First Time Buyer

skedastik · Joined: 25 Jun 2007 Posts: 6 3.76 Dollars($)

Situation:
My wife and I are looking to buy are first home in Utah.

- Income: $58,000 (have another $7000 /yr fairly steady income, but won’t include for loan)
- FICO: me - 660 (deliquent payments in '02, nothing bad since), wife – 715
- No debts (CC, cars, or otherwise, except $560 /mo day care not sure if that would be included)(just finished paying off medical expenses, credit cards, and student loans)
- Currently only have about $2500 for down payment (see above).
- Want to move in the next 2-3 months (wanting to leave a bad situation).
- Current rent is $900.

Before we meet with lenders just wanted a little picture, some ideas, etc. Ideally we'd like to save up another $10,000 for a down payment, but we are willing to live with slightly higher rates to get the f outta dodge now and not have to wait another year or two. What kind of rates, loans, options etc. are we looking at with our income and scores? How do the credit scores work when one is quite a bit higher than the other? Calculators range from $140k - $210k. We are hoping to get into a place for around $160k, and expecting to be there at least 7 years. Any other thoughts appreciated. Thanks.

miller_st · Joined: 17 Jan 2007 Posts: 917 168.84 Dollars($)

Hi Skedastik,

With the low down payment you are in position to make, fha loan would be a good idea to look at. You only need to make 3% down on them. Plus Fannie Mae has no down MyCommunityMortgage program too. These are few of the good options you can look at.

Miller

Guest 0.10 Dollars($)

deliquent payments won't factor in as it been 5 yrs. now

you can expect to qualify for good rates with the scores you have & acceptable dti ratio

if income is been continuing for the last 2 yrs & in the same line of business & you can provide documentation then you are in line for good rate offers

with plans of staying for 7 yrs, look at 5/1 arm or a 10 yr fixed

skedastik · Joined: 25 Jun 2007 Posts: 6 3.76 Dollars($)

thanks for the responses. one issue is that i started a new job only 2.5 months ago. previously my income was about 44k, but with this new job it is around 58k. will that play much of a factor?

also, our debts are completely gone as of about 1 week ago. before that they remained pretty high for awhile. how much improvement in scores might we see if we continued without debt for just a couple months?

i am a little wary of arm's as i have seen people's payments jump quite a bit and are left unable to afford their mortgage, and i'm not sure we'd be able to afford a 10-15 yr mortage on a 160k house. seems the monthly payment would be real high.

skedastik · Joined: 25 Jun 2007 Posts: 6 3.76 Dollars($)

also how do the scores factor into determining the rates? will they look at only my score? only my wifes which is higher? an average of the two? the one with the higher income? thanks.

blue · Posted: Mon Jun 25, 2007 2:38 pm Post subject:

Job change will not be too important if you are in the same profession as it has resulted in increase in your income. Lenders want you to be in the same profession for the last 2 years more than being in the same company.

If you are going for a fha then scores are not the main thing looked into rather they will be checking your overall credit history.

Thanks
Blue

miller_st · Joined: 17 Jan 2007 Posts: 917 168.84 Dollars($)

I agree arms can be difficult to maintain after the initial period is over and rates can be quite different after the change. As you are planning about keeping the house for a period of 7 yrs. and selling off after it you can look at higher repayment period loan as well.

That way your monthly payments would get reduced.

Miller

skedastik · Joined: 25 Jun 2007 Posts: 6 3.76 Dollars($)

well, i say at least 7 years. but if we find a good house in a good location i see more like 15 - 18 yrs. but i just don't know.

also, if we went with something other than an fha loan, what score will lenders look at to determine the rate? both? or just mine? or the higher? i have no idea.

*oh and I would be the primary wage earner, but my wife does make a 18k contribution

Niicss · Posted: Mon Jun 25, 2007 3:15 pm Post subject:

What I say is that fha loan will be best bet for your situation with the low amount of down payment you are able to make.

Income of $58,000 is it you or combined for your and wife? But with $2500 on a 160k house you are still short a bit for a 3% down, would you be able to bring this amount?

How do the credit scores work when one is quite a bit higher than the other? -> for fha loan it is not important consideration

Other than fha, when you take the loan with your wife as co-borrower, they will look at both scores. And both of you have good score. Anything 630 up is considered good and can help qualify for good rates. Let me also add that for conforming loans the score is not the only main factor that is looked at. Your income, dti, credit history are more important.

Best loan type for you would be a 30 yr fxd, for a 18 yr or 20 yr stay target you have. Down the line you can make extra payments and reduce the total loan term.

Niicss

skedastik · Joined: 25 Jun 2007 Posts: 6 3.76 Dollars($)

yes, i am sure we could come up with 3% in 2 months time. with a little family help im sure we could be up to 5%. what about 80/20 loans? i've heard about other 100% financing that waive the pmi as well? how much higher would those rates likely be?

Niicss · Posted: Mon Jun 25, 2007 3:34 pm Post subject:

I won't recommend you to go for a 80-20 loan as the 20 part will have higher rates. Many banks nowadays have 100% ltv programs. You need to consult brokers/lenders about them first.

80-20s are also called as piggy back loans, you will have to manage two loans. one for 80 percent and the other for 20 percent of the home value.

Fannie Mae has a 100% ltv program you can try out and rates would be quite equal to what the present market rates are. Another one I can remember of is the no down program by cofedbank.com.

Guest 0.10 Dollars($)

try to find if No Fee Mortgage PLUS from BofA you can qualify for, it has 0 application and closing fee and no pmi required even with down less than 20%

carnahandavid · Joined: 21 Dec 2006 Posts: 239 58.41 Dollars($)

160k house is certainly affordable with the income you have.

0.10 Dollars($)

thanks for all the info.

jenkin7 · Joined: 04 Jun 2007 Posts: 939 140.80 Dollars($)

Hello skedastik,