12-21-2010 12:47 PM
Hello All, its been very educational reading these boards for information.
Six weeks ago my wife and I decided our rental was just too small and we needed to move. Rent on houses we liked was going to be in the neighborhood of $1600-1800/mo, so we were encouraged to look into buying a house. I hadn't considered it for two reasons, 1) Potential of moving across the country in the next 18-24 months, 2) Owning a business, knowing what others have gone through with that.
My wife and I have about 50% utilization on our revolving, and she has some old hospital collections reporting.
Our DTI on the backend was about 52.5%. We were prepared to pay off a car loan to get that ratio down if needed. However our mortgage guy submitted without paying the car off first. Between my personal and business accounts, I have about the same amount of cash to our revolving debt balances, since all my clients are trying to get orders in before end of year.
FHA automated underwriting approved us. I want to celebrate, but I'm curious what to expect next? How confident should I be about things at this point?
12-24-2010 11:20 AM
52.5% is pretty high for the back-end, it may require additional underwriting approval by an underwriting manager. I'd check with your loan officer if they have any overlay guidelines such as that. However if you pay off the car loan, then your debt ratio should sink below 50%, and you should find the approval process a little easier.
Why might you move out of the area in 18-24 months? Realize that there are costs involved in selling a home. If you have no desire to become a landlord and rent out the home if you need to move across the country, then you'll want to sell the home. Usually typical costs are about 1-2% of the sales price for the sellers closing costs, and then another 6% of the price for the real estate agents commission (both the buyers & sellers combined). If the home goes up in value, then those costs are just deducted from the sales price, and after your mortgage is paid off, hopefully you'd have netted some profit, or worst case just break even. However if the home's value remains the same, or declines, then you may find yourself having to come in with funds in order to sell the home. Add those costs to the amount of rent you'll pay for 18-24 months, determine what type of income tax breaks you may get by owning the home (paying mortgage interest & property taxes), and use that to determine if it'll be better for your family and it's finances to rent or buy.
01-23-2011 08:07 PM
Just an update - the only real 'headaches' were the 203K part, getting bids in, LOE for my wife when she stopped working to go to school, and verification of some deposits in my business account - they seemed very at random and had no rhyme or reason (not questioning a 7k deposit but a 550 one). Other than that, I admit it was less of a headache that I had prepared for it to be. We closed on the 19th, and the renovations have begun.
We didn't have to pay off the car loan, in fact, after the rescore, where we both had mid-scores over 640, the credit was never an issue. They didn't pull right before closing either (both our scores have jumped 40 points since too).
Our renovations go well beyond our 203K writeup, and the appraiser gave us 40K equity in the property with the proposed improvements, our total improvements should net another 30K conservatively...so this story has a happy ending and we are happy we did the K loan. Yes, my interest rate is a little higher than I'd like, but with the likelyhood of us only staying there 2-4 years (I will try to hold onto it and rent out if possible, perhaps have a home in Cali as well as this one), I'm not worried. Once I have 20% equity I'll refinance to a conventional.
Anyway, i think FHA automated underwriting approval is as close to a golden ticket as you can get nowadays, we had older collections, a high DTI, but with good cash reserves, 401K, and evidence of improving income, our process was fairly easy. "No news is good news", we didn't really get any more verification requirements until a week before closing, and they were easy to get (invoices and check stubs).
01-24-2011 07:27 AM
Congrats! Which lender did you go with? If you don't mind me asking.
04-11-2012 03:58 PM
Anyway, i think FHA automated underwriting approval is as close to a golden ticket as you can get nowadays,
any loan monkey can make the computer spit out an approval when you have zero chance of qualifying.
i only mention this for others reading your great story.... let's not get their hopes up.
04-11-2012 04:03 PM
Do you realize that you dug up an old post? When I was applying for this loan, it was a pretty significant indication. Aside from a few some UW requests, all went perfectly smooth. So my "great" story had a great ending.
As always, your mileage may vary.
I don't understand how people fail to evaluate the time in which information was posted. I don't heed computer purchasing advice from a thread dated 2006, that would be pretty dumb wouldn't it?
04-11-2012 06:44 PM
Sometimes, people surf in after having Googled something, and simply don't notice the teenie tiny date under the header... it's a common mistake. Once it gets bumped up, it's readily assumed (even by the regulars) that it's a recent/relevant topic. An honest mistake... Happens to everyone.
It's a good idea, though, to just point out that the topic is old, keeping everyting friendly, and respectful.
Friendly, Supportive & Respectful
"However gradual may be the growth of confidence, that of credit requires still more time to arrive at maturity” ~ Benjamin Disraeli