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Self Employed Seeks Mortgage in Gilbert, AZ in June 09

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Anonymous
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Self Employed Seeks Mortgage in Gilbert, AZ in June 09

I know I'm way early, but due to a few misconceptions on my part, I need to get my cc balances down (and yes leave them down) to raise my credit scores. I'm self employed and have been in the same field since 2002. There were 2 periods where I worked some or all of the year with another company who paid with paystubs but that was more than 2 years ago so I think that's in the past.
 
I will be applying on my own and currently my scores aren't good. They range from 533-588, but I have a few corrections to make and just paid one card totally off. (leaving it open, yes.) Since I've got a year and I plan to apply for nothing and do nothing that triggers any other negativity, I'm hoping that having almost 100% (or no more than 20% of my CLs utilized at the most) and getting the inaccuracies gone plus another year of on time payments and not runing up the credit can raise my score at least to the low 600s. I'd like for 650-680 but I'm not asking for miracles.
 
At this point, other than monthly and quarterly payments to the IRS and my rent/car and renters ins, I have no other monthly obligations once the CCs are taken care of, so my DTI should be fairly low. My current rent is $1138 and I make between $3-$4k a month.
 
I guess my questions are
 
What can I do to get approved for FHA loan or similar with low downpayment?

Say I get approved for up to 180 and then get a downpayment grant (if they're avail next year) for 10%The up to approval is the actual amount of the loan, not counting downpayment or grants, correct?
 
My mother mentioned she'd like to help me out but I don't know if she was serious or how much. Probably no more than a few K at most. I guess I need to know about gift programs.
 
Is it hard to get sellers who are willing to accept the first time homebuyer programs?
 
I've paid my rent on time every month for the last 2 years. Will a letter and cancelled checks showing the amount do anything?
 
I'm asking some of these because I want to know what I have to make and how much I'd have to put down to get a 3-4 bedroom in Gilbert that's not too old and has a pool. Right now they're in the $160-189K range but I'm anticipating them coming down in the next year or so.
 
Let me know if I left anything out. Work keeps interrupting me.
 
Karen
Message 1 of 7
6 REPLIES 6
DallasLoanGuy
Super Contributor

Re: Self Employed Seeks Mortgage in Gilbert, AZ in June 09

if your debt ratios are in line and there arent any lates in the last 12 months.... you dont need to do much. just get the scores up a little since we now charge a little extra in rate for low scores.
Retired Lender
Message 2 of 7
Anonymous
Not applicable

Re: Self Employed Seeks Mortgage in Gilbert, AZ in June 09

That's my problem. I'm trying to find out what the DTI ratios are. I believe for FHA they're 28% but I've got no idea for conventional. If my car holds out, the only debt I'll have next year is the mortgage, insurance and taxes. I'm trying to do whatever I can to be able to afford what is right now around 175-185K. I'm trying to come up with 20K down but could be more like 18. I'll have a few thousand in reserves at the time of closing also. Right now, cause I'm paying my CCs down, my scores are not quite 600 but my util is I believe around 80%, so I know when everything updates in another month or two, that should help my score shoot up because I just paid 2 off. I'm aiming for 650-700 if not higher by then. When I bought my last house in MA in 2002-03, it was a foreclosure and the bank if I remember right, was being very stubborn then. They wouldn't take much less than the asking price and still roll my closing costs in.
 
I know things are different now, will be different in a year and hopefully are different in Arizona, but I'm not factoring any of that into my calculations.

Also, is it possible (I mean right now, I know this may change after Jan or by then,) to pay a point or two at closing to get the interest rate down? If the market doesn't fall like I'm hoping, I was thinking if I had enough extra to buy down from 6% (or wherever I qualify for with my credit in a year), I could get 1/4-1 point knocked off the rate, if they still do that. I'm also going to see if there's any way to pay less than 20% down and avoid paying PMI. So far, it doesn't look like it. I'm marginal on my DTI w/ 6% APR and 20K down with the market the way it is now. I don't want to count on any down payment assistance either just because of the bad experience I had before. I'm planning to work as much as I can, save as much as I can and cut back wherever possible. Anything I'm overlooking would be greatly appreciated.
Message 3 of 7
DallasLoanGuy
Super Contributor

Re: Self Employed Seeks Mortgage in Gilbert, AZ in June 09



Kareninaz wrote:
That's my problem. I'm trying to find out what the DTI ratios are. I believe for FHA they're 28% actually they are 31/43. the first number is housing ratio and the second in total ratio with other obligations included. automated underwriting can go over those limits. but I've got no idea for conventional. If my car holds out, the only debt I'll have next year is the mortgage, insurance and taxes. I'm trying to do whatever I can to be able to afford what is right now around 175-185K. I'm trying to come up with 20K down but could be more like 18. I'll have a few thousand in reserves at the time of closing also. Right now, cause I'm paying my CCs down, my scores are not quite 600 but my util is I believe around 80%, so I know when everything updates in another month or two, that should help my score shoot up because I just paid 2 off. I'm aiming for 650-700 if not higher by then. When I bought my last house in MA in 2002-03, it was a foreclosure and the bank if I remember right, was being very stubborn then. They wouldn't take much less than the asking price and still roll my closing costs in.
 
I know things are different now, will be different in a year and hopefully are different in Arizona, but I'm not factoring any of that into my calculations.

Also, is it possible (I mean right now, I know this may change after Jan or by then,) to pay a point or two at closing to get the interest rate down? If the market doesn't fall like I'm hoping, I was thinking if I had enough extra to buy down from 6% (or wherever I qualify for with my credit in a year), I could get 1/4-1 point knocked off the rate, if they still do that. yes I'm also going to see if there's any way to pay less than 20% down and avoid paying PMI. So far, it doesn't look like it. I'm marginal on my DTI w/ 6% APR and 20K down with the market the way it is now. I don't want to count on any down payment assistance either just because of the bad experience I had before. I'm planning to work as much as I can, save as much as I can and cut back wherever possible. Anything I'm overlooking would be greatly appreciated.



Retired Lender
Message 4 of 7
Anonymous
Not applicable

Re: Self Employed Seeks Mortgage in Gilbert, AZ in June 09

You just made my weekend! Thanks. I'm fully aware that things may change substantially either in my favor or not between now and the time I apply, but with the ratios you provided plus confirmation that underwriting might be able to tweek them slightly, I should be able to afford the house. Especially since my income's come up in the last 3 years and my rent's more than the mortgage will be. I have no late payments at all and plan to keep it that way.
Message 5 of 7
Anonymous
Not applicable

Re: Self Employed Seeks Mortgage in Gilbert, AZ in June 09

Dont move to Mississippi .. I tried to buy a house that was a shack in the woods for 59000.00 my DTI was 19% at the time I also own my own business and make around 4200 a month..  Since being turned down for a house I have since then aquired a loan for a 10,000 dollar truck, a CLI on my cap One now at 2000.00 , 2 store cards 400.00 and 300.00 limits.. Still cant get a walmart card though.. XXXX GEMB... LOL  Anyway it is sort of a trick when you own your own business , if you show a good amount of adjusted gross income you will probably get the loan but you will owe the IRS out the butt, If you write off everything that you use ( like I do in my business) your adjusted gross income is low and you wont get approved... Banks do not take into account that if you run your business from home you can write off 1/3 of utilities and rent or home note.. So they donot even take that into account...
Also in Mississippi I have learned that pre approval is a joke, it is something mortgage people say to get you in the office so they can run your scores and see how well they can rip you off..
Also in Mississippi if you plan to get further screwed go and try to rent an apartment when your self employed you will get what they call conditionally approved ,, This is where they charge you about 500 or 600 dollar deposit + the First months rent + an additional deposit for get this a sub prime renter... LOL WTF is that.. .
I have been wanting to move fo a few months now because we need a better school district for our daughter , if you dont believ me look up jackson MS public schools, they are a joke.. I did get a call this morning early from a little girl sounded every bit of 15 years old she said I am with XXXXXX Apartments and I noticed you applied on line I said yes I did.. She said we noticed you own your own business and I said yes I do ... She then said we would really like to see you actually working for someone in order to approve you for a 6 month lease at our apts.. I said I do work for someone ( MYSELF) she then said thats not really working for someone.. WTF  did people just get STUPID ovenight while I was asleep... I ended the converstion with Let me call the Public Service Commisiion and The attorney general's office and ask them if I am Considered SOMEONE if I work for myself..
Like I said Do Not move to Mississippi  .. ( Maybe this is why we have alot of homeless people in Jackson)
Message 6 of 7
Anonymous
Not applicable

Re: Self Employed Seeks Mortgage in Gilbert, AZ in June 09



bevy1234 wrote:
Dont move to Mississippi .. I tried to buy a house that was a shack in the woods for 59000.00 my DTI was 19% at the time I also own my own business and make around 4200 a month..  Since being turned down for a house I have since then aquired a loan for a 10,000 dollar truck, a CLI on my cap One now at 2000.00 , 2 store cards 400.00 and 300.00 limits.. Still cant get a walmart card though.. XXXX GEMB... LOL  Anyway it is sort of a trick when you own your own business , if you show a good amount of adjusted gross income you will probably get the loan but you will owe the IRS out the butt, If you write off everything that you use ( like I do in my business) your adjusted gross income is low and you wont get approved... Banks do not take into account that if you run your business from home you can write off 1/3 of utilities and rent or home note.. So they donot even take that into account...


Yes, this really bites!  I am fully expecting to be shelling out a chunk of change as high as $10k to uncle sam this year forfeiting many of my deductions in order to show income that will qualify me for a a mortgage.  The one thing they do allow you to add back into your income is any "Depreciation". It does NOT make sense that they won't allow you to add back in the deductions for utlities, portion of your home used to run your business, etc - as this is simply an allowable deduction and not a decrease in your income or out of pocket.  Makes NO sense. Self-employed really get penalized, not to mention the fact that we pay more taxes to begin with. Argh!
Message 7 of 7
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