Am I ready for loan approval? .......UPDATE

[Anonymous]

Hello All!!

With God's help, I hope to buy a home within the next few months.  I will be using a program with downpayment and closing cost assistance, so my out-of-pocket expenses will be minimal. Are my chances of 30-year fixed FHA loan approval good? Here's my info:

 TU 655, EQ 617, EX 604 (LO)---- (Paid off several cards that haven't posted yet. I expect a nice bump by the end of the week)

Util is about 68% (it is down from 95%)

work history: 16 years w/same employer

DTI is about 22%: includes payments on 2 cc and 1 LOC; car payment of $499; and 2 installment loans: both loan balances are under $1000 and will be paid out by the end of the year. One loan payment is under $100, and the other one is just over $100.00. (Will these loans payment be factored in my DTI? I was hoping that they wouldn't be since they are both almost paid off.) Once the loans are paid off, DTI will be 16%.  What is the max DTI + mortgage % for FHA?

I am looking at a home in the $150 to $180K range, but I will be using my state’s soft-second loan program. It will pay $52,000 to $65,000 towards the purchase price of the home. So, I wouldn’t necessarily have to qualify for $150-$180K. For example: Purchase price of home is $170K minus $52K = $118K. As long as I qualified for $118K, I would be able to buy this home, as long as all of my credit was ok.  In addition, this program gives $10,000 towards down payment and closing costs.

Property taxes in the area that I am interested in avg. $1500/yr, homeowners insurance avg. $3000/yr.

The association fee would be $100/yr

Also, I have a BK from 2001, that will fall off in 2/2011 reported on all 3 CR, and 2 paid judgments only reporting on EX. One of the judgments will fall off in 2011 and the other one will fall off in 2012.  One reports as paid/satisfied, the other does not. But, I do have the documents to prove that it is paid in full.

I have one account with lates from 2004 that only reports to EQ. I have 1 unpaid med collections for $105, and 3 unpaid other collections. I have DV'd them all. Will send PFD once/if they respond. If these collections don't come off, will that keep me from getting approved?

I'd appreciate any and all input and suggestions.

Thanks again!!!

[Lel]

Generally, the maximum front-end DTI (prinicipal, interest, taxes, insurance, and association fees) is 29% and the back-end DTI (adding in other loan payments, credit card minimum payments, etc) is 41%.

With a current DTI of 22%, you'd have less than 20% of your income available to go to a new home purchase in order to come under the 41% maximum DTI.  I know there's some wiggle room, and some lenders might allow that back-end DTI to go higher, but not too much higher.

[Anonymous]

Any one else want tp chime in?

[Lel]

I've just been informed that the ratios were actually eased up a bit a couple years ago - front end DTI 31%, back end 43%.  There's some wiggle room around these numbers (they're not set in stone) depending on a person's overall application profile.

Speak to a loan officer; he/she will be able to give you a better idea of your approval chances with all your information in hand.

[Anonymous]

Thanks Lel!! I plan to go to LO by the end of next week. I'll keep you posted!!

[Anonymous]

bump

[Homebuyer24]

Hi--I am not a loan expert--I just had a question about the homeowner's insurance.  It seems really high.  I live in CA and I helped a family member with their homeowner insurance for a home 300K value and a $500 deductible was $600/year.   Paying $3000 a year for a home under 200K seems like a lot to me.  Is the range that great in different states?

[ShanetheMortgageMan]

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@Homebuyer24 wrote:

Hi--I am not a loan expert--I just had a question about the homeowner's insurance.  It seems really high.  I live in CA and I helped a family member with their homeowner insurance for a home 300K value and a $500 deductible was $600/year.   Paying $3000 a year for a home under 200K seems like a lot to me.  Is the range that great in different states?

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In the areas of Gulf states that boarder the Gulf, it can be very high.  Even parts of Florida that aren't near the Gulf, but are low lying areas (which is pretty much most of Florida) have very high premiums.  

[ShanetheMortgageMan]

Lel laid out FHA's preferred debt ratios, however higher than 31/43% can qualify if you have compensating factors and are able to obtain an automated approval.

It's much better to lay out your income and debts rather than try to figure out your own debt to income ratio, not saying you don't know how to calculate it, but it's be a shame for someone to assume you do, or misses something, because you are just giving them a ratio to go off of.  

Does the soft second require any sort of payment on it?

How current are the FICO scores in your siggy?  If not current, what are they now?

[Anonymous]

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@ShanetheMortgageMan wrote:

Lel laid out FHA's preferred debt ratios, however higher than 31/43% can qualify if you have compensating factors and are able to obtain an automated approval.

It's much better to lay out your income and debts rather than try to figure out your own debt to income ratio, not saying you don't know how to calculate it, but it's be a shame for someone to assume you do, or misses something, because you are just giving them a ratio to go off of.  

Does the soft second require any sort of payment on it?

How current are the FICO scores in your siggy?  If not current, what are they now?

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Hi, Shane!

No the soft second  does not require a payment. It is forgivable after 10 years as long as I don't sell of refi the house.

The scores in my siggy are current as of this week.

Thanks, Jelly