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Frequent Contributor
NewbieReed
Posts: 416
Registered: ‎12-05-2012

First Time Homebuyer in this Crazy Housing Market

[ Edited ]

Ok, I am new to this side of the forums as DH and I just started really considering buying our first home - YAY! But on a scary note, we are looking to buy in one of the most expensive markets in the US -- Greater Boston. I am really concerned about the cost of this..... And now I'd like some advice. Thank you for your help! 

 

Quick Stats:

  • Credit - My middle scores: 680. DH's middle score: 667.   
  • Income- My salary is 50K.  Ive been in the industry for 4 years though. DH started his current job in August 2012 too - he is hourly and it rounds out to 18K/yr.  He's been in the industry for 5 yrs.  But according to our taxes from last year and the ones that will be filed this year, our combined income is ~ 55K.  So I am guessing that if we buy in the next 11 months, those are the numbers that the lenders will be basing this off of, right? Or can I get a letter from my "semi-new" employer that states my gross salary is 50K. Does that matter? Will it help? will it determine anything? 
  • Source of income - FT &PT Employment.
  • Monthly debt payments - $386 car payment, $150 in student loans, and $100 in past due debt payments (NOT on our CRs or reported in anyway)
  • Employment- I have a college degree; DH doesn't. info on our employment is above.  We both work full-time. And we work PT as independent contractors 
  • Assets/Reserves.  About $5K saved that we are willing to pay out. $2K in a CD.  
  • Location.  Boston, MA
  • Property- Single family house, condo, or townhome.
  • Value.   $150-$250K though more likely to be between 150-200. 
  • Occupancy.  Primary residence
  • Transaction Type. Purchase

 

1. I started my current job in August 2012.  My salary is 50K.  Ive been in the industry for 4 years though. DH started his current job in August 2012 too - he is hourly and it rounds out to 18K/yr.  He's been in the industry for 5 yrs.  But according to our taxes from last year and the ones that will be filed this year, our combined income is ~ 55K.  So I am guessing that if we buy in the next 11 months, those are the numbers that the lenders will be basing this off of, right? Or can I get a letter from my "semi-new" employer that states my gross salary is 50K. Does that matter? Will it help? will it determine anything? 

 

2. We are looking for a home from $150-$250K range. is that reasonable? We are pretty frugal, so would most likely err on the side of $150-200 unless it's absolutely spectacular.  We've seen some pretty cool/nice condos & townhomes online (3br/2ba) for $180-210K. We are looking into FHA loans since we'd like to put down less money up front and probbaly utilize the City of Boston Homeownership program for first time buyers (gives u 3% of home purchase price if u complete the first time homebuyer 101 course). 

 

3. My middle score as of last week is 680 TU. It should be going up in 2 weeks after a baddie (2009 collection) is removed. I have no repos. But I do have a 2009 CC CO from an OC oin all three reports, a $1650 CO autoloan on my EXP, a paid collection from 2010 on all 3, and SEVERAL late payments on a closed CC from 2008-10.    I wont pull my scores again until late February but should be much better since I reduced my util from 40% to 9% and a baddie is removed.  And DH's Middle score as of last week is 667 TU  w/ multiple old paid collections from 2007,2008, 2009 and 2 Charged off autloans from  2008 with NFCU.  We are in payment arrangements with the CAs right now and they are not reporting, nor have they ever been. His scores should be better next month, as I added him as an AU on my good tradelines and an old medical collection has been removed as of yesterday.  Since I have better income and scores (for now),we are debating using only my info for the mortgage loan. Does anyone advise us against or for this? ? Is there any risk of using DH's info too? 

 

4. Does anyone advise going with a broker to get the best rates for the mortgage loan? Ive heard so many suggestions against and for getting a broker that I just dont knoiw what to do. Maybe if someone could share a story about why using a broker was helpful or not, that might help me see more clearly for our situation...

 

5. Adjustable vs Fixed rate??? The plan is to own and live-in this home for 5 yrs before buying a single family home, having kids,etc. So in five years, assuming that we buy a home this year, we would either sell this home (if the market picks up) or keep it as a rental since this is a great rental market in the boston area. Ive heard ppl say that Adjustable rates are only good if u want to buy & flip a home, so dont do it because ur never too sure what the rate will do. And the other half of people recommend that we take advantage of the low rates offered with an ARM. What are your thoughts? Experiences? 

 

I know this is a lot. Feel free to answer as much or as little as u like. just looking for some insight from u guys!! :smileyhappy: Thanks!!!! 

 

Starting Score: 526 EXP 09/2012 600 FICO 10/2012 608 EX (lenderpull)11/2012
Current Score: 4/2013 TU FICO 697, 02/2013 EQ 698 FICO (lender) 04/2013 674 Credit Sesame
NEW GOAL SCORE FOR 2013Breaking into the 700 club
[OLD GOALS: For now- 680 on all 3 = GOAL REACHED IN 02/2013}
Take the FICO Fitness Challenge
App Free since 2.8.13
Valued Contributor
JM-AM
Posts: 3,303
Registered: ‎06-09-2010

Re: First Time Homebuyer in this Crazy Housing Market


NewbieReed wrote:

Ok, I am new to this side of the forums as DH and I just started really considering buying our first home - YAY! But on a scary note, we are looking to buy in one of the most expensive markets in the US -- Greater Boston. I am really concerned about the cost of this..... And now I'd like some advice. Thank you for your help! 

 

1. I started my current job in August 2012.  My salary is 50K.  Ive been in the industry for 4 years though. DH started his current job in August 2012 too - he is hourly and it rounds out to 18K/yr.  He's been in the industry for 5 yrs.  But according to our taxes from last year and the ones that will be filed this year, our combined income is ~ 55K.  So I am guessing that if we buy in the next 11 months, those are the numbers that the lenders will be basing this off of, right? Or can I get a letter from my "semi-new" employer that states my gross salary is 50K. Does that matter? Will it help? will it determine anything? Your pay stubs will show the increase in pay.

 

2. We are looking for a home from $150-$250K range. is that reasonable? We are pretty frugal, so would most likely err on the side of $150-200 unless it's absolutely spectacular.  We've seen some pretty cool/nice condos & townhomes online (3br/2ba) for $180-210K. We are looking into FHA loans since we'd like to put down less money up front and probbaly utilize the City of Boston Homeownership program for first time buyers (gives u 3% of home purchase price if u complete the first time homebuyer 101 course). Nothing wrong with getting the assistance if you qualify, I recommend it all the time. I see no reason you will not qualify for the amounts you are looking at 180K-210K.

 

3. My middle score as of last week is 680 TU. It should be going up in 2 weeks after a baddie (2009 collection) is removed. I have no repos. But I do have a 2009 CC CO from an OC oin all three reports, a $1650 CO autoloan on my EXP, a paid collection from 2010 on all 3, and SEVERAL late payments on a closed CC from 2008-10.    I wont pull my scores again until late February but should be much better since I reduced my util from 40% to 9% and a baddie is removed.  And DH's Middle score as of last week is 667 TU  w/ multiple old paid collections from 2007,2008, 2009 and 2 Charged off autloans from  2008 with NFCU.  We are in payment arrangements with the CAs right now and they are not reporting, nor have they ever been. His scores should be better next month, as I added him as an AU on my good tradelines and an old medical collection has been removed as of yesterday.  Since I have better income and scores (for now),we are debating using only my info for the mortgage loan. Does anyone advise us against or for this? ? Is there any risk of using DH's info too? The only thing that will matter is how much home you are looking to buy. You may have to come under 200K if just use your income. Your DTI will also play a part.

 

4. Does anyone advise going with a broker to get the best rates for the mortgage loan? Ive heard so many suggestions against and for getting a broker that I just dont knoiw what to do. Maybe if someone could share a story about why using a broker was helpful or not, that might help me see more clearly for our situation... I am a Broker and while I prefer when people choose Brokers, I also know plenty of excellent LO's. You have to be happy with the services they offer. You can shop the rate and numbers you are offered, but personally a Broker usually can beat the LO rate, but does not mean it always happens. Rates are fairly competitive, but you need to look at the whole picture.

 

5. Adjustable vs Fixed rate??? The plan is to own and live-in this home for 5 yrs before buying a single family home, having kids,etc. So in five years, assuming that we buy a home this year, we would either sell this home (if the market picks up) or keep it as a rental since this is a great rental market in the boston area. Ive heard ppl say that Adjustable rates are only good if u want to buy & flip a home, so dont do it because ur never too sure what the rate will do. And the other half of people recommend that we take advantage of the low rates offered with an ARM. What are your thoughts? Experiences? With rates as low as they are I wouldn't recommend an adjustable rate unless you knew 100% for sure, you would be selling (and know it will sell) within that time period.

 

I know this is a lot. Feel free to answer as much or as little as u like. just looking for some insight from u guys!! :smileyhappy: Thanks!!!! 

 


 

Good Luck
May all your dreams and wishes become a reality!
Valued Contributor
MovingForward_2012
Posts: 3,406
Registered: ‎12-19-2012

Re: First Time Homebuyer in this Crazy Housing Market

+1, with rates so low, you aren't gaining anything with a ARM except risk as rates will be on the rise in a few years.

I initially was going to have a broker do my loan but I found a new construction and would lose out on $15K in incentives so I went with the builder's lender to get the incentives. The biggest thing I noticed that is different between a LO and broker is the broker tends to have a well rounded picture of the mortgage business and can easily answer most if not all your questions. The LO on the other hand, tends to lack that experience and is more focused on crunching the numbers to send to loan processing. The Broker I was working with had a team of loan officers working for him and he verified their work and spent the extra time getting to know you and your unique situation and extend a hand to help in those areas and also to give you a deeper understanding of what your application goes through to get approved and why. This has been my personal experience.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
Frequent Contributor
NewbieReed
Posts: 416
Registered: ‎12-05-2012

Re: First Time Homebuyer in this Crazy Housing Market

@JM-AM

thanks for ur response! I really appreciate it. 

 

Do u think that my 6 months on my job will be an issue, since I hear that lenders are looking for 2 yrs on the job?

 

Is it true that lenders raise the interest rate when u work with a Broker? Im just reading all over the internet different versions of horror or success stories with ppl working with brokers. I am just really unsure. 

 

I definitely think that an ARM is not for us ebcause of the unpredictability of it all. Thank u !!!

Starting Score: 526 EXP 09/2012 600 FICO 10/2012 608 EX (lenderpull)11/2012
Current Score: 4/2013 TU FICO 697, 02/2013 EQ 698 FICO (lender) 04/2013 674 Credit Sesame
NEW GOAL SCORE FOR 2013Breaking into the 700 club
[OLD GOALS: For now- 680 on all 3 = GOAL REACHED IN 02/2013}
Take the FICO Fitness Challenge
App Free since 2.8.13
Frequent Contributor
NewbieReed
Posts: 416
Registered: ‎12-05-2012

Re: First Time Homebuyer in this Crazy Housing Market


MovingForward_2012 wrote:
+1, with rates so low, you aren't gaining anything with a ARM except risk as rates will be on the rise in a few years.

I initially was going to have a broker do my loan but I found a new construction and would lose out on $15K in incentives so I went with the builder's lender to get the incentives. The biggest thing I noticed that is different between a LO and broker is the broker tends to have a well rounded picture of the mortgage business and can easily answer most if not all your questions. The LO on the other hand, tends to lack that experience and is more focused on crunching the numbers to send to loan processing. The Broker I was working with had a team of loan officers working for him and he verified their work and spent the extra time getting to know you and your unique situation and extend a hand to help in those areas and also to give you a deeper understanding of what your application goes through to get approved and why. This has been my personal experience.

Where did u find ur broker? recommended by someone u kno? a bannk? online? 

The broker that spent the time getting to know u, but u didnt go with them on ur purchase -- is there a penalty for that? a fee? 

Starting Score: 526 EXP 09/2012 600 FICO 10/2012 608 EX (lenderpull)11/2012
Current Score: 4/2013 TU FICO 697, 02/2013 EQ 698 FICO (lender) 04/2013 674 Credit Sesame
NEW GOAL SCORE FOR 2013Breaking into the 700 club
[OLD GOALS: For now- 680 on all 3 = GOAL REACHED IN 02/2013}
Take the FICO Fitness Challenge
App Free since 2.8.13
Contributor
MzKoli
Posts: 96
Registered: ‎12-20-2012

Re: First Time Homebuyer in this Crazy Housing Market

Employment history shouldnt be an issue if you're in the same field/industry.
Valued Contributor
JM-AM
Posts: 3,303
Registered: ‎06-09-2010

Re: First Time Homebuyer in this Crazy Housing Market


NewbieReed wrote:

@JM-AM

thanks for ur response! I really appreciate it. Your Welcome

 

Do u think that my 6 months on my job will be an issue, since I hear that lenders are looking for 2 yrs on the job? As long as its the same field you are okay.

 

Lets clarify this just a little.

 

If you graduated school and went to work in the same field of study you are fine.

If you have been working in the same field and change jobs into the same field you are fine, as long as not to long of a gap between jobs.

If you have been out of work for an extended period of time (lets say for unemployment) and went back to work finally in the same field, it may be UW discretion or Lender requirement. I have seen this be approved but was lots of going back and forth. I also have seen this situation denied many times.

 

Is it true that lenders raise the interest rate when u work with a Broker? Im just reading all over the internet different versions of horror or success stories with ppl working with brokers. I am just really unsure. You cant believe everything you read online. Brokers have Wholesale Rates, so technically they can beat any rate your bank offers, majority of the time. Doesnt mean you will get that rate, but it is possible if you qualify. Perfect example of your rate is if you go to a Broker ask him what the PAR rate is for the type of loan you are seeking. While you dont understand the PAR rate, the Broker sure will and may (no guarantee) actually give you a better rate then his original choice, if he or she feels you have some knowledge. Just for your satisfaction, the PAR rate is the break even rate.

 

I definitely think that an ARM is not for us ebcause of the unpredictability of it all. Thank u !!!


 

Good Luck
May all your dreams and wishes become a reality!
Frequent Contributor
NewbieReed
Posts: 416
Registered: ‎12-05-2012

Re: First Time Homebuyer in this Crazy Housing Market

@JM-AM so very helpful!! Thanks a lot
Starting Score: 526 EXP 09/2012 600 FICO 10/2012 608 EX (lenderpull)11/2012
Current Score: 4/2013 TU FICO 697, 02/2013 EQ 698 FICO (lender) 04/2013 674 Credit Sesame
NEW GOAL SCORE FOR 2013Breaking into the 700 club
[OLD GOALS: For now- 680 on all 3 = GOAL REACHED IN 02/2013}
Take the FICO Fitness Challenge
App Free since 2.8.13
Valued Contributor
MovingForward_2012
Posts: 3,406
Registered: ‎12-19-2012

Re: First Time Homebuyer in this Crazy Housing Market

I found my Broker through a realtor reference as I was looking for houses online and requested more additional info. The realtor asked how much do I have as a downpayment and I told him that I was interested in one of the CHFA programs that puts the downpayment into a second mortgage so the realtor referred me to a Broker that did those types of loans. I got preapproved through that broker and hired a realtor and started to look at homes. I found a new construction I really liked and proceeded to put an offer in on it. They told me it would be beneficial if I went through the builder's lender to get $15K in incentives. So I decided to do that and started working with one of their loan officers. I never actually signed any docs with the Broker as the loan app was done over the phone. I was scheduled to come in and meet with the broker in person but never did as I switched to the builder's lender before my appointment. And I wasn't charged any cancellation fees or any other fee. The Broker got to know me over the phone.

Many brokers band together and start stand alone mortgage loan companies like CityWide or Countrywide home loans, which are companies where you would work with a Broker.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
Frequent Contributor
NewbieReed
Posts: 416
Registered: ‎12-05-2012

Re: First Time Homebuyer in this Crazy Housing Market


MovingForward_2012 wrote:
I found my Broker through a realtor reference as I was looking for houses online and requested more additional info. The realtor asked how much do I have as a downpayment and I told him that I was interested in one of the CHFA programs that puts the downpayment into a second mortgage so the realtor referred me to a Broker that did those types of loans. I got preapproved through that broker and hired a realtor and started to look at homes. I found a new construction I really liked and proceeded to put an offer in on it. They told me it would be beneficial if I went through the builder's lender to get $15K in incentives. So I decided to do that and started working with one of their loan officers. I never actually signed any docs with the Broker as the loan app was done over the phone. I was scheduled to come in and meet with the broker in person but never did as I switched to the builder's lender before my appointment. And I wasn't charged any cancellation fees or any other fee. The Broker got to know me over the phone.

Many brokers band together and start stand alone mortgage loan companies like CityWide or Countrywide home loans, which are companies where you would work with a Broker.

AAaah. I see. Thanks for sharing.

i definitely think that we'll be going with a broker -- i need a seasoned hand to guide me.

Starting Score: 526 EXP 09/2012 600 FICO 10/2012 608 EX (lenderpull)11/2012
Current Score: 4/2013 TU FICO 697, 02/2013 EQ 698 FICO (lender) 04/2013 674 Credit Sesame
NEW GOAL SCORE FOR 2013Breaking into the 700 club
[OLD GOALS: For now- 680 on all 3 = GOAL REACHED IN 02/2013}
Take the FICO Fitness Challenge
App Free since 2.8.13

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