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Guest

Thanks in advance for any insight or advice.

My husband and I would very much like to be first time homeowners in 2007. I have about a 715-720 score, but last we checked, my husband has 551. He had some major bumps 6 or 7 years ago (when he was 19 or so) and had a car repossessed and let a few debts go into collections. He has been pretty much laying low credit-wise ever since, letting me handle pretty much all of the finances. Even though he doesn't physically pay the bills himself, his name is on several of our accounts, so he has been gaining the positive history from me paying the bills on time for the past three or four years. Luckily, we are not too far from most of his bad items being dropped from his report after the requisite 7 years. There are also a few errors that we need to dispute from his report (for example, the reposession is on there twice, and another item we have already disputed and got expunged is still appearing in at least one of the reporting agencies' databases). Hopefully fixing those will be enough to raise his score at least a little bit.

We make about $50k combined, with me bringing in about another $5k annually in overtime, so $55k total. With help from my parents, we plan to have a cash reserve of $15k for downpayment and/or closing costs. We would like to look for homes in the price range of $165k-$180k. Is this feasable or am I living in a dream world? Any thoughts would be much appreciated.

Guest

One other thing I forgot to add.. As of right now, I bring in more income than he does.

Guest

Marie, if I assume your monthly expenses to be near about $1000 and you get a 30 yr fixed at 7%, with $15000 down, then the house you can get will be in the range of about $120,000.

Guest

You mean my monthly CC/loan/etc payments? No, more like $300/month. We only have 1 credit card and a small student loan currently outstanding. No car payments.

wablola · Posted: Wed Jan 17, 2007 4:57 pm Post subject:

Marie,

What I would do before considering purchasing a home, is to determine your monthly expenditures. People never consider the added bills after purchasing a home (utilities). Also, it would be best, if you do have any debt, please pay it all up. After you have gathered all the information and determined how much you can spend a month, then you can determine if you can afford a $165K-$185K.

30 year fix are at an all time low. Since your FICO is above 700, you would be considered A paper loan and would receive good rates. Also, if you do plan on using a loan officer, please use more then one loan officer to force them to compete for your business. In the end, it will provide you good rates. However, please do go with someone who is looking into your best interest.

Guest

Marie I did some more calculation, if the total monthly expenses are around $300 as you are saying then with property tax rate of 1% and insurance rate of 0.5% with maximum PITI (Principal, Interest, Tax & Insurance) of 28% and maximum total debt ratio of 36%, the house value you can qualify for would be roughly about $160 to $170k as you are trying to locate. The figures for expenses, tax and insurance will obviously vary depending upon current market situation and rates.

I agree with Wenzel, get estimates from a few lenders and compare the term and rates they offer. You score is pretty good and would get the best available rates if you shop properly. The calculations I have provided are just to provide you with an estimated figure of how much you would be able to afford. Compare the GFE you get from them and check who is providing you a better offer.

Guest

Thank you. I certainly will. We currently rent a 955sqft home for $920/month, and the places around here in the price range I have been looking are of similar size, so I think I have at least somewhat of an idea of what utilities and other expenses outside of the mortgage itself might be. Our current debt load isn't spectacularly huge, both cars are paid off and we just have the one credit card and a few thousand left on my husband's student loan, but we are working to pay it down even further. Our current lease is up in October, so we have a little bit of time. We plan on starting our search this summer in the hopes of timing a potential purchase with the expiration of our lease.

As luck would have it, we will be obtaining our mortgage from a friend of my father's, so I can be reasonably sure that he will have my best interest in mind. I have yet to speak with him because I really want to be sure to have my "ducks in a row" so-to-speak, before we meet with him. But, we will be setting up an appointment with him soon.

Thanks again! I appreciate all the insight! Smile

wablola · Posted: Wed Jan 17, 2007 6:07 pm Post subject:

Good job Marie,

Looks like you are on the right path. It is great that you have a friend of your father to provide you some guidance and a loan. However, it would be in your best interest to have another loan officer working with you as well. This will force both loan officers to compete for your business and you would have no question if you did receive the best rate possible.

Also, please educate yourself with the great articles provided on this website. The better you know, the less chance of you getting a raw deal.

Guest

Your credit score seems to be good and hopefully your husband will be improving his score too. Also, you do not have too much of debts – that's a nice thing to happen to you before buying a home.

Two cars paid off and a credit card and few thousand dollars left to pay off the student loan! I think it's the right time for you to buy.

Since your lease will be over by October, there's pretty much left for you to search for the right home, the right lender and a suitable loan offer. I hope you get the best choice from the lender you have opted for. But verify what he is offering with some more lenders.

It is quite possible that you may end up getting lender who will be ready to offer you a comparatively lower rate and also has good service background.

All the best!

Guest

Thanks everyone! It's good to know that we aren't a couple of lost-causes, as I had feared.

My husband just started his first job in the computer graphics industry this past November (and finished his degree in graphics just last month). He has a low-paying job right now, but he is sacrificing a better salary for a really great job title and the extremely valuable experience that this job is bringing him. So this is actually a strategic move for us. His plan is that after about a year in this job, he will be able to apply for positions that require more experience, and at that point his earning potential should go up substantially. I am also looking for promotion opportunities at my job. So the $55k combined annual salary is actually the absolute worst-case-scenario for us if things stay just as they are now.

Now if only we can get his credit score up, we should be in good shape!

Caron

You are most welcome Marie!

It's a good move on the part of your husband to go for a job that will help him learn. And, when you learn things well, you can apply it any time in future. May be it's a low paying job but then he's acquiring experience which hopefully will do him good and you as well.

Hope you too get promotion opportunities and accumulate some good money for buying a home. And yes, do try to improve your score which can really help you get a favorable rate of interest.

In case you have any queries on mortgage, feel free to let us know about it.

Thanks,

Caron.

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