Can I get a mortgage loan? Any changes for Approval?

[newmomnewme]

I am renting an apartment for $1250 per month. The lease ends in December 2016 and I want to pay a mortgage instead of rent. 

My mortgage credit scores stink (585-602) because all of my credit cards are maxed out right now (54/55k). I just lost the side job I was using to pay the debt down.

In addition to the maxed out cards, I have 140k in student loan debt (undergrad and two graduate degrees) and 33k in personal loans. My annual salary is 120k.

Baddies vary on each report. Macys - 30 day late 6/2015, EZPay Finance - 30 day late 10/2015, IC Systems - Paid Collection 1/2016, and NCC - Paid Collection. 

Inquires are as follows - EQ - 12 (4 fall off this year) EX - 8 (3 fall of this year) TU - 2

So with debt of almost 225k, half that in annual income, few baddies...would ANY lender approve me? 

Be brutally honest please.....I'd rather not get my hopes up if there is no chance. 

Thanks in advance!!!

[BrianB_The_Loan_Professor]

If you work on the credit you could get approved - you make 10k a month - keep all of your monthly payments below $4300 a month (including mortgage payment) that would equate to a 43% debt to income ratio - 

With a salary like that you have the ability to pay off debt so start working on it - to get more home eliminate credit payments - just an fyi - banks look at the payments and the scores - balances rarely are an issue - they care more about you having the money to  make the payments - 

Hope this helps

Brian B - 

[newmomnewme]

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@BrianB_The_Loan_Professor wrote:

If you work on the credit you could get approved - you make 10k a month - keep all of your monthly payments below $4300 a month (including mortgage payment) that would equate to a 43% debt to income ratio - 

With a salary like that you have the ability to pay off debt so start working on it - to get more home eliminate credit payments - just an fyi - banks look at the payments and the scores - balances rarely are an issue - they care more about you having the money to  make the payments - 

Hope this helps

Brian B - 

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Thank you Brian. I am looking at homes in the 250-275k range. I really want to have a mortgage payment that is lower than my current rent. 

I am currently working on the goodwill removal of the baddies I listed, then start paying down the maxed cards one by one. 

Interest on the cc balances is killing me...and my monthly DTI. Do you think three months will make a difference??  I want to get out of here by the end of the year. 

I would like to take advantage of the tax credits/deductions for purchasing my first home, moving, etc. 

Thanks again for your quick response. 

[BrianB_The_Loan_Professor]

You didnt share the needed info to say for sure how much you  can afford - 

You need to add up all the payments - then use a projected payment for the mortgage - if they are less than 43% or so you should be ok with the debt to income

There is no way you will get a payment lower than rent if homes are in that range

I assume you dont have a large down payment - your scores are better for an fha loan so with the mininmum down - add in taxes - insurance and pmi

you are looking closer to 1700-1900 a month for the payment (ball park is between 600-700 per every 100k you borrow)

Your rent would equal something in the 175k range

Hope this helps

B

[Appleman]

Are you currently using an budgeting software?

Just ball parking you are paying over $3000 to service current debt. YNAB (you need a budget) is my current favorite. There is a 34 day free trial ($45 a year after).

While seeing every penny of debt can be nauseating, it will be the first step in getting those scores up.

We all wish you luck.

[StartingOver10]

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@Appleman wrote:

Are you currently using an budgeting software?

Just ball parking you are paying over $3000 to service current debt. YNAB (you need a budget) is my current favorite. There is a 34 day free trial ($45 a year after).

While seeing every penny of debt can be nauseating, it will be the first step in getting those scores up.

We all wish you luck.

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+1  OP, the debt you are carrying is hurting you now - as you know.

Once you get your budget together you will be able to pay down the debt which is partially causing your scores to be so low.  It may in fact be more of a factor than the baddies on your report. We don't know because we don't have specifics.

You will need to "beans and rice" your way to paying off/down your current debt loads.  In addition to checking out YNAB, check out other budgeting software and Dave Ramsey website. You have a decent income, but you need time to pay off your current debt before you consider getting a mortgage in the range you are thinking now.

When a lender calculates your new mortgage payment, they will use the following monthly figures:  

• Principal and interest (this you can find out from various mortgage calculators online)
• Mortgage Insurance (you will need to use a figure of .0085 * amount financed/12).  For example: $250k financed would be a MIP of $177.09 per month just for mortgage insurance
• Real estate taxes for the home you buy
• Homeowners insurance for the new home
• HOA/POA fees if applicable

The payments you make now for your cc debt and student loan debt reduce the amount of mortgage for which you qualify.  If you didn't have all the cc debt you could more easily afford a mortgage and that debt is the easiest to tackle.  The student loan debt is here for the long term and you will need to adjust your mortgage downward to allow for the student loan payments. 

Head over to the rebuilding section too for specific help on your debt and the best way to pay it off.

[newmomnewme]

You all are absolutely correct! Beans and Rice for SURE. I will cut expenses and look for additional income as well. I had a nice remote development job ($55 hr) but they lost their contract and I am now fighting with them for unpaid wages (almost 5k). My current job offers annual bonuses as well, I think we get them in the Spring...obviously they will go straight to these balances.

I am going to keep cable/phone/internet for now....cancelling netflix, amazon prime, and all of the credit monitoring. This could save me $100 per month I think.

I will check out the budgeting software programs available....right now I only had the Excel add-in (Avalanche option selected) ....this says it will take 3 years minimum to pay off the revolving debt. I can't afford 1700-1900 for a mortgage payment, at least not until my son gets out of pre-school (1200 per month) Fall 2017.

Heading over to a debt pay-down thread now. Thanks so much everyone!!!

[CKinNC]

Anyone else having problems posting here?

[StartingOver10]

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@CKinNC wrote:
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