Two Students one PT JOB good credit, first time homebuyer...Please HELP!!

[Salukis]

Shane, Dallas and all you other experts here...any help/advice would be appreciated.

We are in Illinois

Background... I am a 28 y/o , college graduate finishing up my masters right now. I work part time as a server at the same place for 8 yrs and am seeking full time employment. Since I have found this site I have raised my crdit to 625 tu 675 equifax 638 equiarian. I have several disputes still pending and expect my middle score to be around 650.

She is a 24/ yo med student with excellent credit history 725/715/690. She is not allowed to work while in school but gets considerable money from student loans. We have plenty of money through student loans and family to pay 600 monthly rent payments.

We are getting married at the end of June and want to buy a house. For what we cant rent for 850 we can buy for around 500-550. We are unable to find a nice house to rent, but there are 1000's to buy.

We have no recent inquiries on our reports so we want to be careful and shop around before we let a bank do an credit app on us. She has a uncle with great credit and plenty of income who will co-app, co borrower or do whatever it takes to help us get a mortgage he says. Some banks have said this is good while others said the rules have changed and since he already has a mortgage it will be tough for him to take out another one for us since he will not be living there.

I have been a avid reader of this board and see there our downpayment assistance programs out there along with FHA. So are we better off waiting until we are married June 28th to start applying for mortgages, or can we start now. Will we qualify with my low income 8yr work history as a server if I dont find full time employment first. Is FHA easier to get approved for with low no income. Some realtors have told us there are a few banks in the area that will work well with med students. How can her uncle help us best. Shane the mortgage guy or anyone else please feel free to give us any advice you have or feel would be helpful. Sorry for the long post but I wanted to be able to give you a clear picture of what is going on.

Message Edited by Salukis on 05-07-2008 08:39 AM

[DallasLoanGuy]

You can't buy alone unless your part-time income will support the mortgage..

Uncle can co-sign with her if he has the income to handle two mortgages. This is frequently called a 'kiddie condo' loan(doesnt have to be condo, house ok).

That is the only thing I can think of.

[Anonymous]

You probably won't like my advice, but FWIW ...

WAIT to buy a house.

You've both got so much going on that there's no reason to rush into a major financial commitment. 

WAIT until after you're married next month (congrats, by the way ).  There's probably enough hubbub with the wedding that you don't need the headache of shopping for a house and running the gauntlet for financing and closing.  Plus it doesn't matter how long you've been together, being married takes a certain period of adjustment.

WAIT until you've both finished grad/med school.

WAIT until you've each got an income that can support a mortgage payment plus all the costs that go with the joy of homeownership (repairs, maintenance, lawn, appliances, etc.).

WAIT until your credit scores are higher.  Hers are good, not excellent.  A lender will use the lower of a couple's middle scores, which will probably be yours.   

WAIT until you can do this without Uncle's help.  It was very nice of him to offer to cosign, but if he asked me for advice, I would say NEVER cosign.  It will most surely lead to touble, and your family Thanksgivings will not be the same.

You're both young and you've got great futures ahead.  Spend some time settling into adult life and then you'll be better positioned -- both emotionally and financially -- to buy a home.

JM very very HO. 

[Salukis]

Thanks for the honest reply masdeocho.

We talked with a bank yesterday that deals specifically with Med Students. They have a program set up with a %100, balloon loan that is fixed at 6.1 for 5 years and they keep it in house. No mortgage insurance is required. Only house insurance and taxes will be escrowed. They said with our decent credit and lack of income it will definately take her uncle to help us out. Student loans don't count as income so our debt to income ratio is way off even though we have very very limited bills---4 credit cards monthly payments less than $25.

Does this program sound like a good deal or are there any other better programs that may be better like FHA or something that would get us down payment assistance.

I know masdeocho felt that renting may be a better option but for what we can rent for 850 we can buy for 600. And we really dont want to live in a dump that we can rent for 600. My personal friend who is a banker felt that if we can afford the payments and get approved it is a win win situation because we are bound to gain 15-25 percent in the next two years.

Anymore opinions or help would be appreciated.

[DallasLoanGuy]

I don't know of any other programs that will work.

FHA is out unless uncle has the income to help you.

[Anonymous]

OK, just one more post by me and then I'll shut up.  I'll leave it to the mortgage experts like DallasLoanGuy and others.

The words 100% and balloon scare the heck out of me.  Home prices are dropping in some areas so it wouldn't take much for you to be upside down on the mortgage in a year.

What happens to the 6.1% rate after 5 years?  What does it balloon to?  Or are you paying interest only for 5 years?

I'm not sure where the $600 figure comes from.  Does that include PITI, repairs, yard, maintenance, pest control, etc?  Houses are expensive beasts once your name is on the title.

Finally, I didn't understand what your banker friend meant when he said are going to gain 15-25% in 2 years.    It can't be the value of the house -- they just don't appreciate that fast.  Did he mean your net worth, or your salary , or ...?

I'll M M O B now ...

Message Edited by masdeocho on 05-08-2008 04:14 PM

[Salukis]

Dallas wrote: I don't know of any other programs that will work. FHA is out unless uncle has the income to help you.

What do you mean by "unless uncle has the income to help you"...do you mean that he would have to lend us money for down payment, or that he has to have good credit?

Would FHA work with us with a super high debt to income ratio. What are some of the benefits of FHA opposed to a regular bank.

Message Edited by Salukis on 05-08-2008 02:02 PM

[Salukis]

masdeocho,
Once again thanks for the input, please don't m y o b, we enjoy and respect your advice.


"The words 100% and balloon scare the heck out of me. Home prices are dropping in some areas so it wouldn't take much for you to be upside down on the mortgage in a year."

Agreed but we are looking in nice areas and are willing to take the risk. Even if we don't gain allot of equity, we are willing to rent the house to other med students when we leave in 2 yrs.

"What happens to the 6.1% rate after 5 years? What does it balloon to? Or are you paying interest only for 5 years?"

She told us that in 5 yrs it is renegotiable in 5 yrs, they figure by that time a Dr opposed to a med student (resident) is in a much better position to qualify for a mortgage.

"I'm not sure where the $600 figure comes from. Does that include PITI, repairs, yard, maintenance, pest control, etc? Houses are expensive beasts once your name is on the title."

Good thought here, we don't have allot extra but we have figured some of these cost. We have lots of family (who are carpenters etc) that are willing to work for free for, and a lowes card. Not the best situation but better than paying roto-rooter for clogged drains. We understand this can be an expensive endeavuer. PITI?


Finally, I didn't understand what your banker friend meant when he said are going to gain 15-25% in 2 years. It can't be the value of the house -- they just don't appreciate that fast. Did he mean your net worth, or your salary , or ...?

Well he said he would "assume" the that the housing market would rise and we would gain equity that way. But even after making payments for two years if we broke even we wouldnt have our feelins hurt.

[bluevalentine78]

PITI - Principal, Interest, Tax, Insurance.

If youre using some of those online mortgage calculators to figure out what your monthly payments will be, you're not figuring out what your actual payments would be.

you have to pay property taxes every year on your place. Lets say property taxes add another $1200 a year, thats another $100 a month.

And you have to have insurance on your place. Lets say thats $500 a year. That $40 a month.

so all of a sudden you have to tack on another 140 a month onto your mortgage so your "what I can rent for $800, I can buy for $600" now becomes "what I can rent for $800, I can buy for $740 before any sort of routine repairs" and your savings isn't as impressive and based on actual figures, might not exist at all.

[DallasLoanGuy]

---

Salukis wrote:
Dallas wrote: I don't know of any other programs that will work. FHA is out unless uncle has the income to help you.

What do you mean by "unless uncle has the income to help you"...do you mean that he would have to lend us money for down payment, or that he has to have good credit?

Would FHA work with us with a super high debt to income ratio. What are some of the benefits of FHA opposed to a regular bank.

Message Edited by Salukis on 05-08-2008 02:02 PM

---

You don't make enough to qualify.....

I mean that uncle will have to basically qualify for the house with all of his debt included. Because you have such a low qualified income for a home loan. If uncle has a high debt ratio..... then he can't help.

FHA is a full doc program for peopl who can VERIFY income...... it is not some magical program for people who are about to get out of school and their income is about to go up 500%