06-30-2014 07:25 AM - last edited on 06-30-2014 09:40 AM by 09Lexie
I own a home in a different part of the state I live in. The market was HORRIBLE when I relocated for a new job last year. I am renting. I am concerned that I may need to sell in order to qualify for a purchase. DH declared BK in 12 so I am assuming it is just me as far as trying to obtain a mortgage. I am interested on Shane's take on my situation. I am a lawyer and my SL's are 953 a month. Here is my information!
*I have 3 pif collections that are medical related. I have a modification of my home loan in 12. I have paid on time since that time.
*Is it better to save for a downpayment or pay the cars off?
*We will have CS obligations for years to come. Youngest we support is 14.
Thanks for you input and consideration.
I started a new thread for you for better exposure
07-01-2014 02:09 AM
Sounds like your husband filed a Ch 13 instead of a Ch 7? If so, since it's been over a year since filing, and if he's had perfect credit since and all payments to the trustee have been on time, then it's definitely possible for him to be on the new loan if you go with FHA financing. Without him, and if you aren't renting out your old home, then with just you on the application your debt ratio would be too high to qualify (if you could lower your own payments by about $300/mo then you'd be in a better position to qualify by yourself). Your bonus couldn't be used until you've received it for 24 months, so just about a year shy... otherwise with the bonus income you should be good to qualify by yourself in your current situation.
07-02-2014 03:03 AM - edited 07-02-2014 03:09 AM
my vantage score is 786. should i try to prequal with someone to see where i stand? better to pay off cars or save for downpayment? thanks!
The vantage score doesn't have any meaning in the mortgage lending world (or anywhere). It is a FAKO score that isn't used by lenders.
You can boost your score quickly by paying off debt on your revolving accounts (cc's). What are the credit limits and the balances on your cards? Ideally to optimize your FICO score you want all credit cards to report a zero balance except one card and its balance should be less than 10% of the credit line for that card. FICO gives you points for having a zero balance on your card. That is the quickest way to boost your score.
I noticed that Shane said you have a better chance by reducing your payments $300/month. That will help with your overall DTI. You can do that by paying off one of the vehicles in your name. Probably your husband's vehicle if possible. Or your's if the combination of your vehicle payment and the cc debt is $300 per month or more.
The amount of house you can afford is a percentage of your gross income. The total debt you have can impact how much home you can afford as there is a max ratio allowed for total debt. On a conventional loan the max total debt ratio is 45% of your gross income. For FHA the max is 56.99% but many lenders won't go to the max, they limit it to 50%. So you have to work the figures to see where you are now and what it will take to get below the max ratio amount. These are total debt ratios, the housing ratio is lower.
Naturally, having a larger down payment helps too. If you are going FHA so your husband can be included, if you put down 10% or more, that is considered a compensating factor and will help in the overall approval of your file.
07-02-2014 05:09 AM
I was curious to see what Vantage had for me. I did the number times .86 like I've seen for a conversion to FICO which is obviously speculative at best. It was about right and between CK and MYFico. Thanks for your insight. I appreciate it. My car loan is 7700 and DH's is 15,500 or so. I would have better luck paying mine off all the way but that wouldn't get me 300 lower by the time I'd want to buy a home. So do I pay mine off fully and then throw all the money I can at his and then refi? That would bring down the payment?
I need to figure out what my total outstanding credit would be if we build the home we want. I guess add up all payments and then compare to salary? Never done that. THanks so much for your input Starting Over 10. I appreciate it.
07-02-2014 08:52 AM - edited 07-02-2014 08:53 AM
Yes, the very first thing to do is make a list of each card and their overall limits plus their balances and the min required payment.
Naturally not having the $205 car payment you currently have goes a long way toward reducing your overall debt.
You may be able to get to the $300 by paying off some of your cards down to zero (DO NOT CLOSE THE ACCOUNT). Closing the account will hurt you. Keeping the credit line open with zero balance helps your utilization and therefore helps your score.
What rate is your husband's car now? Is it a high rate where a refi would make a big difference? If so, then see what you can do to refi into a lower payment if you have to go in that direction to get to the $300/month savings. Get the figures first before you start accelerating the payment on his car though.
07-02-2014 09:24 AM
Shane, thanks!!! i do rent the home @ 795 monthly. the mortgage is 748.18. does that help? his payments havent all been on time.
Is the rental income reported on Schedule E of your 2013 tax return?