Do I qualify for a home mortgage?

[newhomer]

Hi all,

First of all, thank you everyone on this board for the information and knowledge. My wife and I are planning to purchase a home in Orange county, CA in April , 2014. I am open to all comments, suggestions. Thanks

1. Credit.  Transunion= 730 Equifax (from myfico)=708 Experian=701 (hopefully will increase another 10-20 points in 4 months)
2. Income.  73k
3. Source of income.  Employment W2
4. Monthly debt payments.  No debt, just normal household expenses such as cell phone, car insurance , food, ect.
5. Employment  W-2'd
6. How long have you been on the job & how long have you been in the industry.  With current company for almost 2 years. Been in the industry for 6 years.
7. Assets/Reserves.  After selling my manufactured home, will have a total of about 100k as down payment
8. Location.  Orange county, California
9. Property.  Prefer a single story house
10. Value.  350k-400k . Most likely in the 400k
11. Occupancy.  Currently living in a mobile home, will sell it and move in with parents temporary while searching for home.
12. Transaction Type.  purchase.

Based on the online mortgage calculator, 400k-100k down payment = 300k loan equals to $1450 + $350 property tax + $100 insurance = $1900 per month 

My annually income is 73k/12 months= $6083 gross monthly. Which means that my Front End ratio is about 31%. I heard that 28% for front end ratio is normal, but how high will they allow it? My wife will be employed by the end of this year bringiing an additional 40k, so I know that we can afford this home. Obviously, the underwriter doesn't care her future employment. So base on my income alone and the information provided. Do I have any chances of getting the loan? Thank. 

[J_G]

You are in great shape! You should be good on a conventional

[ShanetheMortgageMan]

Front ratio can go up to 45%, so you will be golden.  Hopefully you can get your score up to a 740 in order to qualify for the lowest conventional rates.  April is just a couple months away.  We always see the inventory increase here in OC as we get closer to school getting out, as well as lot more buyers at that time.  You should get yourself pre-approved in February so you can make an offer in March to avoid having it turn into too much of a seller's market where you are having to compete with a lot of other offers. 

If you have no debt, is there anything negative on credit?  If not, I'd think your scores should be in the mid-700's at least.

[newhomer]

Thank J_G and Shane for the replies, 

Shane,

Unfornately I have to wait at least until April or May. Currently I live in a manufactured home and are unable to sell it until April or May.  Which is a big portion of the down payment. I know that summer months are typically the sellers' month. I just hope that it is not as crazy as last year and the year before that. Hopefully by paying my bills on time for the next 2-3 months, my scores will jump to mid 700's. Wow! 45% front end ratio. I couldn't imagine how people live with that high of a front end. Even at 31% and no debt. I am hestitant. With my wife's future income it will drop the front end ratio to about 20%, which to me sound more liveable. So basically, according to you both I am good to go and should have a good chance of getting aprrove even with my income alone. Can you guys/girls reccommend me some mortgage lenders? Again thank you very much

[ShanetheMortgageMan]

While it won't help you get your offers accepted, you can make an offer contingent upon the sale of your home.  Sellers typically do not like those though, since that is a pretty big contingency.  If the home has been on the market for awhile then it's more likely that such an offer would be entertained, but in OC homes go pretty quickly if they are priced right so I'm sure your agent would advise making contingent offers upon the sale of your home.  Often they'll also write up the contract so they can still accept other buyers offers and give you a 3-day notice to remove that contingency otherwise they'll cancel the contract with you and go with the offer that doesn't have such a contingency.  Since it's such a competitive market here what we've been doing is getting our clients pre-approved by having their situation reviewed by the underwriter, so credit/income/assets have all been checked out and it's just a matter of the appraisal & title work being cleared.  They can write offers without any financing contingency (and feel comfortable about it) which makes them a lot more desirable to a seller than someone who hasn't gone through that extra process.  The additional review by the underwriter as part of the pre-approval process takes a few more days, but for those who plan early it's a huge benefit.

The ratios are all relative to disposable income.  Honestly I think there should be a much more detailed way to calculate the debt ratio, as I have had some high net worth clients with debt ratios over 50% but they still are able to save $10k in the bank each month.  They feel the debt ratio limits are too low.

Is your manufactured home here in OC?  I can't think of too many places where there are manufactured homes on fee simple land, unless it's out in the canyon.

[newhomer]

Shane,

Yes my manufactured home is in OC. I do not own the land only renting it. Without the sale of my manufactured home, I don't have 100k as down payment. 

[ShanetheMortgageMan]

You can still get pre-approved prior to you selling your home, the pre-approval would just have a condition that you need to sell your home + profit $X amount from it before you could get final approval.