12-09-2012 09:25 AM
12-09-2012 10:55 AM
Just a few things to keep in mind.
1- Self employment is more complicated for approval but it is done all the time. Proper record keeping, tax statements, bank statements, etc etc are some of the documents that may be needed.
2- Your scores are fine, but the judgment may give you a hiccup for approval. It would increase your odds for approval if judgemnt is satisfied, and even better if you can have it vacated. But you knew that already.
3- Your self employed income will be averaged over the last 2 years. Based on the numbers you provided in my opinion you by yourself on loan will not qualify for the amount you are seeking. In my opinion you will need your wife to be on the loan to help with income for approval, so you may want to start on the process of rebuilding her credit also.
4- In your situation in my opinion I would speak to a few brokers and see what their opinions are based on their expertise. Do not fill out any applications! Not yet anyway. Once you feel comfortable with the information you receive ( can even come back here to forum and ask for advive and opinions ) then you continue your steps to home ownership again. When you are ready to try and purchase then go back to the broker you were most comfortable with and do business with them. Any broker who was not willing to give you any time or advice in my opinion is not worth your business when you are ready to purchase.
5- Good Luck!!!
12-09-2012 11:10 AM
DW and I purchased our first home 2 years ago come next month. We are employed and self-employed. My lender looked at my net income only (not gross) and they averaged out the past two years. The net income they looked at was the net income reported at the bottom of Sch. C (I am a 1099er). Because I am also employed, they added the net biz income to my gross W-2 income and averaged both when considering DTI. In those two years, I also showed a small loss. That was a concern. As a condition, I was able to demonstrate on a P&L that the current year would not result in a loss. It's not a fixed rule I don't think but you'll find that others will scrutinize the net income.
After opting out from each CR and being very careful as to which bank accounts we use, we jumped in and everything worked out. We took our time and the only hiccup were some bank accounts they found out about. We didn't claim some income on the app because we didn't want them digging through a couple of checking accounts. In the end that income helped our DTI and it worked out OK. We also started shopping about 9 months before buying to get a feel of the market, prices, etc.
On your income, etc., bumping for others.
12-09-2012 08:10 PM
12-09-2012 09:44 PM
to figure out the income required, you look at your front end ratio.
Right around 30 percent of you monthly gross income is used to calculate what you can afford. I would guess you would need to earn about 75k a year to get a 250k mortgage.
12-13-2012 06:50 PM
12-13-2012 06:59 PM
Are you wanting to go FHA or Conventional? FHA will have more lenient credit requirements and will allow for higher debt-to-income ratios for both front and back end.
Of course with FHA you have the required mortgage insurance which isn't fun, especially if you have the money to put down and can go Conventional.
Ok...I was responing as I was reading your original post and saw the bankruptcy in 2010 (when was it discharged? Ch. 7 or 13?). Conventional loan you have to wait 4 years from discharge, FHA you can get a loan after 2 years from discharge, so it sounds like you have to go with FHA.
What other monthly debts do you have (credit cards, car loans, etc)?
For self employment, they are going to calculate your income by the last two years of filed taxes. Are you a Sole Prop., Corporation, S-Corp, or? It's actually good that you're deciding this at the end of the year as that will allow you to adjust your income (by taking less deductions if needed) if you need to.
12-13-2012 07:17 PM
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions based on Experian or Equifax data (additional FICO® Score versions based on TransUnion data are not currently available on myFICO.com). Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.