Am I ready?

[Elcid89]

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@jonjohn wrote:

I plan on having the contract written up at the beginning of July.. We are doing this transacation without a real estate agent. However, my friend who IS a real estate agent said she would draw up the aggrement for me. What do you think I should give her for doing this for me? $500???

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That sounds fair to me, but you could always ask her. You'll want a signed contract in hand before you start contacting potential lenders.

Get the ball rolling, find a lender and settlement agent that you like & get your estimated HUD-1s from them so you have an idea what closing costs are going to run.

Assuming you are good to do with regard to having funds on hand to cover closing & your DP, start the approval process rolling.

[newhouse2013]

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@Elcid89 wrote:

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@jonjohn wrote:

Ok.. After a 1 1/2 years of preping for my home purchase, am I ready? I got my credit score up to 680 for both TU and EQ. I have no credit card debt left. I have student loans and a car payment that equals less than $600 a month. My monthly income (before taxes) is about $4,700. I am scared to do a "pre approval". Am I ready? Experiences and opinons please... And, FYI I am living in the home that I am about to purchase, so I don't have to "search" for my home.

Thanks for all your input.

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As long as your DTI is workable, I'd say that you are ready. I second the advice about rates going up shortly - most likely we're going to start seeing significant bumps beginning around September.

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Do you know by how much interest rates are supposed to increase? The beginning of September is when I would like to apply. 

[Elcid89]

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@newhouse2013 wrote:

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@Elcid89 wrote:

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@jonjohn wrote:

Ok.. After a 1 1/2 years of preping for my home purchase, am I ready? I got my credit score up to 680 for both TU and EQ. I have no credit card debt left. I have student loans and a car payment that equals less than $600 a month. My monthly income (before taxes) is about $4,700. I am scared to do a "pre approval". Am I ready? Experiences and opinons please... And, FYI I am living in the home that I am about to purchase, so I don't have to "search" for my home.

Thanks for all your input.

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As long as your DTI is workable, I'd say that you are ready. I second the advice about rates going up shortly - most likely we're going to start seeing significant bumps beginning around September.

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Do you know by how much interest rates are supposed to increase? The beginning of September is when I would like to apply. 

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The Mortgage Bankers Association is predicting mid to high 4's by the end of the year. I'd consider that to be an accurate, if not possibly conservative, assessment.

The problem is that the Fed was ambiguous in its May meeting about whether/when it will end QE3 buying of mortgage bonds. That buying has up to now created demand side pressure, raising MBS pricing and by association lowering mortgage rates. In other words, mortgage rates have been kept artificially low through QE3 buying.

Nobody can predict with accuracy when/if Fed will end that buying, but Wall Street is a world of people who speculate about such things and speculation moves markets. We've already seen the average rate on Freddie Mac 30 year fixed shoot up from 3.375% in May to 3.875% in June.

The street has clearly made the assumption that the buying is going to ramp down and then end, so I don't see the rate trend going back down. In that regard, sooner is better. The party is over.

[newhouse2013]

Interesting...well I will be happy if I can get still get 4% or under...I know it is cutting it close so my fingers are crossed!

[webhopper]

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@Elcid89 wrote:

Yea, current FHA guidelines would give you $1,363 for allowable total mortgage payment and $1,927 for all obligations. At a SP of $110,000 you should be fine.

I'm not 100% on the guidelines with regard to rental income being factored in . I believe that you have to have a signed lease and have collected at least 3 or 4 on-time rental payments from the tenants, but double check that.

In any case, you should be ok even without the rental income. No need to be scared. Just find a loan officer / bank that you feel comfortable with and get it started. If you can, you really want to have your rate locked in before September.

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The rental income is factored in at 75% based off of the current lease...  For example, if the renters pay $750 per month, then the rental income will count as increasing your annual income by $6750.

[jonjohn]

Thanks for the info....