Can I get a mortgage?

[BrianB_The_Loan_Professor]

So long as the student loans are deferred for 12 months you wont have to count them for FHA but keep in mind that they will kick in and may make things tight.

[MrCredit]

FHA is the way to go.. you will have to document every little thing they do not allow overtime unless you been in the same employer for more than 2 years. They allow gift funds, half of your down payment of 3%, you will need 3% plus closing with them. If you plan on buying and have cash laying around or getting the lump sum from someone put the money in the bank now. They will call your bank and check your average daily balance and it has to come close. They want to make sure the funds are not borrowed. FHA will not take your scores into consideration as long as you have no baddies or bks within the last year. BKs must be discharged/dismissed. Hope this helps. I can recommend Capital One Home Loans to you, I dealt with a guy named [Edited] there... AWESOME. They will find a program for you and they do FHA. DO NOT get any new credit if you are approved and the process is in motion also. Hope this helps.

Edited to remove personal information. Sharing of personal information, belonging to yourself or anyone else, is prohibited on the forums. Please read the User Guidelines and TOS for more information.  - sidewinder

Message Edited by sidewinder on 11-13-2008 08:27 PM

[ShanetheMortgageMan]

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@Anonymous wrote:
I do have student loans (10,000) but I am still in college.  I receive child support and that is figured into my income.  I just opened a CC and a jewerly acct.  I think my min. pymt on CC is $20 a month.  I didnt buy any jewerly, but it is list on my CR.  I live in Florida.  Should  I still pay the debt without a PFD?  I was told that it would be the same as a negative on my CR.

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Kind of hoping it wasn't Florida (or Texas, or any state that has high property taxes and/or homeowners insurance).  The problem with Florida is that homeowners insurance is usually really expensive there, reducing the amount you need to qualify for.  Sure you can choose a condo without seperate homeowners insurance, but instead it has a homeowners association fee that is actually more expensive than homeowners insurance (this is why people can usually qualify for a higher house price than a condo price).

The $150k sales price range is probably going to be a little bit out of your reach right now with the income you have.  The payment on a $150k sales price, 3% down, at 6%, would probably be about $1,200/mo in Florida.  Your income of $2,500 means each month you'd be spending almost 50% of your pre-tax income (or more than half of your take home pay) on your housing payment.  FHA prefers that you spend no more than 31% of your pre-tax income on your housing expense, although higher percentages can qualify if there are compensating factors (good credit, good amount of reserves, 5 or 10% down payment/equity).  I've seen 44-45% qualify when there are those compensating factors, but yours is about 48% and with the rest of your profile that's going to be a stretch.  You can try, but it's not likely for approval.  An even more important question though...  is that a housing payment you are comfortable with?  How much do you pay in rent now?  It seems really high for the amount of income you have, even the most frugal would have difficulty.  A home for $125,000 would have a payment of about $1,025/mo and a home for $100,000 would have a payment of about $835/mo, just to show you examples of payments you might find more affordable (at least I would).

[ShanetheMortgageMan]

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@MrCredit wrote:
FHA is the way to go.

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MrCredit, I am glad you are so enthusiastic, but some of the information you've rattled off is inaccurate when it comes to FHA, such as not allowing OT unless you've been with the same employer for 2 years.  OT is just required to have been rec'd for 2 years, doesn't have to be with the same employer.  In special situations, such as required OT as part of a contract, less than 2 years can be considered as well. 

FHA also allows ALL of the down payment to be a gift, not just half of it.  The seller can also pay closing costs up to 6% of the sales price, so you only are required to bring in 3% not 3% + closing, but you are right, it is good to prepare to have to bring in closing costs in case you can't negotiate to get the seller to pay. 

The average daily balance actually doesn't need to come close to your current balance as long as you can explain any recent deposits, if the deposits come from earned income it's completely fine to have a current balance of say $5,000 whereas your average balance is only $3,800, etc.

Ch 13 BK's don't have to be discharged before you apply for a refinance, as you can actually pay off a Ch 13 BK balance if you have enough equity in your home (can take out cash up to 85% to pay off a Ch 13 BK balance), you've been in the payment plan for at least 12 months, and all payments have been made on time.  Ch 7's need to be discharged, but FHA wants them to be more than just 1 year discharged, they want it to be 2 years discharged unless it was due to an extenuating circumstance, then just 1 is OK.

Enjoy the forums, I see you've been extremely active in the short time you've been a member.

[Anonymous]

Will a lease to own option be good for me while I try to clean up my credit?  How long do you have to decide if you would like to purchase the home?  What % of the monthly payment goes toward the down payment?  Will I still be able to go through FHA if I do the lease to own option?

[ShanetheMortgageMan]

For a quick primer on lease options, they have good & bad points. They benefit the seller in a falling market, the buyer in a rising market. You pay your option money upfront; amount is negotiable. Understand you will not get that money back if you decide not to purchase. It is not a deposit. You are purchasing literally the option to buy at a future date. You can generally negotiate the period of time you have to exercise the option. You will have to pay fair market rent and money on top of that if you are trying to accumulate a down payment for permanent financing later.

There are some serious hazards right now most important of which is that many sellers trying to do lease options are in trouble with their mortgages & you run the risk of the property going into foreclosure & losing your money. Having a recorded lease will not protect you. If the bank takes the house back, you are out. But do talk to a RE attorney if that happens.

If you think prices will fall during your option period, you could end up with a price that is no longer realistic & if the house won't appraise for that amt, you will be out of luck. You could agree to set the purchase price later based on an independent appraisal, but that could be leaving the door open to some disagreement down the road.

My advice would be to talk to a RE attorney before handing over any money and talk to a mortgage broker about how to set up a lease option in such a way that it will be possible for you to get permanent financing when you decide to go forward & purchase.

The big benefit to the seller/landlord is having tenants who have a stake in maintaining the property & a purchase price potentially locked in.