Plz guilde me in the process of home building? new construction/mortgage loan?

[DWill02]

Good afternoon,

So I finally got approved for a home mortgage loan, however I only got approved for 120,000 I am in the dfw area. I am really shocked I didnt get approved for more, but I was told due to me having a car loan with about 10,000 left that counts against the amount I can get approved for. Ok so its an FHA loan and from my understanding they are very particular with what they will approve you for. So with that my options are very low, I would love to have an updated kind of house but I dont see anything I like less than 140k. From my understanding I cant even get a fixer upper. So I am so confused on what I should do. I looked in a new community where I would like to buy a house at and their homes are very beautiful but expensive nothing less than 180,000. I dont know if I should wait until I make more money and pay off my car or what because after seeing the new homes I would love to get one built. I have a teen so I would love to buy a house where she can call her own before she leaves home which will be in in about 6 years. There is a community in my area that has so many open lots and the homes are being built by First Homes. However it says the starting prices are 180k. So it possible to buy a lot in that community and get it built by a different contractor for a lower price. I would love to atleast build a starter home and upgrade over the years. I know building in a certain area the houses will have to be up to par but I would love just the least expensive to atleast get started. So I have been doing my research and I am not finding a lot of information on the actual process. I have read that you have to have a new construction loan and a mortgage loan and some lenders offer a 2 in 1 type of deal. I also have read when getting a home built you have to have at least 20% in earnest money or a downpayment. Can someone please direct me in the right area. I know dallas has first time home buying assistance programs but its not for building a home. I also know Dallas has the habitat for humanity home building program but they only build in the most urban low income areas. So from my research there are no home building programs in the DFW area and building a home is very costly...PLEASE HELP

[Anonymous]

A lot of times areas are being devloped by a certain builder - so it can be VERY difficult to try to get another builder in.

You could go talk to the builder and see what options they have maybe they have a  smaller floorplan that isn't typically offered- maybe you could get by with not finishing a basement, taking lesser appliances, not having something else finished....no landscape allowance, or lesser on other allowances(carpet, cabinetry,etc.)  To help bring costs down.  

Your other option is to see what homes are available out there.   You can usually get a home that needs SOME work - but not drastic work.  Find something that needs updating, paint and flooring can go a LONG way in making a house seem fresh.  Double check with the lender on what things CANNOT be wrong with the house to not have issues.   

If all else fails - wait a year - work like the devil to pay off the car and any other debts and then 'garden' your score so it goes up.   Also - you could try to find something that supplements your income - find a 2nd job 2 nights a week to help increase income and change the debt to income ratio so you can qualify for more. An extra $500 a month income could be the ticket.   

[Sassy_Taurus]

I thought only the monthly payment was counted in your dti not the entire balance.

[DWill02]

Thank you Jlynn...I am going to check on that! I would love to get started now.
Sassy my car payment is about 380 a month..so if u didn't have it then I would have gotten approved for more.

[Anonymous]

Hmmm, do you have any savings? Normally people do save something up before apping for a home. If so, I would suggest paying off or down the car note and saving again. A lot of people's first homes are their starter homes and then they upgrade to something bigger and better later when they have some equity in it and can sell it. But you're pretty close to your low end ($140k). You can try to find a home that suits you now and later sell it when the market goes up and you get a little equity in it, or you can save more or pay your car off to get a better DTI. Did the lender suggest other areas where you can earn more/cut costs? Without your full financial picture it's hard to give advice.

[DWill02]

No Bmhill, he didnt..I make about 43,5k a year..my scores about 640..

[Anonymous]

When I was playing with calculators I found that even $50 per month less on my revolving and installment loans could mean an extra $20k of mortgage affordability. I don't know what your interest rate is on your car and other loans/debt. Any way you could refinance to get lower monthly payments? The monthly payment is what is important. I'm just guessing here because I don't know your whole financial picture: other debt.

[DWill02]

So I have tried refinancing on my car but it has over 100k miles, so thats why the banks supposedly denied me for refinancing.

I have 3 collections on my credit one for $873 which will fall off in 2017, and the other 2 are medical collections which one will fall off this month and the other will fall off in 2016..but its only for $59 so I may just go ahead and pay that off.

I am also a student so I have student loans that are in school deferment.

I have a conns appliance account I pay $141 every month never late

car note $388

4 credit cards..very low balances

[Anonymous]

They don't use your collections in the DTI unless they are at least $2000, so paying those off will have no impact to your DTI and unless you pay for delete, will probably have minimal impact to your credit scores, which are not the problem anyway. I would contact your LO and go over the calculations he used with a fine tooth comb and brainstorm ideas to lowering your DTI. Ask him how much less in payments or extra in income a month would qualify you for that $140k. It may not be as much as you think.

To lower DTI, you either need to lower monthly debt or increase monthly income. That's pretty much it. The other thing you could do is save more money for the downpayment. If the house is worth $140k but bank will only give you $120k, you would need to make up the difference of $20k. Good luck and let us know what happens!