A Dream, can it come true?

[Anonymous]

I'm 29 years old my dream for the last 8+ years has been to be a home owner. I want to own primarily because I see it as a huge step towards spending my golden years with grand kids not working 40 a week, which is my ultimate goal. I started the process in 2004 and it looked like I could have bought a home with my $60K+/yr income. However the choices for me were bad. It was take an exotic loan (which to me meant a house you can't afford) or buy a house I wouldn't want to stay in for 10 years. I decided the time was wrong especially living in the SF bay area, I felt prices would have to come back to earth.

Can my dream come true soon? 

My situation is as follows.

CREDIT

Just paid $15K+ against our CCs 

My credit: low 700s right now but I just paid my CC usage down from 60%+ to less than 20%, hoping that will put me back in the mid 700s, sim puts me at 740-800 for what it's worth.

Wifes credit: mids 600s but... Just paid off her CC usage from 60%+ to maybe 10% or less sim puts hers at low 700s. Working to get a underhanded comcast collection off her credit as well.

DEBT

I have a truck payment of $450 a month($27,500 total), I'm upside down around $10,000 on this truck, BUT I have the 10K and I am willing to put the 10K towards the truck in a refinance to get the payment below $300 or just drop the 10K to sell it and drive a junker.

 CC

$4000 - $100 a month

WORK HISTORY

Here is what I worry the most about. I worked in construction for around 10 years, around 8 years at my last job. I got hurt and couldn't return to my job about 7 years in, my job officially ended at the 8 year mark dec 2008. My workers comp case didn't complete until spring a few months ago, CA WC is so bad ugh! As of right now I am in a role reversal. My work history will show a gap for at least 6 months, although I was out on working comp since late 07 I was still employed until Dec. 2008.

My plan is to move to a new state in a month or two, both my wife and I will start new jobs. How much of an issue will this be in terms of approval? Technically I will only have a ~6 month gap with no job, if you go back to the date of injury more like 2 years. Which do they go     

INCOME

I'm not shooting for the stars here. My wife and I together are looking to make a modest $30-35K a year combined at our new location. Considering going back to school part time while doing full time work.

To add to this I am expecting to have another $5,000-$6000 dollars cash to work with in the next six months, I also own another car worth $6,000-$7,000 that's free and clear. I've already put a little over $15K against our CC debt we built up over the time of injury. I have $10K in cash now and should have around $15-16K total at the time we move in a few months.

LOAN

Don't need a Mcmansion. Looks like in our new area a house in the 100-130K will be perfectly fine. Those ranges get you 1200-1800 ft² or more in some cases. Plenty for us.

So that's my spider web of confusion I've spun for myself. I am not sure if it's best to refi the truck or to put 10k on it and sell it, save that for a down? Should I use the other 5K to pay off the last few cards or save some for closing costs or down payment ect. If anyone can give me any advice I would be greatful. Even if you can only give me advice in one area that perfecty fine as well. I'll take what I can get.

Tank You

-JJ 

Message Edited by Jayjinx on 04-30-2009 10:30 AM

Message Edited by Jayjinx on 04-30-2009 10:34 AM

[medicgrrl]

Gap in employemnt shouldn't be a problem because you can easily document that.  Big question is:  Are either of you going to be in the same line of work when you move?  You need 2 years in the same industry.

[SonorityGenius]

Which State are you moving to?

Try renting there a few months to feel the market and area.. It will be worth it... My friend was blindly putting an offer on a house here in NJ which seemed so hot because it was a 100k below avg prices until she realized it stood next to two burned down units in the worst part of the city.. lol

[Anonymous]

I will most likely be in a different industry.

I am very familiar with the area I want to move, in Oregon. I grew up around the area, my parents have lived there for 20+ years, and I visit family there 2-4 times a year. My wife and I both like the area so that wont be an issue. 

I was planning on renting for 4-6 months. I guess it could be longer considering job history. 

Can any one offer some suggestions on the finacial end of it? What course of action would put me in the best place in terms of qualifying/buying power?

Message Edited by Jayjinx on 04-30-2009 12:47 PM

[medicgrrl]

Financially you are already looking good.  Your credit scores are good, just keep those up.  Savings wise, I would suggest that if you are going to be increasing your housing payment from the rent you will be paying vs the mortgage payment you want then put the difference in savings every month to show that you won't have a problem with the payment shock.  Again, your hurdle will be employment.  Maybe you can find a job in the industry that isn't physical.  Then you can overcome that hurdle.  What does your wife do now and what is she planning to do when you move?

[Anonymous]

Thanks..

My wife currently works for a corp office doing filing ect. She also worked as a bank clerk before we had children, finding a part time office job doesn't seem to be that difficult although I don't want to assume anything.

Sadly the rent seems to be roughly the same as PITI on a 100K home within $100 or so even for an apt. for w/e reason. The credti crunch/housing is the reason for this I suppose. Once we have jobs in the area getting more savings is a perma goal for us. I'm concerned about our DTI if we try to keep the truck even if we dump 10K into it and refi.    

At 41 back end DTI we would be at 1000-1200 a month. A truck payment of $300 (If can refi) and $100 a month in CC would start cutting into our front end DTI (29?) at our lower range of expected income, heck our upper one!

[medicgrrl]

Financially you would be better off putting that money towards paying the cc debt off.  That would put you $50 of where you wanted to be on your total payments, would save you a tremendous amount in interest and would leave you $6000 left over for savings.  You have probably already paid a good chunk towards the interest on the truck so I am not sure if you would really want to refi that. 

Your wifes income should be able to be counted if she finds another office job.  Yours is really going to depend on what you end up doing and how you can relate it to your previous experience. 

With reserves and your high credit score you will be able to go higher on your DTI.  I wouldn't worrying so much about that $50 difference in payments.

[Anonymous]

Thanks a bunch Medicgrrl

100K @ 5%, I'm coming up ~700-750/month PITI depending on PMI. My $450 a month truck payment would put me at 1150-1200 a month. With a 30K/yr income that would be a DTI of .46 to .48, is that reasonable with scores in the mid 700s?

Also If I do as you said and only paid off my $4K CC debt I would have around 10K in cash, that I was going to use to refi or get rid of the truck.

I have about $10K now and at the end of june should have another $5-6K, for a total of $15-16K. I would LOVE to keep the truck my wife really likes it as well, but we want a house more obviously. If there is a way to have both I'd be tickled pink! I'm not expecting that though. 

Message Edited by Jayjinx on 04-30-2009 05:26 PM

[medicgrrl]

You may be able to get thru with that DTI, especially with high reserves and high credit scores.  Personally I would hold off on the refi and put the money in savings.  Once you get moved and you have your jobs in place then go talk to a mortgage broker.  They have many different national lenders they use and will know what and who they can do your loan with.  If you can't get the loan done with that DTI then I would work towards the refi.  I think you can probably get thru with that DTI if you can just get past the job issue.  Check on your truck payment and see how much is actually going towards interest now.  Compare what it will cost you to keep this loan the remaining term vs what it will cost you to refinance and the total of those payments.  When you refi an automobile, it is not always going to save you money over the life of the loan.  Also, if the refi isn't worth it, there is always the option of buying your mortgage rate down to qualify for the loan.  There are lots of options available.  It is just a matter of choosing which one is going to be best overall.

[Anonymous]

Kudos! 

Yeah I thought about doing that too. I mean I can try to refi anytime if I do put 10k on a refi I can't go back! I really like these forums, it's a good place to find people to bounce ideas off of without the bickering and name calling you see elsewhere.

Thanks medicgrrl