Am I ready for a Mortgage?

Anonymous · ‎10-26-2014

Alright. As of this comming Sunday I will have officially met my 10k savings goal and begin my forward search for a home away from dungeon in the parents basement [crying inside.] 2014 has been my year of credit recover from a high 500 to aim for a 700. Sadly it doesn't seem I can break into the 700's this year as the only way I'll be able to improve is with some added time or a few things to drop off my report (which would be in 3-4years.)

Income: 34k year/employment with around 5k from hobbies/unreported side jobs.

Job length: currently going on 5 years in december. Salary w/o overtime or benefits.

Was hoping to get up to a 700 before this date but, am stuck around 690ish for a good while.

Current Credit scroes: 688/695/689

Length of Credit History 13 years (on autho acct.) 6 years for longest current and 3 year for average age of acct.

Revolving Credit Utilization: 6-11% usually have a ballance around $100 with it's highest being $900 across all cards. Currently it I owe $65 total.

Baddies: I have 2 60+day lates on 2 different cards from 4 years, 3months ago. I'm working to get one removed (had a fee of $3.36 for 120days on a US Bank CC after I paid off and cut up the card. Never checked so didn't know until I was bit hard.

Loans: One car loan. 49k have 22k remaining. 3 year loan, 1/2 year down.

Summary: currently 2 balances. $65 credit card and $22k auto loan.

Monthly debt payments: >$445 if making the minimum payments. Around $520 currently.

Assets: Pretty much $10,020 in savings only.

Desire: 150-175k single family, 2 bedroom ranch style home w/ 2 car garage. Outside North Kansas City, Missouri. Honestly a nice house, small fenced in yard for the dog and a garage to play in on the weekends somewhere in a 'good area.'

Occupancy: Full Time/1st house.

Buyer: Just me, no spouse. Will likely be able to get my parents to cosign and/or addition downpayment since I will be housing my younger sister until she is done with Highschool since they will be flying south for winter full-time.

Totally nervous, and really need to buckle down into research on this one. Just looking for a quick thought on whether I should or shouldn't even be considering this.

Do I have a shot?

Anonymous · ‎10-27-2014

You will be able to purchase a home but unfortunately not one in your price range. With your DTI currently you'll probably only be able to finance $130K at the most. So with your downpayment a $140K range.

The extra $5K a year won't be counted towards your earnings.

That car payment is your main obstacle. It seriously affects your buying power. Time to decide which one is more important to you. Lol.

StartingOver10 · ‎10-27-2014

@ncoEricDET wrote:
You will be able to purchase a home but unfortunately not one in your price range. With your DTI currently you'll probably only be able to finance $130K at the most. So with your downpayment a $140K range.

The extra $5K a year won't be counted towards your earnings.

That car payment is your main obstacle. It seriously affects your buying power. Time to decide which one is more important to you. Lol.

^^^Listen to EricDET. He is right. Sell the car. Get rid of the car payment. Buy a well maintained used car for cash.

Get the house you like, close and then if you still want a car payment, then find another vehicle. Car's come and go. The amount of house you can buy is directly dependant upon your income and existing debt. If you don't have a car payment (or other debt payments) when you apply for a house, then none of your buying power eroded.

Anonymous · ‎10-28-2014

Thanks guys, so I'm not quite ready which is basically what I expected. However I figured the news I was going to receive would ne much harsher. I'm not willing to part with my vehicle yet so I guess the place to start is knocking out the balance ASAP instead of semi-floating it.

Thanks for taking the time to read.

StartingOver10 · ‎10-29-2014

@Anonymous wrote:
Thanks guys, so I'm not quite ready which is basically what I expected. However I figured the news I was going to receive would ne much harsher. I'm not willing to part with my vehicle yet so I guess the place to start is knocking out the balance ASAP instead of semi-floating it.

Thanks for taking the time to read.

KKnocking down the balance won't really help.

The lender looks at the monthly payment to figure your DTI. So you either have to increase your income or remove the debt to adjust DTI.

Used to be some lenders would remove the payment out of your debt if you had less than 6 months remaining. I don't know if that is still an option or not. Talk with the lender you are going to use.