Interest rate buy-downs

[teton]

Looks like the only way I will be able to buy any time soon is with a MAJOR interest rate buy-down between what I can come up with and what the seller might offer. I know we have many people reading the forums who have closed recently. I'm wondering how successful buyers have been with getting sellers to participate in a buy-down? Any big numbers offered?

[ShanetheMortgageMan]

There is a 2-1 buy down, where your interest rate is 2% lower the 1st year, 1% lower the 2nd year and then a fixed rate the remaining 28 years.  Goes like 4.25%, 5.25% then 6.25%.  This allows you to qualify for more without having to pay 8-9 points to buy your rate down to 4.25%.  The catch is that the rate in years 3 & on is higher than you would be getting if you just took a straight 30-year fixed.

Why do you need a buy down to qualify?  I imagine DTI is too high... nothing else you can do to lower it?  Pay off other debts or anything?

[teton]

Thanks for the quick reply, Shane.  I had looked into a 2-1 buydown or a 3-2-1 buydown but was told that I would be approved based on the full interest rate, not the initial buydown rate. Yes, my DTI is too high. Only debts I have are a car lease and student loans. I had thought paying off my lease might help my DTI, but was told it would still be included, even if paid, because it is a lease and not a loan. Saving more for a down payment isn't the answer. An extra $10000 down only lowers the payment about $60 a month.

Maybe the feds should help out those of us paying off school loan debt like they are the homeowners? How about reducing my principal?  

[ShanetheMortgageMan]

Back in 2004 FHA stopped underwriting at the "buy down" rate but conventional still undewrites at the lower rate, so it depends on what loan program you are using.  Are you going with FHA or conventional?

More reserves, down payment, stronger credit, etc. all help compensate for higher DTI.  Adding a co-signer can help lower the DTI too.  Have you and your loan officer gone over all of those options?

[teton]

I need to find a new loan officer. With this one, I got the feeling he either thought this was hopeless or too much work. I did more legwork by using these boards than he did to find a way for me to get financed. I don't have the option of a co-signer. I have a relative living with me, but wouldn't want them on a mortgage.

[ShanetheMortgageMan]

So is it safe to assume that your loan officers didn't play around with the figures to see if there was some way, or some "goal" to reach where your DTI would be acceptable without having to do a major rate buy down?

Getting back to the rate buy down - how much lower of a rate do you need in order to qualify?

[teton]

Doing the calculations, the max payment I could qualify for is around $1000. That's a $400 a month deficit from what I would pay if I bought a house. I only pay $600 a month rent now, but have put away at least $800 a month in savings the last couple of months and should be able to continue to do that. I will be teaching two evening classes in the spring, so that's another $5k or so extra in the bank. I'll also get a pretty good jump in salary when I finish my second masters degree.

I'm pretty disciplined about saving money when I need to. I wasn't thinking about moving for a couple more years, so wasn't very concerned with saving money for a house. Then I got some new neighbors this summer. It's time to go!

[damnedanddetermined]

How long does someone have to be on the job to qualify for home refinancing? Would starting a new job kill that idea?

[Anonymous]

No offense, but if you want help, dragging up a year old thread and throwing in an off topic question is not likely to get you  many answers.  Try starting a new thread. 

That said, changing jobs can definitley affect your cahnces of getting a refi or a new home loan.  We would need alot more info to answer.  Again, put up a new thread and ask and some of the mortgage pros will answer you.