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ralliartdriver · Joined: 06 Jan 2009 Posts: 3 2.63 Dollars($)

My wife and I would really like to stop paying so much rent and start building some equity. We are outside of Burlington, VT. Looking for a house in the 170,000 to 190,000 range. Here is our profile:
Combined gross income $75,000
Car Payment: $350 (20 months left)
Student Loam: $200
Credit Card Payments: about $500 a month in minimum ($18,000 total)
Savings: $3000

I've checked two of my credit scores and they were 710 and 745.
My wife has good credit.

We both have parents that are willing to help with a down payment of probably 3-5%.

We are currently paying $1100 a month in rent and I know a mortgage for the home price range we want to look at would be about the same.

Is it possible for us to get the mortgage that we want, with the high debt ratio right now?

It seems that if we put every bit of cash we can into the home buying process, we could get it back with the $7500 tax credit.

We also seem to be just above the income limits for the VHFA loans, so I'm assuming we would have to have a conventional 30 yr fixed.

Thanks in advance

smithsussane · Posted: Tue Jan 06, 2009 10:25 pm Post subject:

Hi ralliartdriver!

Welcome to forums!

As far as your credit score are concerned, I don't think you will face any problem in getting a loan. But you will also have to show a stable income history to the lender. Moreover as you are looking forward to pay a down-payment of 3-5%, the lender will ask you for a PMI (Private Mortgage Insurance). If you pay a 20% down, this insurance will not be required.

In case of conventional loans, the debt to income ratio should be 28/36. In case of a FHA loan, the limits are typically 31/43 whereas in VA loan, the limits are only calculated with one DTI of 41. As you are planning to get a conventional loan, your DTI should be 28/36.

You can speak to the lenders of your area and check out what kind of rates and terms they can offer you. You can also speak to the lenders of this community and seek a no obligation free mortgage consultation. They will tell what kind of rates and terms you may expect to get. They will also tell you about the current market rates.

Feel free to ask if you have further queries.

Sussane

ralliartdriver · Joined: 06 Jan 2009 Posts: 3 2.63 Dollars($)

I have been in the same job for a year and a half now. What are the disadvantages in getting an FHA loan, because with a conventional loan and a 36% back end ratio, I think we will be below what we would like to borrow?

Thanks

gmakerley · Posted: Wed Jan 07, 2009 3:00 pm Post subject:

ralli, there really aren't any disadvantages to fha loans. you'll pay a mortgage insurance premium up-front, yes; and you'll pay a monthly mortgage insurance premium also. nevertheless, with 3.5% down payment requirement, it seems to suit your situation. conforming loans these days are looking for 740 credit scores to give you the best rates, whereas fha is far more forgiving.

we in my office do tons of fha financing. i see no harm to you, and there are no hidden aspects of the product that would jump up and bite you, either.

ralliartdriver · Joined: 06 Jan 2009 Posts: 3 2.63 Dollars($)

Hi,

Thanks for the responses. Do most all banks offer FHA loans? A number of the local banks around here that I have looked at do not explicitly mention FHA loans on their websites. Is there a list of FHA lenders that I could look at for Vermont posted somewhere?

Thanks

gmakerley · Posted: Thu Jan 08, 2009 8:14 am Post subject:

ralli, although they may not list fha on their sites, i'd say that if you have already shopped those companies, you might want to simply go back and ask the question. for that matter, most web sites have search engines that will provide that answer for you as well.

i'm not sure if you'd find a master list of lenders.

Posted: Sat Jan 10, 2009 2:55 pm Post subject:

Something else to consider is a "gift" from a relative. If you have someone who can give you some down payment money, you may be able to get a better deal.

Guest

my husband I moved with parents 7 years ago and now want our own house. since that time we have saved very little and parents would provide down payment money, but do not want us to leave. I have since been laidoff from my job of 8 years, my husband works but has 2 high creditcard balances and one car note. I paid everything in my name before losing my job. What are the chances of us getting our own home? Credit score for me is 720, and his is 705.

Niicss · Posted: Fri Jan 16, 2009 2:22 am Post subject:

Hi,

With the credit score that both of you have, you may get a loan. However, the lender will also look after the income history. If you husband can show a stable income history for at least the past two years, then there are chances that you will get a loan. Moreover the lender will also ask you to pay a down-payment of 20%. If you cannot pay that, then you will have to go for a PMI.

You can speak to the lenders and check out if they will be able to give you a loan. You may also seek a no obligation free mortgage consultation from the lenders of this community and see what they have to say in this case. They may even tell you what type of rates and terms you can expect to get.

Thanks.

equitytalkingfinancing · Joined: 16 Jan 2009 Posts: 4 2.34 Dollars($)

the best way is to take some suggestions from experts.

gmakerley · Posted: Fri Jan 16, 2009 7:53 am Post subject:

wife, please don't be so frustrated. i agree with the above postings that your credit scores will serve you well in attempting to obtain a mortgage. the issue you'll likely run into is how much you'll qualify for with your husband's income.

with an fha loan, for example (if you choose that route), you can borrow 96.5% of the purchase price of a home, and your funds don't have to be your own specifically (a gift from your parents is perfectly okay).

eric1 · Posted: Fri Jan 16, 2009 6:16 pm Post subject:

George,

My other concern with the loan scenario referenced by Ralli is the liquid assets. She stated that she could get the 3.5% down payment from relatives but that only leaves $3000 in savings for closing costs and reserves.

gmakerley · Posted: Sat Jan 17, 2009 6:09 am Post subject:

i can't disagree with you eric; though her logic about the tax credit is a tad comforting in the scenario.

and, of course, we've seen plenty of borrowers who've come into their transactions with no reserves and succeeded. and believe me, i'm not ignoring the ones who failed. here, though, we seem to have borrowers with good income (hopefully stable) and very good credit. the likelihood is that they'd protect their investment to the max, based on all the other qualifications.

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