Calling All HomeOwners

As for how much house you can afford, they have a formula. I believe my lender said they take 50 % of your monthly income, subtract all monthly expenses, and what is left from that 50% is the amount you can afford. That is for a normal conventional loan. They have "no doc" loans, that are based only on "stated" income and credit score. That is what I had to do as 1/3 of my income is not reported.

My scores are high 600's to about 725, so that was not a problem. I was told anything over 660 is adequate and they take your middle score. I am putting $53,000 down so financing for me was not really going to be an issue. It took 1 1/2 hours to get qualified and lock in my rate. I am closing on Jan 8th.

 

do a searh on yahoo for "how much can i afford" calculator. try bankrate.com too, the have mortgage calulators and info as far as front ratios and back ratios and what is considered for a mortgage.

 

I would find a reputable mortgage broker (many aren't.) and talk about your credit...show them a copy of yours. Most of their investors (lenders) are score driven. There are hundreds of lenders out there, (do NOT go apply to each of them) and they all have different requirements or standards they go by. They use scores to determine what LTV (loan to value) you'll get for example. Just like anything else the higher your score, the higher LTV and better rates you'll get. You'll have to be careful because there are a lot of junk fees, but some are legit. I wouldn't pay more than 1% origination fee for example, but if they do a good job they are worth it. Also, how much you have to put down and how much if any your seller is willing to carry back, if you qualify with the lender to do that. Also, if you don't have much to put down, I would raise your sales price so your seller can pay it, unless they are already offering it. If you are over 620 on your middle score, I believe there is a program right now that will allow you to purchase at 95%. Programs change all the time, some will let you borrow 100% but that's where a good broker will know what programs will work for you. Call and ask them who their top closer is and how many lenders they are signed up with. If they say 3, I'd look for a bigger company.
Also...if you have HUGE judgments/collections, that will hinder your ability to borrow, because a lender will be concerned that your house will be attached.
You can usually get a reasonable mortgage two years after a bankruptcy or foreclosure.
Rates become more reasonable at certain thresholds. 580, 620, 680 etc. are "magic" lending numbers in the mortgage industry I believe. I am no expert, but this is from my experience.

 

Here is a link to some mortgage calculators that may help:

http://www.interest.com/calculators/

 

Those should be okay. Again, a good broker will tell you what the threshold for a particular lender is... for example......they might have a combined total of 10 grand or they might have a limit of no judgments individually over 2500.

Have you tried disputing judgments? I got those off easy. Good luck!

 

I believe that most lenders will require you pay off all collections and things like that. Im pretty certain that fha requires that too.

 

I financed through FHA back in May of this year and was required to pay all 6 of my unpaid collections/chargeoffs. The bank didn't care if they were settled, paid in full, or whatever, as long as I could show a $0 balance on each of them. My advice would be to settle them before talking to a bank, and do your best to get deletion.

My experience is that you have less leverage trying to settle an open collection once they realize you're shopping for a mortgage. If you choose to see a broker or lender before settling, just take a copy of your own report and don't let them pull an inquiry. Two of the six CA's I dealt with knew within a week that I was house-hunting and it reduced my bargaining power.

 

LB

Chucky is right about taking your own report, and you might have to pay off everything if you go to FHA, that's why I was mentioning take your own report to a broker and they will know which lenders require payoff and which don't. I am not advocating not paying your bills, you WANT to pay or settle, but if your scores are good enough you won't have to pay them off to get into a house. Disputing them is good to get them off to get into the house then work on settlements. I especially enjoyed that when the Collector didn't know it was no longer on my report. <snicker>

 

I purchased back in July. Do a search for fla-tan. he was the catalyst for me. I had to pay two charge-offs in order to get the loan. I paid those at closing. My scores were in the 550-600 range. I put 3% down and my purchase price was approved up to $125,000.

My mortgage is serviced by GMAC Mortgage and they have been great.

 

Amy, I really believe that unpaid charge-offs and collections have to be paid before closing. I know we've already spoken to a broker, and the loans that we are applying for are not FHA, nor are they score driven, but they do require all unpaid bad debt to be paid. I believe if you search Fla Tan, you'll see that he references this too. I could be wrong, but I don't think that you could get many loans w/ unpaid CO's. believe me, I'd love to be wrong on this one, because we are now trying to get the last 2 things paid off, for deletion, just so we can apply for a house soon.

 

Yes, they usually will pull one at some point right before closing.

 

I just purchased my home at the end of August. I worked with a broker and my scores were 526, 586, 620. I was approved for 125,000 and purchased a home for 112,900 (market value about 133,000 - possibly higher). I was lucky to find an Accubank foreclosure (w/ no deficiencies besides a broken heat pump) that they were trying to unload. My interest rate was high (8.25) w/ 1 point for origination. I had quite a few bangs on my credit after BK (they all showed zero balance - worked hard and paid off w/ overtime money). Because of this, I couldn't go FHA. The broker gave me the loan at 3% and then sold it to Ohio Savings Bank within the week. I'll refinance around March. Another good thing with the home purchase was that I got my car refinanced from 19.99 to 14.00 and the house hasn't even showed up on my credit (I guess checking that box yes can work in your favor). This saves me $70 a month and the auto loan term wasn't even extended.

 

I know someone that got approved with Countrywide and they had an unpaid chargeoff. Charlie

 

Tracy,

I promise you, I've seen it happen ALL the time. Like I said, it depends on the particular LENDER and their criteria, as well as what their limits will be. If a broker put you through someone who requires it all to be paid off, then that is THAT lender. I'm definitely not saying, "don't pay your bills" or that these would be prime lenders, but I see it happen with my buyers a lot. Every lender has different criteria and bad debt thresholds.

Amy