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elisette
Posts: 4
Registered: ‎10-25-2012
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Mortgage strategy for high-income couple with disparate credit histories

My husband and I are hoping to buy our first home this year.  We are both in our late twenties and have ~10 year credit histories.   I don't know our exact FICO scores, but I suspect that his is excellent and mine is less so.  The reason is that I took out ~$150k in student loans, which went into repayment 6 mos before I expected them to.  The servicer was sending all the correspondence to my parents' address rather than my current address, so I never paid a dime.  I ended up 90+ delinquent on several massive loans.  Since then, it's been difficult for me to qualify even for the lowest-end credit cards, despite my substantal income.  When I finally did qualify for a card, I would routinely max out my credit limit (because the limit was ridiculously low), which I now know was probably bad for my credit score.  I now try to use my debit card for most purchases.  

 

For the past four years (since getting out of school), I've earned upwards of $170k per year.  My current income is about $300k, and my husband likewise earns between $250k and $350k.  Our assets, however, are minimal -- maybe $150k in investments, including stuff set aside for retirement.  Almost all my student loans are paid in full -- I have about $30k remaining at a low rate of interest (3.1%).  We did not open any joint accounts after marrying, and our finances are still separate.  

 

We are hoping to purchase a home valued between $900k and $1.2m, and will probably need a mortgage for between $700k and $1m of that amount.  

 

I am wondering if there is a way to execute some sort of instrument that would place my incoming paychecks into a trust with my husband as beneficiary -- that way, instead of a couple with a decent joint income but disparate FICOs, he'd be applying for the mortgage as a single borrower with a high FICO and an "individual" income (including his trust income) of around $500k.  

 

Would a bank/broker permit this?  Is it commonly done?  Do you see any potential obstacles or have any better recommendations?

Valued Member
hendersj31
Posts: 42
Registered: ‎09-18-2012
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Re: Mortgage strategy for high-income couple with disparate credit histories

Honestly, it sounds as if your husbands income alone may be able to qualify for the home given you are looking at 200K down and if his credit is excellent and he has proof of thge income you stated with tax returns, w2s etc. for the last two years.  This is assuming no significant additional debt on his part.  If he averaged 300k a year for the past two years I would call up a lender and see what they say. 

Private money is another option.  It will be more expensive however. 

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elisette
Posts: 4
Registered: ‎10-25-2012
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Re: Mortgage strategy for high-income couple with disparate credit histories

Thanks for the reply!  So you think my husband would definitely be better off applying on his own, vs. jointly with me, even though our income would double if we applied together?  

 

We will probably borrow a small amount from our parents to make the $200k down payment.  After that it would be nice to get as cheap a mortgage as possible, since in addition to our mortgage we will be paying coop maintenance and a buttload of taxes.

 

Oh nyc....

Valued Contributor
beb86
Posts: 1,117
Registered: ‎10-31-2011
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Re: Mortgage strategy for high-income couple with disparate credit histories

Together you and your husband make over 600k and you need to borrow money from your parents to make a down payment?

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beb86
Posts: 1,117
Registered: ‎10-31-2011
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Re: Mortgage strategy for high-income couple with disparate credit histories

Keep in mind that any money you borrow from your parents would be considered a "gift" and he will have to go through the appropriate steps (gift letter, bank statements etc) as well as any money you give him i.e.. Your paychecks would also be considered gifts so you would have to go through the same steps.

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Valued Member
hendersj31
Posts: 42
Registered: ‎09-18-2012
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Re: Mortgage strategy for high-income couple with disparate credit histories

I live in Houston and am currenlty shopping for a rather expensive home.  As long as the debt to income is not over 45% and you have 20% down you look to be in good shape at first glance.  This of course is assuming everything is accurate and can be proven.  So at a minimum if your husbands tax returns for the last two years show him making 250-350k with no large debt and good credit I would definitely start talking to lenders.  You will have to ask about gift funds for down payments (the money form parents).  Also FHA in New York County allows for loans up to 729k.  That can help too.  If I were you I would call a lender today and start talking. 

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elisette
Posts: 4
Registered: ‎10-25-2012
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Re: Mortgage strategy for high-income couple with disparate credit histories

Thanks to all.  To address a couple of things that have been brought up -- both my husband and I can definitely document and verify our income/assets for the past several years.  His income has been on an upward trend -- I believe the last 3 years were $320k, $275k and $250k respectively.  During prior years he would have made less -- maybe between $100-$200 (before his prmotion).  

 

Unfortunately we may not be FHA-eligible, since most apartments we find seem to be coops which I understand are excluded.  

 

I'm curious about this "gift" issue.  So if I were a trust fund baby applying for a mortgage and listed trust disbursements as income, would that likewise be considered a gift?  What are the implications of gifts with regard to mortgage pricing/eligibility?  And finally, if one of our parents gave us some cash under the table, would there really be any way for a lender to tell?  

Valued Contributor
beb86
Posts: 1,117
Registered: ‎10-31-2011
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Re: Mortgage strategy for high-income couple with disparate credit histories

The usually consider a "gift" as an unseasoned fund. So most of the time the want to see 2 months of bank statements. Seasoned funds are over 60 days so you could always deposit them into your husbands account and wait 2 months.

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elisette
Posts: 4
Registered: ‎10-25-2012
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Re: Mortgage strategy for high-income couple with disparate credit histories

>seasoned funds

 

this is helpful -- thanks

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webhopper
Posts: 7,230
Registered: ‎09-16-2011
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Re: Mortgage strategy for high-income couple with disparate credit histories


beb86 wrote:

Keep in mind that any money you borrow from your parents would be considered a "gift" and he will have to go through the appropriate steps (gift letter, bank statements etc) as well as any money you give him i.e.. Your paychecks would also be considered gifts so you would have to go through the same steps.


There are certain restrictions on gift money as far as amounts.... If you're looking for anything over 5k in gift money, they need to give it now and then you'll have to let it age for 6 months in your accounts before you can use it for down payment


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