Advice for young first time home buyer

[Anonymous]

 Hi all,

I've lurked on these forums in the past, but now I'm in a relatively unique situation and wanted to get others' input on the matter

I'm a recent college grad (graduated in 12/2016) and landed a good paying job in my field that started in 01/2017. However, I was recently recruited to another company, and anticipate on going to the new company in 04/2017 or so. 

I want to purchase a condo this year, I'm currently targetting sometime between August and October 2017.

Income/Downpayment

-Salary/Income: $75k (+ some misc income -- not reliable income, so not going to factor that in)

-Downpayment: 20% - Looking at roughly $45k- Looking to purchase the condo I've been renting

Debts

-Car loan - Roughly $31k outstanding- $605/month @ 1.9%

Credit Utilization Ratio - 0% to 1%, depending on month (PIF monthly, usually before statement cuts)

-10 Credit cards currently open, Total CL is around $42k

-Average age of accounts: 1 Year, 5 Months - I could make the average age 2 years by closing ~4 accounts and dropping my credit limit ~$10k

-10 hard pulls in the last 2 years, 5 of those HPs were for my car loan (Was going through manufacturer's financing, but dealership pulled for multiple banks anyway) - Will be around 7 HPs when looking to buy later this year.

-Credit score (according to CreditKarma, AMEX, Citi, Cap1, etc) is in the mid 740 to mid 750 range.

All accounts are in good standing, no late payments, no deragatory remarks, etc. The 2 main points of concern for me right now is the higher number of HPs I've had (latest one was in Late Nov/Early Dec - for the car), and the average age of my credit. However, I see my short employment history being another factor (although it looks like I can qualify through FHA because I was in school the last 3.5 years and was able to secure a good job immediately after).

[Anonymous]

A couple notes:

• I'd recommend pulling your 3B report here on myFICO so you can see what your actual mortgage scores are. Much more helpful knowing those than the non-FICO scores you mentioned from other sources.
• Closing accounts will not impact your AAoA in the FICO scoring model, but it does in the Vantage scoring model used by CreditKarma and the others. Your mortgage lender will 99% not use Vantage scores, so that AAoA calculation is a moot point. What will you be at in August-October?

I'm not an expert on the other issues you raised, but I'd think you'll be fine as long as you aren't pulling any new HPs between now and mortgage app time.

[Anonymous]

Thanks for your quick input!

Based on the 3B report I pulled:

EQ Fico 5: 740 -- AAoA - 19mo

TU Fico 4: 743 -- AAoA - 21mo

EX Fico 2: 733 -- AAoA - 19 mo

So in August - October, my AAoA should be 24-26 months, with my oldest account being 48-50 months. 

[kc0039]

Fortunately, a lot of programs consider school as part of your employment. Provide  your diploma to your loan officer and they'll be able to tell you which programs you will qualify for.

[DallasLoanGuy]

conventional will take you. will be better terms.

apply with confidence

[Anonymous]

Conventional is the route for you. Very solid applicant - pull the trigger .

[wa3more]

I would also advise to not let a banker tell you how much you can afford to borrow. Put together a budget that includes 10-15% of gross income as saving/emergency. Then let your budget determine how much you can afford.

For years, a rule of thumb i heard was to get a mortgage of twice your salary and a down payment equal to salary. Depends on location as well. For example, here on long island an average house of 400k will have 12k+ of property taxes. Now they will tell you to use 40%+ of gross for mortgage .

Be conservative. Good luck.

[Anonymous]

Thank you all for your feedback -- It definitely makes me feel more confident knowing others think I'm a qualified applicant

wa3more -- I'm already renting the small condo I'm planning on purchasing (very small condo, but in a new development area that is quickly becoming a hotspot). Based on various mortgage calculators, it looks like my monthly mortgage + insurance + HOA + taxes will be slightly lower than what I'm currently paying in rent right now - thanks for the advice on being conservative -- Always a good idea not to overextend yourself  

[kc0039]

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@wa3more wrote:

I would also advise to not let a banker tell you how much you can afford to borrow. Put together a budget that includes 10-15% of gross income as saving/emergency. Then let your budget determine how much you can afford.

For years, a rule of thumb i heard was to get a mortgage of twice your salary and a down payment equal to salary. Depends on location as well. For example, here on long island an average house of 400k will have 12k+ of property taxes. Now they will tell you to use 40%+ of gross for mortgage .

Be conservative. Good luck.

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To defend my fellow LO's out there. All good LO's ask people how much are they willing to pay for the mortgage. All good LO"s advice people from overextending themselves. It is our job to tell them how much they can afford based on the documents provided. Some people are curious as to how much they can go upwards (I see it as people being curious thing). I've known people that overextend themselves so much against my own advice. People have begged for me to okay their application and I have to tell them no, you cannot afford it because of DTI purposes and some say, they'll pay CC off that has a $50 minimum payment. People fall in love with houses and most of us are the bad guys for saying no, which I'm fine with. Like you implied, they're the ones in charge of their money, not us.

[wa3more]

Yes many good LO's out there. My comment was meant for the more aggressive bankers and brokers who are still out there and are partly to blame for the 2008 crisis.