topic Help will be applying for a mortgage soon in Mortgage Loans

Help will be applying for a mortgage soon

creditwatcher2012 — Thu, 27 Dec 2012 09:28:10 GMT

Hello, I am fiarly new to this form and if possible would like some adivice as to what I should do for you the experts.

I am a self employed General Contractor, I own my own business, I am filing income tax this year for alow 90000 with no deduction(except the ones everybody gets which I think amounts to about 16k), so after starting it on turbo tax I will have to pay 26k in taxes(I am ok with that) my question is, is I havent filed in about 3 years due to the economy and being out of work, and in the past when I did file I had alot of deduction..... so When I file this year for 90k and next year for 90k will I qualify for a mortage.

I am looking to purchage a 500k-600k house if at all possible, or if not I will look in the 350.00-400k range. Based on your experience do you think I will qualify for this amount of mortage and btw I am a first time home buyer (own another home but never obtained a mortgage)

My plan is to take a home equity out on my office(other home) to come up with the down payment on my home.

Do you have any suggestions when I file my income tax?

Also my credit is a 680transunion, and substantially lower on the other two(80+ inquires) hoping they will fall off by the time I buy my house.

Credit Cards

Chase Freedom 4k/4k

Chase BP 1700/1650

barclay apple fiancing 1k/950

Merrick Bank 1k/1k

Capital One No Hassle Rewards 500/500

Capital One Platinum 500/500

Credit One Bank 300/200

Target Red Card 200/0

Orchard Bank 400/400

Installment Loan 5k/ 205.00 a month

(credit line, utilization)

I have VERRY HIGH utilization now because of christmas shopping etc, and took the loan out to come up with the additional money to buy my son a Rolex for his hs graduation

Anyfeedback will help,

Thanks

Re: Help will be applying for a mortgage soon

creditwatcher2012 — Thu, 27 Dec 2012 09:30:54 GMT

I should also add In March I am planning on buying a new car price 52k financing about 40k

Re: Help will be applying for a mortgage soon

llecs — Thu, 27 Dec 2012 09:56:13 GMT

Even if no tax was owed, you still will need to file for previous years. I'd do that now.

When your lender looks at your income, they'll look at your net income only on your Sch. C (assuming you are a 1099er vs. paying yourself a paycheck) instead of factoring in the gross. Be careful of how you file. Your lender will also look at the prev. year at least.

Not sure on the DTI. Seems like it could be too high on the $500k range.

Pay off the balances ASAP.

Opt out.

ETA...I'd delay the car purchase until after the mortgage closing.

Re: Help will be applying for a mortgage soon

creditwatcher2012 — Thu, 27 Dec 2012 09:57:24 GMT

thanks so do I need quarterly profit and loss statements?

Re: Help will be applying for a mortgage soon

creditwatcher2012 — Thu, 27 Dec 2012 09:58:08 GMT

also why should i delay the car purchase?

Re: Help will be applying for a mortgage soon

llecs — Thu, 27 Dec 2012 10:10:40 GMT

creditwatcher2012 wrote:
thanks so do I need quarterly profit and loss statements?

I'm a biz owner as well and applied for and received a loan 12/2010 and 1/2011 respectively. My lender asked for a current balance sheet and P&L annual statements for the prev. 2 years (2009 and 2010) and asked for an estimated P&L for 2011. I had shown a large loss for 2009 on my Sch. C but large gains for 2010 and they wanted a forecast of where things were going with an explanation of the turnaround.

Re: Help will be applying for a mortgage soon

llecs — Thu, 27 Dec 2012 10:12:47 GMT

creditwatcher2012 wrote:
also why should i delay the car purchase?

The main reason is that it'll cut into your DTI if you finance the car and that'll for sure lower your purchasing power. Depending on when you buy, your FICO score could still see some damage when you apply for the mortgage. IME, new accounts dinged me for up to a year.

Re: Help will be applying for a mortgage soon

SantaMar — Fri, 28 Dec 2012 13:34:19 GMT

With all due respect bud 500k might be too much to balance. I know you have high utilization but even with all you cc paid off you are willing to take out a high note. With a purchase price of 500k at 5 percent down your note will be 475k plus an equity line?!? One reason they want two years of tax returns is to see job stability (among other things). You said yourself that the past two yeas were rough for you correct?! Idk. Seems like you should be in the 250-300 category. My personal opinion.

Re: Help will be applying for a mortgage soon

creditwatcher2012 — Sun, 30 Dec 2012 11:21:17 GMT

Thanks For the Reply,

I was planing to put approx. 20% down, what would you recomend, I will have all my cc's paid off definately by march when I purchase a new vehical, but anothet question, making 90k a year, and financing a car @610/month what do you think they would approve me on for a mortgage?

Re: Help will be applying for a mortgage soon

MovingForward_2012 — Sun, 30 Dec 2012 17:07:50 GMT

I remember you. You were recently denied numerous of times for a auto loan and posted about it on the auto loan thread. Your 75 inquires you acquired from June to now trying to buy a car won't fall off for two years. You stated the score the dealer pulled was 580. There is no way you are getting an Infiniti JX in March for $610 a month and then a mortgage shortly after that. $610 a month for a 52K car plus $10K down that you stated you would put down is the payment for someone with A+++ credit and even then $610 is still a little low. Your 580 score will cost about a $1,000 car payment for the Infiniti JX. Plus you stated you had 21 late payments on your auto loan. There is no way you will qualify for a 500-600K mortgage with that score, your income, and your DTI. Mortgages are harder to get approved for than an auto loan. 90K a year can't buy a 500-600K home and a 52K Infiniti JX. You are at least 2 years away from both a car loan and the mortgage. Try it if you like but you will be sadly disappointed. Like I said before on the other thread, you need to spend the next two years gardening otherwise I could see you filing bankruptcy in a few years if you can pull a fast one on the lender. Right now you are not properly managing your finances and the mortgage lender will see that just like the multiple dealerships you applied at saw it which is why you got denied over and over again. Not sure who you are trying to fool with all of this but if you only read what you want to hear, your going to be in bad shape. I encourage you to read our advice and apply it instead of blowing it off. My two cents.

Re: Help will be applying for a mortgage soon

MovingForward_2012 — Sun, 30 Dec 2012 17:19:25 GMT

Here is a link to the other post by OP that I was talking about:

http://ficoforums.myfico.com/t5/Auto-Loans/Denied-Denied-Denied/td-p/1715170

Re: Help will be applying for a mortgage soon

aussiesareforever — Sun, 30 Dec 2012 19:48:05 GMT

MovingForward_2012 wrote:
I remember you. You were recently denied numerous of times for a auto loan and posted about it on the auto loan thread. Your 75 inquires you acquired from June to now trying to buy a car won't fall off for two years. You stated the score the dealer pulled was 580. There is no way you are getting an Infiniti JX in March for $610 a month and then a mortgage shortly after that. $610 a month for a 52K car plus $10K down that you stated you would put down is the payment for someone with A+++ credit and even then $610 is still a little low. Your 580 score will cost about a $1,000 car payment for the Infiniti JX. Plus you stated you had 21 late payments on your auto loan. There is no way you will qualify for a 500-600K mortgage with that score, your income, and your DTI. Mortgages are harder to get approved for than an auto loan. 90K a year can't buy a 500-600K home and a 52K Infiniti JX. You are at least 2 years away from both a car loan and the mortgage. Try it if you like but you will be sadly disappointed. Like I said before on the other thread, you need to spend the next two years gardening otherwise I could see you filing bankruptcy in a few years if you can pull a fast one on the lender. Right now you are not properly managing your finances and the mortgage lender will see that just like the multiple dealerships you applied at saw it which is why you got denied over and over again. Not sure who you are trying to fool with all of this but if you only read what you want to hear, your going to be in bad shape. I encourage you to read our advice and apply it instead of blowing it off. My two cents.

Well said Moving Forward. I couldn't have said it better.

I see a lot of red flags with the OPs spending and saving habits. She/he is maxed out on all credit cards and has aspirations to get a car/house they cannot afford. Definitely sounds like a train that is about to wreck quickly

Re: Help will be applying for a mortgage soon

tooleman694 — Sun, 30 Dec 2012 21:21:13 GMT

90k a year you are looking at probably a 350k mortgage. If you want a 500k home you would need to put down 30 percent. I would keep your other installment and revolving debt under 1000 a month payment if possible so you wont have DTI issues.

Re: Help will be applying for a mortgage soon

creditwatcher2012 — Tue, 01 Jan 2013 19:12:22 GMT

Moving_Forward, once again thanks for the reply and "constructive criticism, however I do believe I am managing my finances pretty well, like I stated I make 90+ thousand a year, and my scores were a bit low then, however I brought them up to about a 712 accross the boad(then got an approval to borrow 42k from capital one auto finance my check is good for 90 days @7.9% apr, I plan on purchasing the vehical within a few months once my cd matures for the down payment.

Now my scores have dropped approx 70-80pts due to high utilization, Christmas Shopping, son graduating etc. But they will all be paid off by middle feburary.

btw capital one pulled tr which only has 16inquires right now, when I send my 1099 and bank statements in they just asked what they were for and I said auto loan shopping.......

Now to reinerate my question, Its set in stone that I am purchasing the vehical.

heres my questions:

1) how bads that going to hurtmy dti ration

2) maximum mortgage I will be qualified for making a little over 90k a year

3) maximum mortgage I will be qualified for with 20% down

btw moving_forward im not trying to fool anyone, I come to this forumn looking for advice. Thanks For Everything I do apprciate it

Re: Help will be applying for a mortgage soon

creditwatcher2012 — Tue, 01 Jan 2013 19:15:57 GMT

and thank you everybody else, just try to understand I'm just asking questions so I know whats in my best interest.

Re: Help will be applying for a mortgage soon

MovingForward_2012 — Wed, 02 Jan 2013 14:52:45 GMT

You seem to be confused about your salary in that you think it is so extravagant when it really is not. I make 92K a year and I am leasing a $35,000 luxury vehicle that I was approved for last month. Big difference from financing the $42K vehicle you are considering. The difference is since it is a lease, I am only financing $18K of the total price so $18K shows up on the credit report NOT $35K which saves my DTI by a lot. 7.9 APR on a $42K vehicle is an $800-900 a month car payment. That is why they advertise 0.9 to 1.9 APR for well qualified buyers so the payment is reasonable. Given my income, the debt from my lease, and two CCs that I pay down the balance on to 0-10% per month, the max house I have qualified for is $320K. You are looking at $2,000-$2,500 per month on a mortgage for a 400-500K that you won't prequalify for so now you are looking at a back door mortgage to qualify. They prequalify people for a certain amount for a reason...to make sure they can afford the home! A 500K home is over 40% of your income after taxes plus you will have the $800-900 per month car payment. Doesn't add up to nothing but default. You are looking at $500 per month just to heat the home of that size!

And then you have like 5 CCs that are maxed out and that hurts your DTI. In another forum, you had 21 late auto payments which tells me you were having a hard time paying your car note on your income and you want more debt???

Your scores you posted here (712) doesn't match the scores that you stated in the auto forum which was around 580...scores don't jump that fast to above 700 in 4-6 mos especially during this time you were maxing out your cards for Christmas. Something doesn't add up. So I feel you aren't giving us the full picture. And then instead of paying off your CCs, you app'd for another CC from a subprime lender that charges 75% of your avail credit as fees. Why would anyone do this?

I'm sorry but if you are a real person and this is your financial portrait, you are not managing your money properly. You need to take the advice here or talk to a close responsible friend or relative about your finances before you crash and burn by taking on more debt than you can handle. 21 late pays to your auto loan tells me that you can't manage your current debt. If you could, you would have made those payments on time. I gave you advice on the auto loan thread to take a break from apping for two years to pay off your debt but you didn't listen...instead you got another CC and a blank check from Capital One. Something doesn't add up. Sorry.

Re: Help will be applying for a mortgage soon

Shogun — Wed, 02 Jan 2013 15:26:59 GMT

I think the advice and concerns you are receiving from the members here reflect the overall picture of the myFICO boards. We are here to promote financial security and responsibility, not "grab what you can" like some other forums. We want you to be sound in your finances and promote a healthy base of credit. I do believe you would be extending yourself way too far if you continue in your current direction.

First off, at 90k a year, you are making a decent wage and I congratulate you on that. But you need to stop and think about the total expense that these purchases will require. I drive a 7 year old cadillac and bought a house in the 250k range. I could have went with a bigger house, higher mortgage, but I bought a house that met my familes needs. I could buy a new vehicle, but mine is in great shape and I still love it. I don't have an image to maintain, I don't really care about that. I just want to live within my means and enjoy things. I can still save for what I want, vacation, etc. I wouldn't be able to if I was worried about if I was going to make my payments every month.

I hope the best for you in whatever decision you make and life treats you well. I also thank the board members for the help they give, even though they can seem a bit harsh at times. Tough love! Good Luck!

Re: Help will be applying for a mortgage soon

creditwatcher2012 — Thu, 03 Jan 2013 18:09:12 GMT

Thanks again,

I understand where your coming from, but yes, prior to my credit cards being maxed out my scores were around 712, they decreased once I maxed out and opened the 5k loan, I need a new car, I am gardening now.

I know it might seam hard to believe but I am listening to all your advice, so far I made a total 1500.00 payment on my chase freedom......1200 more than a prior post recommended making, I am determined to have these cards under control by Feb.., so no AA action occurs ..

I'f you don't mind me asking, what kind of "luxury" car are you leasing that costs 35k, that's what I paid for my wife's explorer a few years ago.

Thanks,

Re: Help will be applying for a mortgage soon

webhopper — Thu, 03 Jan 2013 18:44:53 GMT

creditwatcher2012 wrote:
Thanks again,

I understand where your coming from, but yes, prior to my credit cards being maxed out my scores were around 712, they decreased once I maxed out and opened the 5k loan, I need a new car, I am gardening now.

I know it might seam hard to believe but I am listening to all your advice, so far I made a total 1500.00 payment on my chase freedom......1200 more than a prior post recommended making, I am determined to have these cards under control by Feb.., so no AA action occurs ..

I'f you don't mind me asking, what kind of "luxury" car are you leasing that costs 35k, that's what I paid for my wife's explorer a few years ago.
Thanks,

I agree with everything that Shogun posted... with a combined family income of 180k my husband and I went with a mortgage for 162k for our home purchased in January 2012. There are only 3 of us in our family, and we went with a very energy efficient split level home. 2400 sq ft 3 bedroom 3 bath.. utility bill is 150 per month (levelized billing)

We are buying a new luxury SUV for 45k with 3.8k down payment at 1.79%, but also we are paying off a car too with bonus money in march - april 2013, the other car is owned free and clear. So three cars total in our family and after April we only have a note on one of them. I've been in a situation where my credit didn't qualify me for a good rate and in that case I went with a much cheaper pre owned luxury car (volvo) that had 14k miles, and paid 19k and had the car paid off in two years... I paid principle way down and I refinanced it after one year and then completely paid off the loan the following year.

I also have about 60k in reserves to fall back on if our job situation changes.

Too many notes to pay + expensive notes = hard time paying your bills and late payments....

Its better to live below your means! Much less stressful to live that way! Plus you are covered if something goes wrong!