Help me Get Ready to buy a Home! Realistically Nov 2015

[ReaLiLJ]

Okay so about 3 months ago I went into a Chase Bank, and I sat down with a banker (Not a loan officer,) and he broke down the mortgage game to me but it seems as if I was provided with wrong information. I wanted to verify some things and make sure I was going about this in the right way for the future. (Nov 2014)

He said If I had 3% down I could go with a FHA loan which is accepted by certain areas/people?, and if I had 5% down I could go with a conventional loan, which is accepted everywhere. He also said I could get up to an amount that is in respect to my down payment. So if I wanted to do a 100k house If I had 5% of that down I would get accepted. Etc.

I will be in my second year of my job next year of november, and I was hoping to buy a house next year for myself so that I can almost hopefully achieve my American dream. He said I had to have 2 years of work history, so that's why I picked nov 2014. He also said I needed to not apply or do anything within a year of that date, and that I must have a 720+ if I wanted to get the best loan.

Next year I was hoping to save up 15,000 have my car 3/4 paid off, and all my credit cards at 0 balances, my school loan from 5.6k -> 2k (don't want to fully pay it off, since its in def. 10 year thing as well) And I wanted to be ready to buy my house. (Not have any apps 12 months before I decide to app for the mortgage).

The twist is my family saw this, and now they want to move with me. And in doing so they want to help contribute and get a even bigger home so we can remain together, the bad things are is that I am the only one with 700+ scores, a permanent job, and a good credit history to show that I can take on a mortgage. My question is what can I do now.?

I want to give you guys an example and I would love everyone's insight on what I can do in the next two years to acquire a home of this description, with this price range, given are scenario. Here's what we would need.

NOV 2015 We want to apply for a mortgage. (Max $925,000)

http://www.redfin.com/CA/Sylmar/14326-Tyler-St-91342/home/5408380

The home is $890,000 (Will the price really be this, or can we talk them down)
It is the area we want to live in, that or thousand oaks, or simi valley. (Valley Friendly) We need the 7 bedrooms, don't care how many baths, either a big yard or pool either or, and a upstairs.

-Looking for a 30 year fixed mortgage, we want the flexibility to pay it down, as we will pay it down faster then 30 years, but don't want to put that much money down.

-Living here will be my widowed grandmother, auntie, mom, brother, me, and three kids. 

-(Honest) Money we have saved due to what the banker told me is ($50,000) As we were thinking since the loan would be $900,000 (5% of that for the conventional loan would be $45,000) Please correct me if this is totally wrong, As number wise and risk wise it doesn't seem true, and we need to know what downpayment we have to come with to understand what is realistic to us.

1. -Credit Scores, Mine are below (But they are that low (not high 700's anymore due to me apping like crazy, since I won't be able to app for the next 1-2 years. (I have never missed a payment ever) My brother is in the 600's (hes been delinquent on his card for 3 months, due to a hardship but he paid it completely off and they increased his CL, my auntie has a credit profile like mine but she has mid 650's, my mom is 300 (just bad credit), and my grandmother doesn't believe in them so she has a 0 score. She has only used cash for everything.

-For credit history, my auntie has the longest on her BOFA Accolades card, I think its like a 7-8 year history, although only me and my brother will be taking over the loan, they don't want their names on the loan or whatever, they just want to show that they will be performing in paying down the loan, and don't mind their names being ran for the loan. (So the longest history in nov 2015 will be 3-4 years)

-No one has debt in my family except my mother, I am in the process of paying it off for her, and will add her as AU's to my account, after I have gotten all the PFD's I can for her. Her car will be paid off by Jan, and she has no financial woes after that. My brother just has 14,000 left on his car, hopefully to have that paid off by then. My auntie has no debt, neither does my grandmother. I will have my car fully paid off, if not only have  a small amount left, and my school loan will be either at 1k or 2k. So we should all be debt free by Nov 2015. 

2&3. INCOME will come from odd places, but it will be there, my income will be between $48,000-$55,000 (LAX Worker), my brother $39,000-43,000 (LAX Worker), my mom 20,000-30,000 (She a works as a home care nurse), My auntie from social security, and child support $19,000-$20,000 She has a 50,000 cashier check in the bank, we want to use that for collateral, My grandmother gets social security from my grandpa (passed away) and she has a huge lumpsome tucked away, (want tell us) but want to know if we can use that as collateral, she's not touching it, but will let chase or BOFA verify those funds if its between accepting and denying us. But her income would be just from those sources, has not revealed that too me what that amount is.

4.Monthly debt payments:
Just my school loan 5.6k -> 2k, and my car loan will probably have like 3-4k left. My brother possibly 2-3k and everyone else no other obligations.

Is there anything else that you guys might need to know to determine what we need to do to be ready for this process? And what amount do you think we will be able to get, and is the amount we want to save good enough!?

5.Employment
For Job security I will have 3 full years with the LAX full time and in my final years of college, my brother will have 2 years with the LAX full time, grandmother is a widow (income from my grandpa's Social security) and she's a retired school teacher of 25 years, my auntie will be unemployed, money coming from kids social security I believe? And child support (guaranteed), and my mom is a nurse goes to homes to take care of the sick been doing that for 5-7 years?

6.Assets/Reserves

Is this what can my grandmother and auntie can use? The lumspsome of money she has, and the cashier's check in a safe that my auntie has? I also have $8,000 stashed away.

7.Location. Sylmar, Northridge,  thousand oaks, or simi valley. (Valley Friendly) 93062 (California, USA)

8. Property.  A 6+ units home with stairs, with either a pool or big backyard for the kids. We don't mind if it needs some fixing, but we want it to be fully function with minimal fixtures.

9.Value.  Looking for a 30 year mortgage no higher then $925,000 (Need to know how much down, were not rich, just looking for a good home, that we can all afford monthly, without headache, that we can later own. Were looking at it from its 5 of us who can pay monthly, we don't want a super high monthly payment, but were open, if it helps us save in coming up with more down payment, as we rather do that monthly.

10. Occupancy.  Primary residence, Family Owner

11. Transaction Type.  We want to purchase it with a 30 year loan.

[StartingOver10]

Well, that is quite a plan.

There are some things that immediately jump out at me - but the first thing is  the cashiers check in that is being kept in a safe deposit box. Those funds will not be permited to be used at all unless that check is deposited long before the purchase so she can show seasoned funds. If you had planned to deposit it 60 days before the purchase to season the funds, you can bet the lender will want to know the source of the funds.  Besides I don't believe you can hold onto a cashiers check for several months like that just sitting in a safe deposit box without the check becoming a stale check or void. First check the expiration date on the front of the check to see if is still good. If it doesn't have an expiration check, have her bring it to her bank and check to see if it is still good. If it is, have her put it in her account or a CD if she is afraid she will spend it.

The other thing that I noticed is that the house you are looking at is higher than the conforming loan limits. In the county where the house is located it looks like your conforming loan limits are $625,500 and you are looking for a higher loan than that to purchase the specific house you show (or a similar home in two years). You would need to go for a jumbo loan, put more than 5% down, and follow the jumbo loan criteria for both credit and income. BTW, I looked up the conforming loan limits for Los Angeles county - the loan limits vary by county in CA so if you buy in another county, check their conforming loan limits to see if you need a jumbo or conforming loan. This one thing, the type of loan, makes a huge difference on the criteria. Of course you could put down a very large down payment and bring the loan into conforming limits.

In fact, any mortgage company will require that the income is enough to repay the loan. Right now you said only two of you would be on the loan and the total income between the two of you total's $98,000 per year. Your income doesn't support a loan of that size. If you and your brother are on the loan, than the lowest mid score is used and his mid score would not qualify you for a jumbo loan. The debt to income ratio on you and your brothers income is what will determine what you and your brother can afford.

I think you need to actually speak with a mortgage professional in your area. Not a Chase 'banker' that doesn't do mortgages. But someone that can explain the process directly to you with your numbers and specific situation. Then you will get a better idea of what you can buy.

[ReaLiLJ]

First and foremore most, I would like to say thank you for taking out the time, to provide that information. As it is very helpful. In response to that here are my concerns and questions: 

Okay I will get more information from her on that later this week, I forsure know its her money, I just don't understand what she meant when she said cashier's check as it is her money, but I know when I hear cashiers check its usually when a bank gives you money in that form to go pay down something. And as you said its only valid for sometime, before it expires. So I will get back to you on that, but for sure it's her money, I just think she didn't justify it right, it is in my grandmother's safe deposit box though just for that reason (so she doesn't spend it!) Only in case of an emergency.

I will definitely look it up further, and I was just researching the criteria based on the information you gave me, and its discouraging I would think since all of us are involved on the loan it will be more appealing, but it doesn't seem that way.

In response to total income, if I get them to sign on the loan then can their income's be counted in towards total income!? Because it will be all 5 of us paying each month, and if we are to all sign, they will use what score from the 5 of us? I always thought they used the highest credit score, from us to determine the rate, I never knew that the median of our scores (person) will be used to qualify us for the jumbo loan. And our DTI ratio will be cleared by then, if debt to income ratio will be a big factor, as I will just tell my brother to focus on paying his car all the way off.

Given our situation and all of us was to sign on the loan, what loan would be looking at realistically? Like how much, I saw like 1 unit, 2+ unit, 4+  units single family home, what categorey would we fall in for trying to get a 7 bedroom home to fit all of us in? As I see different loan amounts for these different categories. 

For credit scores, if I start adding my family to my account's as AU's (especially my grandmother) is there anyway I can get their scores up to a higher score, if they were to all sign the loan as I know that is going to play a factor. (We were hoping that if they do sign the loan, they would only use their income as justification to be qualified for the loan.) So for instance, my auntie has an amex from back in 2003, can she add all of us so we can all get backdated to that card for a longer credit history, and can I do the same for them to help bring more history to my brother (just so he has more accounts, he only has 1), mom (to rebuild her's), and grandmother (empty profile).

I am going to go speak with a Loan officer from Chase on Tuesday/Wednesday but I just want to come to her with at least some knowledge of the process, so when I give her all of this information, she knows I'm serious, as we really want to get in that price range of house (due to the properties out there with that bedroom limit are in that price limit) And we are trying to be realistic, is why we want to move to the valley and not in los angeles, as it is way cheaper then LA.


So please chime in, if you can! Especially if anyone else has been in this situation with their family, as mortgage is something really new to me! (Trying to be as honest and give as much information as possible, so if anything else is needed, feel free to ask!.

[HouseBuyerGuy]

If you want real, here you go:

1) At $925,000 you would be in Jumbo Loan territory. Most Jumbo loans would want 20% down. Some even 30%. So, save up about $200,000.

2) Income requirements are strict. Only the incomes of those on the loan will qualify for the loan. No person signing a piece of paper promising to pay will help. Otherwise, every loan-seeker would have more people promising to pay for the loan than actually are. Even if they counted all (5?) of the incomes, it would be a stretch to qualify. I see only about $130K in total income. So the max your total monthly debts including the new mortgage could be is about $4100. I can't imagine the house payment + taxes + insurance + hoa on a 900K property would be less than that. (I'm at $98K and not looking for a house for more than $250K)

3) Every credit score would count. I get the reason you wouldn't want everyone on the loan is because of credit scores. Only those on the loan have their incomes counted and thus their credit has to count. Lowest score wins. You would essentially need everyone to have a 720+ credit score for the loan you are trying to get. Most couples have trouble doing that, much less a house full of borrowers.

It can be hard to get government-backed loans in the 100-200k range. It's incredibly difficult to get the size of loan you are seeking without big income, great credit, and plenty of assets.

On a personal level, it seems like a nice plan but could be troublesome down the road. What happens when so-and-so wants to get married? Or so-and-so moves out of state? Thats a huge committment to be locked into at such an early age. And keep in mind, anytime you apply for credit after that, for a car, for a new house etc you will have a 700K mortgage showing up on your file and unless you have 5 co-signers every time you are setting yourself up for disappointment.

Maybe consider getting 2 separate house close to each other? A little less risky (but still risky given "life"). You could have two people on each loan, have looser guidelines/requirements. Even here the credit scores would need to be good for everyone. Others debt would need to be nonexistent.

[ReaLiLJ]

Thank you housebuyerguy! I've been working a crazy schedule and just got back on the forums, so I will be replying in full as soon as I get out of school. I thank you for the input though as it has opened my eyes. Once I get all the details and new plan derived from this I will respond ASAP!

[awp317]

i am currently in the process of securing a jumbo loan. My Loan officer is requiring 30% down, my DTI to not be above 45%, 700 plus credit score, atleast 12 months reserve monthly payments avalible (seperate from all other assets), and I must have escrow for taxes and insurance to gaurentee they are paid. They are requiring this as the amount im borrowing is over the limit that the government will insure it. IN some areas this is 417k in others its 625k depending on how much housing costs. 

I average your total combined salary around 140k. 45% of that is 5250 allowed to be used towards debt. However I live in a strong economic area, my bank is ok with lending 45% DTI. In areas where the economy is not very strong the bank may be conservitive and only want you at 30% DTI. Just depends. 

if you are in a good area 45% of your combined income leaves you around 5k a month to use towards debt. 

However if you are in an area where its only 30% DTI you only have 3500 to spend monthly. Now on a 900k home with 200k down, after taxes and insurance are calculated you are at 3625 a month. (more if you live in an area with high property tax) and again Keep in mind that DTI is all debt you currently incur, not just housing debt. Thats car payment, student loans, credit cards etc. So you have to minus from that 30-45% DTI what you currently are paying monthly. YOu really might want to rethink the plan here a bit, or save up a bit more than the minimum 20% down. To be really honest, YOUR CRAZY. A 700k loan at 19 years old is just nuts lol.