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Want to buy a home but have a few questions

Established Contributor

Want to buy a home but have a few questions

Hello Family, I've been wanting to own a home for the longest.... I don't know anything about the process so please help me as mich as you can.......

 

 

1. Do all of my credit card have to have a 0 balance in order to be approved for a mortgage?

2. Do I have to show tax returns for the last two years or just show pay stubs?

3. What scores do I need to be approved?

 

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Frequent Contributor

Re: Want to buy a home but have a few questions


MssRemaa wrote:

Hello Family, I've been wanting to own a home for the longest.... I don't know anything about the process so please help me as mich as you can.......

 

 

1. Do all of my credit card have to have a 0 balance in order to be approved for a mortgage?   No

2. Do I have to show tax returns for the last two years or just show pay stubs? Yes, 2-3 years tax returns, and 2-3 months of pay stubs

3. What scores do I need to be approved?  Depends on loan type, property type, credit history     I would say nothing below 620; some lenders want higher and some will take less but with less your rates and costs are both prob going to be higher.

 


 

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In second year post 13 DC (12-28-15)
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Message 2 of 5
Regular Contributor

Re: Want to buy a home but have a few questions


MssRemaa wrote:

Hello Family, I've been wanting to own a home for the longest.... I don't know anything about the process so please help me as mich as you can.......

 

 

1. Do all of my credit card have to have a 0 balance in order to be approved for a mortgage? No, but you should have them at least under 29%, The Mortgage Lender will look at your Debt to Income level and in most cases it has to be under 40% range (including new mortgage payment)

 

2. Do I have to show tax returns for the last two years or just show pay stubs? They will ask for at least 2yrs, but if you don't have them the ML can request them from IRS with you signed permission. If you hadn't filed for whatever reason they will more then likely ask for a "Letter of explanation"

 

3. What scores do I need to be approved? Most lenders like a FicoMortgage score of 620 (they take all three and use the middle), however there are companies who will work with scores under that 620 window...you may have to do a little research to find them

 


Everything depends on what type of loan, what your credit looks like and I would also recommend checking out if your area has a "first time buyers" program.  I have found personally that when I contacted a mortgage broker and explained what my goal was they were very helpful..The one I worked with (4yrs ago) did a soft pull and gave me the straight poop on what I needed to do to buy my new house. All you can do is ask the folks who actually hand out the money for advice (don't tie their hands if they ask to do a pull...otherwise they can only guess)

 

 

Good Luck on your Journey!!

"Your past is the doorway to your future"

Dad's words of wisdom

Message 3 of 5
Valued Contributor

Re: Want to buy a home but have a few questions

I've owned my own home/condos for 25+ years, so a few things to note:

 

  1. If you carry high balances, make sure you understand the financial responsibilities of paying a mortgage.  Not everyone who wants to "own" a home can manage their finances well enough to pay for it properly.
  2. If you don't have IRS tax returns for 2 years, be cautious even if you can find a lender who will approve you with "no docs". Everyone I know who did a "no doc" mortgage in the past 15 years lost their homes because their secret income or assistance disappeared at some point.
  3. FICO isn't as important as having a realistic DTI and a realistic stable income.  If you don't have a stable income, you want to have at least 6 months of mortgage payments in the bank as a back up.

If any of these things strikes you as fact, start working on a financial plan first -- learn to put savings away and say no to spending unnecessarily, and work on making sure you can handle owning a home.

 

In the past 25 years of owning a home, I've had the following happen to me:

  • $15,000 emergency expense for a roof failure that insurance didn't cover (I fought for 2 years tho)
  • $6,500 when my AC and boiler BOTH failed at the end of fall
  • 100+ hours a year of doing work that my renting tenants never have to (cleaning gutters, mowing lawns, shoveling walks, replacing broken windows, repaving broken cement walks, etc).  I spend at least 2+ hours a week on my home maintenance and if I don't, my home will fall apart

Owning a home is nice and all, but in my area for the past 4 years, it was cheaper to rent than own, period.  Right now it's about break even if you have a good credit score and a good mortgage interest rate.  Some of my neighbors are paying ridiculous interest rates on their homes and they'd save $6000 a year renting -- or $60,000 over 10 years.

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Message 4 of 5
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Contributor

Re: Want to buy a home but have a few questions

You have to show 2 years of employment history in same line of work. 1 month pay stubs. There are lenders who will  take 580 fico on FHA loan and 620 for conventional. 

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