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My wife and I are looking to buy our first home..especially with this new tax credit this yr…she is a teacher and I am in banking..our combined salaries are $ 120k…only problem is we have ALOT of debt…roughly $ 3800 a month for credit cards, cars, and student loans…our credit scores are over 700, but im afraid the debt to income ratio being too high will be a big issue..we do pay $ 1100 a month in rent (not aprt of the $ 3800/mo debt)..so i dont know why we would be turned down for a mortgage of $ 160k..but im just wondering if anyone else has been in this situation, if they were approved, or if there are any special offers we could take advantage of…
its actually investment banking….ive gone through the same calcs…i just get mad because I currently pay $ 1100 a month in rent and i figured a $ 160k mortgage with PMI, property taxes and insurance is roughly $ 1200 a month in my area (based off property taxes)…im guessing that doesnt count for much though with lenders…thanks for the advice.
thomas, im referring to the new tax credit obama just passed (up to 8k – non repayable)…ill have until 12/1/09 to purchase…

4 Thoughts on Mortgage approval help?
  1. Reply
    visvardis
    February 4, 2014 at 5:24 pm

    go for a pre approval from a lender they will tell you

  2. Reply
    Steve D
    February 4, 2014 at 6:20 pm

    Unluckily, I ran your numbers on a number of “affordability” calculators, and you have hit the nail on the head – your debt-to-income ratio is well over the usual guidelines. Since you are in banking, have you talked to a mortgage loan officer at your bank (I assume you are in retail banking as opposed to investment banking).

    Also, have your wife check with the board of education – a lot of Boards provide some interest/down payment/cash assistance to teachers to entice them to live in and stay with the county.

    Other options might be an FHA loan – shop around for a bank in your area that participates in the program.

  3. Reply
    thomas p
    February 4, 2014 at 7:09 pm

    O.K. You have to make your first home purchase between April 9, 2008 to July 1, 2009. The credit (not just a deduction) is $ 7,500 and your family qualifies for the “full biscuit” if your joint adjusted gross income remains under 150K. I have not been a home buyer for a number of years; but, I did read a condensed version of the The American Recovery and Investment Act of 2009 which I assume has not been amended since February 12, 2009. My only actionable advice is that you are in the 6th inning of this tax credit plan. So, I hope you will move fast to benefit from this buyer’s market and the tax credit.

  4. Reply
    Kevin J
    February 4, 2014 at 8:02 pm

    If you make $ 120,000 a year, the monthly income is $ 10,000 per month. FHA will typically not go above 45% on your debt to income ratios, but since your credit is so high, I’ve qualified clients up to as high as 55% in debt to income ratios. Believe it or not, it still pays to have good credit. In FHA’s eyes, your excellent credit is a compensating factor. So let’s multiply $ 10,000 X .55 = $ 5,500 minus $ 3,800 (current debts) = $ 1,700 left over to use as a monthly housing payment. Even if you can’t qualify up to 55%, at 50%, you are still qualifying for a monthly housing payment of $ 1,200, which is still the amount you are looking for. I would go to your lender that knows how to do FHA, and I’m positive you will qualify for a monthly amount between $ 1,200 and $ 1,700 per month.

    Please keep in mind that FHA will require you to put 3.50% into the purchase, so in your case, if you are purchasing a $ 160,000 home, you will be required to put $ 5,600 into the transaction. I would also recommend that you ask the seller to pay between 3 and 4 percent for your closing costs so you are only bringing the 3.50% .

    Best of luck to you!!!

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