Question for my cousin

CS800 · ‎03-31-2015

Ok mortgage experts. I have some questions from my much younger cousin who is looking into purchasing a house this month

Middle FICO 680

Income 80K

Monthly debt : $2000

Last late: Nov 2014 (mistake since he was travelling, he was 30 days late)

1 public judgement 2014 satisfied (shows only on EXP and EQ)

util 15%

About $120k in credit (credit cards/store card)

I have been out of the mortage arena for a while now but wanted to provide some support as it is his first house.

He is looking at a $360K with 10% down.

What's the best options for him. He is afraid that the satisfied judgement might hurt him.

Anonymous · ‎03-31-2015

@CS800 wrote:
Ok mortgage experts. I have some questions from my much younger cousin who is looking into purchasing a house this month

Middle FICO 680

Income 80K
Monthly debt : $2000

Last late: Nov 2014 (mistake since he was travelling, he was 30 days late)

1 public judgement 2014 satisfied (shows only on EXP and EQ)

util 15%

About $120k in credit (credit cards/store card)

I have been out of the mortage arena for a while now but wanted to provide some support as it is his first house.

He is looking at a $360K with 10% down.

What's the best options for him. He is afraid that the satisfied judgement might hurt him.

Without a co-borrower, he is going to have a very difficult time being approved for $360k w/ $2000 in monthly debts. His debts alone are already 30% of his DTI.

What exactly are his monthly debts? Where is he looking to purchase?

CS800 · ‎03-31-2015

Monthly debts are : car payment, student loan, credit card, motorcycle loan, cellphone, cable/internet, car insurance, renter's insurance

He is looking in MA about 1 hour east of Boston where it's 'cheaper'. The house he likes right now is listed I think at $325K.

what's a good DTI that loan officers look at?

Anonymous · ‎03-31-2015

When talking DTI, you will only want to factor debts that appear on your credit report. These include loans (mortgage, student, personal, etc.) and any minimum payments on revolving credit accounts. Utilities and insurance need not be included.

A good rule of thumb is your front end DTI (house payment only) should be 28-31% or less of gross monthly income, and the back end DTI (house + other debts appearing on credit report) should be 40-43%.

In this instance, your cousin will want to stay at around $2850 monthly for all debts, including $2000 or less on his house payment.

Anonymous · ‎04-01-2015

I don't know if this deal is gonna fly.

Using the quicken calculator I figured his house payment at 2100 and some change per month. (20% down of 360k =72,000 big ones) @ 3.7 APR

If I calculated correctly his front end DTI is 32% (2100 house payment / 6666 gross monthly income.)

I didn't bother with the back end.

Does he have the 72k for the downpayment on hand?

Now they might float the note, buy my real world experience says this house is going to be a strain for him

Anonymous · ‎04-01-2015

@Anonymous wrote:
I don't know if this deal is gonna fly.

@Using the quicken calculator I figured his house payment at 2100 and some change per month. (20% down of 360k =72,000 big ones) @ 3.7 APR

If I calculated correctly his front end DTI is 32% (2100 house payment / 6666 gross monthly income.)

I didn't bother with the back end.

Does he have the 72k for the downpayment on hand?

Now they might float the note, buy my real world experience says this house is going to be a strain for him

This^^^^^.. I agree.. Factor in taxes and that will be something...