Advice for FHA mortgage loan

Anonymous · ‎12-04-2015

Hi Everyone.

So i am looking into buying a home next year, around May.

Right now i have some credit cards and store accounts with balances on them, which i am paying down to almost $0.

Once i get these acounts lowered, does that help my chances when i apply for FHA loan to buy a house with my wife.

What do i need to do in order to look good and ready so the bank can approve me?

Thanks

P.S. I have student loans that i plan to add on to my mortgage loan when i buy the house.

Anonymous · ‎12-04-2015

1) Pull your credit report ASAP and check for any errors or derogs

2) Do not open any new lines of credit

3)Pay everything on time (This should be obvious but some people overlook the little things)

4) Reduce your debt-to-income-ratio if it isn't in good standing

5)Dont shuffle money around many accounts

6)Keep reading up on other posts in these forums on the subject and get educated. There's a ton of info here

StartingOver10 · ‎12-04-2015

@Anonymous wrote:
Hi Everyone.
So i am looking into buying a home next year, around May.
Right now i have some credit cards and store accounts with balances on them, which i am paying down to almost $0.
Once i get these acounts lowered, does that help my chances when i apply for FHA loan to buy a house with my wife.
What do i need to do in order to look good and ready so the bank can approve me?

Thanks

P.S. I have student loans that i plan to add on to my mortgage loan when i buy the house.

It is a good idea to plan ahead just as you are doing. Take a look at the thread in the stickies "Do I qualify for a mortgage?". The lender will be looking at your income and your current debt as well as the cost to purchase the new home. Your credit score is important but what will drive your ability to purchase is your DTI (Debt to Income ratios).

The best thing to do now, if your score is in shape and your debt in line, is to save as much as possible between now and the time you plan to apply. You will need funds for down payment and closing costs plus funds to move and turn on services such as power and water, cable etc.

I have a question for you: What do you mean by "adding" student loans to your mortgage? I highlighted the statement in blue.

Anonymous · ‎12-04-2015

@StartingOver10 wrote:
@Anonymous wrote:
Hi Everyone.
So i am looking into buying a home next year, around May.
Right now i have some credit cards and store accounts with balances on them, which i am paying down to almost $0.
Once i get these acounts lowered, does that help my chances when i apply for FHA loan to buy a house with my wife.
What do i need to do in order to look good and ready so the bank can approve me?

Thanks

P.S. I have student loans that i plan to add on to my mortgage loan when i buy the house.
It is a good idea to plan ahead just as you are doing. Take a look at the thread in the stickies "Do I qualify for a mortgage?". The lender will be looking at your income and your current debt as well as the cost to purchase the new home. Your credit score is important but what will drive your ability to purchase is your DTI (Debt to Income ratios).
The best thing to do now, if your score is in shape and your debt in line, is to save as much as possible between now and the time you plan to apply. You will need funds for down payment and closing costs plus funds to move and turn on services such as power and water, cable etc.

I have a question for you: What do you mean by "adding" student loans to your mortgage? I highlighted the statement in blue.

What i mean is that i would like to add my student loans to my mortgage as a package. The price of the home plus what i owe in student loans into 1 loan. Is that bad or good?

StartingOver10 · ‎12-04-2015

@Anonymous wrote:
@StartingOver10 wrote:
@Anonymous wrote:
Hi Everyone.
So i am looking into buying a home next year, around May.
Right now i have some credit cards and store accounts with balances on them, which i am paying down to almost $0.
Once i get these acounts lowered, does that help my chances when i apply for FHA loan to buy a house with my wife.
What do i need to do in order to look good and ready so the bank can approve me?

Thanks

P.S. I have student loans that i plan to add on to my mortgage loan when i buy the house.
It is a good idea to plan ahead just as you are doing. Take a look at the thread in the stickies "Do I qualify for a mortgage?". The lender will be looking at your income and your current debt as well as the cost to purchase the new home. Your credit score is important but what will drive your ability to purchase is your DTI (Debt to Income ratios).
The best thing to do now, if your score is in shape and your debt in line, is to save as much as possible between now and the time you plan to apply. You will need funds for down payment and closing costs plus funds to move and turn on services such as power and water, cable etc.

I have a question for you: What do you mean by "adding" student loans to your mortgage? I highlighted the statement in blue.

What i mean is that i would like to add my student loans to my mortgage as a package. The price of the home plus what i owe in student loans into 1 loan. Is that bad or good?

It can't be done.

You are looking for an FHA loan per your original post. The down payment is 3.5% of the purchase price. The lender will loan you 96.5% of the purchase price OR the appraised value, whichever is lower. There isn't enough room between the loan amount and the purchase price to insert your student loans.

Now, lets say that you have a relatively small amount of student loans and you are in a high growth area. It is possible that sometime in the future you could refi your mortgage and obtain enough funds in a cash out refi to pay off your student loans if the value of your home has substantially increased. That is an entirely different thing then rolling up student loans into a home purchase. I am not suggesting it is a good idea to do, but that the possibility exists.

Jazzzy · ‎12-04-2015

Think twice about giving up the rights you have with your student loans. Without knowing anything about them (are they federal?), you may have the right to have them discharged if you die, deferred if you are not working or go back to school, payments based on income if you lose your job, etc. If you change these loans into a different form, you lose those rights.

I realize, however, that your interest rate may be lower on a mortgage than on the student loans, so that is a factor as well.

Anonymous · ‎12-04-2015

It's also not advisable to take unsecured debt, and change it debt secured with your home.

If you lose your job, or are injured and can't work- If you can't pay the student loans, they can go into forebarance in best of situations, and in worst, they harrass you. If you can't pay the mortgage that you rolled your student loans into, you will lose your house.