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03-11-2009 08:21 PM - edited 03-11-2009 08:25 PM
OK. We are taking the plunge and have begun the search for a place to live. I'm usually here looking for resident trolls and unwanted spammers, but DW and I are wanting to learn so as to be ready to buy by the fall.
Credit. By the time we are ready, my mid score will be an estimated 700-720 and DW's around 740-750. Current mine is around 650 and DW's 670.
I will have 0 lates reporting and will have a redeemed repo from early 2005. That TL has nine 30 days and six 60 days on the worst CR. The lates though are not factored into the scores. My payment history on EQ and TU reads "Great". I will also have about 12 CC accts at or near $0. And will have a more recent car note that will be paid to $0 come next month. Our most recent TL would be from 12/2008 with no inquiries since that point.
DW will have a paid CapOne CO with a DOFD around 2004-5, an unpaid med collection from 2004, the same redeemed repo, the same paid car note, and also about 12 CCs at or near $0. She will also be showing new credit from 12/2008 with no inquiries from that point. Other than the CapOne CO and the repo, DW has no lates.
Income. Gross W-2 income is about $89k. DW doesn't work but draws a stipend for being on a corp. board and that is included above. I'm also self-employed and can show an extra profit of about $25k. Haven't done taxes for this past yr yet, but that figure may be higher or lower. I prefer not to include this income into consideration, though.
Source of income. Our W-2 income comes from the same company. I am the pres. for that company but have no ownership over it. Income is salaried and is paid semi-monthly.
Monthly debt payments. Monthly payments would be $0. We'll have no CC payments, and car will be paid next month. No SLs. No other debts, except for the unpaid medical collection.
Employment (for those who are employed). I have been working for the same company for 12 years come May. Been with the industry for just as long. I have been self-employed for 13 years come July for the same business, but really don't want to factor that in.
Assets/Reserves. We are a little nervous here. We have a $30k CD that matures in August. We also have about $8k in a 401(k), but I refuse to check the statement with the way things are. Probably closer to a No-Oh-One-K. We'll probably have about $5k in cash sitting around in checking or savings by then.
Location. Looking at Fairfax Co. VA. Specifically, Burke or Fairfax areas.
Property. Single Family.
Value. Really uncertain to the values. We are spending time on Zillow and Trulia (sp?) and are confused on the affordability calculators. Est. $300-$450k. Pretty sure $450 is the high-end.
Occupancy. Primary residence and first residence.
Transaction Type. Looking for a traditional 30 yr fixed.
We really want to take advantage of this tax credit. Our in-laws own the house we are in now as an investment property and are thinking to rent it out to other family members. It is our cue to leave. And with prices so low, we really don't want to pass up this opportunity to buy.
We are nervous about buying though. Prices are so high in this area and I'm afraid our income is too low, relatively speaking. What type of programs are out there for us (BTW, we never had the opportunity to serve)? I really am looking forward to learning now.
What price range are we looking at?
What programs are available, or do we ever want to go that route?
With the current market, what down payment is preferred?
03-11-2009 08:29 PM
It looks like you should qualify for around 3200 per month payment going by the FHA 43% total debt ratio. For that money you should easily be able to find a house in the mid 300's It is a smart decision to not base your buying power on the self employed income for 2 reasons, self employed makes all loans a little harder to get done, and you know you are not overextending and are leaving extra money for unexpected expenses, etc.
I would try to keep at 3K or under payment (maxing the total backend ratio on just the mortgage will make the underwriter a little jumpy) but it should be OK in either case. the UW will see the SE income anyways when they request taxes so they will have good compensating factors for high front end DTI.
03-12-2009 06:39 AM
03-12-2009 07:37 AM
Thanks Mickie for your help.
I've seen the same ratios, esp. with 43% being the high-end, on several calculators. Is the 43% policy for FHA? Have they been known to insist on less? I suppose it would also depend on the lender, maybe?
Aside from the down payment, roughly how much on a $350k home would we have to fork out for closing and other costs associated with buying a home?
I've helped a couple business owners with their corp. taxes and personal taxes leading up to their home purchase. I've seen exactly what banks ask for. It is a pain in the rear-end to get all of the P&Ls, balance sheets, etc. ready at the last second. I really don't want to go through that for myself. What a pain it was.
FHA is 3.5% down I would look into the nada program as well, that has no closing costs and rates below 5
03-12-2009 09:36 AM
03-12-2009 11:01 AM
03-12-2009 01:29 PM
Thanks guys. Those costs are higher than I thought they were going to be, by double (in my mind anyway). Maybe with the economy and perhaps with a desperation to sell, we could hammer out a good deal. It appears I still nead to read and do some homework.
You are allowed to ask for up to 6% in closing costs from the seller but alot of banks/lenders put a max of 3%. A good chunk of your closing costs comes from the fact you are required to pay a years worth of property/school taxes ahead of time so theres $3,000-6,000 right there
03-12-2009 01:49 PM
I just closed on a home in the City of Alexandria and I can tell you that closing costs in the DC metropolitan area are higher than you would expect. Make sure you account for state & county transfer taxes at closing which set me back over $2500. Also with the prepayment of a minimum 3 months property taxes, you are looking at probably another $1000. Make sure you get a GFE from several lenders before allowing them to pull your credit and start comparing.
03-12-2009 02:33 PM