Seeking Pre-Approval

[imfinesse]

First of all I would like to thank everyone on this site for their wisdom.  I have been educating myself on my fico for 4 months and it has paid off.  I still have a ways to go but getting there.

9/08 eq 547 tu 515 ex  518

1/09 Eq 633 TU 630 Ex 603

Seeking to purchase single family home as primary residence for $450,000 with 5% down.  What are the rules with conventional loans and baddies (how many is acceptable?).  I am Concerned about my baddies so waiting until March to apply for baddies to drop off which will still leave 2.   Can anyone provide insight on when to apply for pre approval and my chances. 

To eliminate confusion – I currently have my primary residence and 2 rental properties.  I have a mortgage on my residence and one rental property.  If  I am approved I will move into the newly acquired residence and  turn my current residence into rental property.

Credit

Eq 633 TU 630 Ex 603

Neg in last 12 months 2-08 (1 -30 days, 1-90 days)  3-08 (1-30 days)  7-08 ( 1 – 30 days)

Annual Income

Salary $125,000

Bonus $31,250

Rental property $21,000

Monthly Debt

Primary Residence $1511 (plan to rent if approved)

Rental property – $850

Auto loans - $560 and $511

Employment

W2’d with employer since 2001 in industry since 1995

Asset Reserves

$25000 in Savings

$75,000 in 401k

Property Location

Jacksonville Fl

[imfinesse]

anybody???

[ShanetheMortgageMan]

Nice increase in 4 months time.

With $450k and 5% down that leaves $427,500 to be financed, and in Jacksonville, FL anything over $417k is considered a non-conforming jumbo loan and will need a minimum of 20% down.  However if you are willing to put the extra $10,500 down to make it a $417,000 loan amount then you would be eligible for conforming loan programs which have a lot easier qualifications than non-conforming programs.

If you were buying in North Dakota and financing $417k or less with a conventional mortgage you would be fine to just put down 5% and have a 630 mid score... but being in Florida, a declining market, you are going to need at least 10% down and at least a 680 FICO score with conventional financing... and since Florida is such a severely declining market, you might even be required to have a 720 FICO score.  These FICO score/down payment requirements are not loan program requirements - but are mortgage insurance provider requirements.  When putting down less than 20% and going with conventional financing, the mortgage insurance companies set the guidelines.

Let's say you met those already though... the next part is getting your credit approved in automated underwriting.  Automated undewriting has no black & white guidelines on what the acceptable amount of late payments are in any given period of time - it all has to do with the big picture.  The perfect combination of reserves, down payment, and debt to income ratio would make late payments as recent as a few months ago be a non-factor.  Then on top of that, again you would need to meet mortgage insurance providers requirements.  Most don't permit more than 1x30 in the last 12 months, although a few are OK with 2x30 or 1x60 in the last 12 months as long as all other parts meet their insurability requirements.

Lastly, in order to use the income from your primary-residence-converted-to-a-rental in qualifying for the new mortgage - conforming guidelines require you have at least 30% equity in your home in order to do that, and require an appraisal to determine how much equity you have (won't accept a tax bill, etc.).  How much is owed on your current home and what do you think it's value is?

[imfinesse]

This is extremely helpful information.  I may be ok with the aditional 10,500 but it sounds like the score is an issue. 

I owe 140,000 on the house and it last appraised for 280,000 when the market was good.  I would hope it was still worth about 220,000. 

[imfinesse]

Also this is a new construction home, is FHA an option?

[ShanetheMortgageMan]

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@imfinesse wrote:

This is extremely helpful information.  I may be ok with the aditional 10,500 but it sounds like the score is an issue. 

I owe 140,000 on the house and it last appraised for 280,000 when the market was good.  I would hope it was still worth about 220,000. 

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You are welcome

Duval's County FHA loan limit is $304,750 so it's quite a bit short.  At least you have the equity so you can use the rental income to help you qualify (debt to income ratio didn't look like it'd be an issue anyway)... but you are right, the credit score is the issue.  MI company guidelines could change but I don't think they'll get any easier for the next 12 months.