I know we can afford to; Will we qualify?

[Anonymous]

My wife and I are anxious to buy, but I am extremely hesitant to pull the trigger now, not knowing if our situation warrants a bank's approval. I worked for the same company since 10/2009, and was promoted in 10/10 to a new position; monthly gross 2735 (plus bonuses, not guaranteed). However, prior to the promotion I made a lot less. So only 7 months in the higher rate. My wife has been in the same job for over a year, but in the same field for 4.5 years. Monthly gross 1075. Our credit situation is what scares me into not applying for a mortgage. My FICOs are 651 and 656 with nothing bad in over 3 years. I'm showing two or three very old (5 years or more) collections for very small amounts. My wife has FICOs over 720. However, monthly obligations are as follows: 272/mo. car payment, 207/mo. student loans, $90/mo. in credit card bill (in my wife's name, about 40% usage on a cap one card). Money situation: We have approximately $15,000 in stock, $2,200 in my 401k and a small amount of cash. We live in a very inexpensive real estate market (depressed SW Florida) and could probably find a house we love for 80,000 or under. Am I crazy to try now and ding my credit or is this a situation where we are qualified? What type of issues is an underwriter going to have with us? Any honest and realistic advice helps.

[jdxprs1]

im no mortgage guy, but looks to me like the only issue you may have is time on the job. everything else looks like you would be fine so a mortgage person might be able to work around that. Try to go with a conventional loan if possible.

[Anonymous]

I am currently in the process of looking for a home.  I was also scared when I went for my loan, but it turned out good. I would recommend you go for it.  Even if they say no, at least you would know where you stand, and the loan officer will be able to tell you what to work on.

Man I kick myself every day, I procrastinated for a year because I was scared, and now the prices have gone up compare to a year ago.

By the way I am also in SW Florida, Cape Coral.

[mauve]

Try this calculator - I have no idea what kind of property taxes and homeowner insurance rates you have out there, but that's going to be a large factor in what they'll determine that you can afford. 

Do you have any revolving credit?  I feel like your scores are indicating that maybe you don't.  Also, is there any outstanding debt?  I remember you said you had some older collections, but you may not qualify if you owe money still.  It sounds like you're probably going FHA or some other program like that (VA? USDA? something) where boosting your scores isn't going to have much, if any, effect on your interest rate. 

[MBOhio2]

It looks like mauve's link didn't show up, but I assume this is what she was trying to post because it's a great calculator:

http://cgi.money.cnn.com/tools/mortgagecalc

[mauve]

I'm positive I didn't paste it at all.  Blame it on the morning.

[ShanetheMortgageMan]

I'm not sure what taxes/insurance is like in SW FL but if it's anything like SE FL (Miami area) then it's quite expensive.  Even using those expensive rates, your debt ratio should still be OK for what you are looking to buy, and the collections are ancient history by mortgage standards so you shouldn't have any issues in my opinion.  Not sure where in SW FL you are but if it's in Naples then that area is eligible for USDA financing/100% no PMI.  http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do to check the eligible areas.