay down within next 2 months. This is the only card we have. I have few student loans which are in deferment till 2011 & two auto leases. Any other way to improve upon our fico scores? We have opened new accounts in the last 3 months: Chase - $7k limit and AmEx - $4k limit. Other TLs are Chase CC(7k), Dell($1k), Bank of America($15k). Need some help with selecting a mortgage for first time buyers. Thanks for the help.

blue · Posted: Wed Jul 04, 2007 2:39 pm Post subject:

Hi Emmeline,

Welcome to Mortgagefit discussion board.

Which type of mortgage you would be able to qualify for depends on many points. Lenders look at past income, current salary, and also year to date income. You will also be required to provide proper documentation of your income based on what type of employment you have, W-2'd/self employed. In case you are self employed income will be judged from tax returns for the last 2 years and year to date P&L.

Also tell us about the payments for the debt items you have mentioned, auto lease, student loans and other expenses other than utilities & personal expenses. After getting these values we will be able to tell if your debt to income ratio is within the specified range or not.

Do let me know if you have any other questions.

Thanks
Blue

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larry · Joined: 27 Jun 2007 Posts: 3245 460.30 Dollars($)

Hi Emmeline,

You can certainly qualify for a loan with good rates as your score and income are quite well. Calculate all your debts and contact with a lender to figure out your debt to income ratio as it is also considered to qualify for the loan.

To know further about the loan programs suiting your financial condition, you can refer to a section on different loan programs at http://www.mortgagefit.com/loan-programs.html

jenkin7 · Joined: 04 Jun 2007 Posts: 928 139.07 Dollars($)

Hello Emmeline,

You may opt for the FHA (Federal Housing Administration) loans. FHA provides insurance against the loans taken. If you default on your loan, FHA loan insurance protects lenders against loss incurred. It is less risky for lenders as FHA would pay the lender if you default on your loan. But, the loan must meet certain requirements recognized by FHA to qualify for insurance. Unlike usual loans, FHA-insured loans require small down payments. In FHA loan, there is more flexibility in calculating household income and payment ratios as compared to the conventional loans.

For more information, you may also refer to FHA Loans

Samantha

Hi Emmeline,

Welcome to the forum.

It's a good decision on your part to wait for 5 months and improve your score prior to purchasing the home. But let me tell you that your Experian and Equifax scores are good enough to help you qualify for a loan at a reasonable rate of interest. Still, it will be better if you can continue with the payments on all your debts right on time. This will help you to improve your score and enable you to get qualified for a suitable loan option especially those that are specifically meant for first time buyers.

Regarding the loan options, you can try out with FHA insured loans that require low down payment or even zero down payment. You may also refer to a previous discussion for more information on First time buyer loan programs.

Hope this helps..

God bless you.

Samantha

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