What are my chances of getting a mortgage?

[Anonymous]

1. Mortgage Credit Scores:  

Experian 654

Equifax 651

Transunion 698

2. Credit Negatives: 

1 Collection - utility account $240 unpaid DOFD 8/2013 reports to experian and equifax, but not transunion.

3. Gross Income.  $60K

4. Source of income.  Where is the income coming from? List each source.

• Employment, Full time w2  hourly.
• Consistent overtime if you wish to take it.

5. Monthly debt payments. 

Car loan $272

Union Dues $60

Revolving $82

IRS payment plan $150

6. Employment (for those who are employed). 

• Type of employment: Full time W2 employment 2 years 5 months
• How long 2 years 8 months in industry

7. Assets/Reserves. This is to determine how much you could potentially have as a down payment and also as reserves to help qualify (for example if your debt to income ratio is high this could help qualify you anyway).

• Savings, $2000
• Checking $900
• 401k $9K

8. Location:  This is to determine govt guaranteed loan limits, what special programs might be available for you, how much property taxes & homeowners insurance will likely be, amongst other items.

• State TX
• County(s) Dallas
• City or zip(s) 75043

9. Property Description: 

    Single family home

10. Property Value. 

• Purchase transaction: I would say between $220k to $250K

11. Occupancy. 

• Primary residence- My wife, my self and our three kids. I will be the only one applying for the loan, since my wife will not qualify. Her income is $35k a year though.

12. Transaction Type.  First home purchase for either of us.

I also have a small business (LLC) on the side that my father and I just started, but did not include it under employment since there has to be a full two years of history on it. We brought in $14k in 4 months. The parnership is set at 60% me and 40% my father.

I'm currently paying $2k a month for a 2 bedroom apartment and would really like to get a house instead.

[Anonymous]

• Primary residence- My wife, my self and our three kids. I will be the only one applying for the loan, since my wife will not qualify. Her income is $35k a year though.

[Anonymous]

12. Transaction Type.  First home purchase for either of us.

I also have a small business (LLC) on the side that my father and I just started, but did not include it under employment since there has to be a full two years of history on it. We brought in $14k in 4 months. The parnership is set at 60% me and 40% my father.

I'm currently paying $2k a month for a 2 bedroom apartment and would really like to get a house instead.

[Anonymous]

Also, you mention your wife's credit isn't great. Texas is a community property state, so her debts will count towards your DTI, even if she isn't on the loan.

Your collection is for utilities - yes it's old, but you might get told to pay it. DO NOT PAY IT YET. Just be prepared for the expense.

[Anonymous]

Okay, so my scores are currently in the low range  because i have several cc's with balances, but most of those balances will be paid off by the time that i apply for the mortgage, which will be in about 7 to 8 months. For cash reserves, we can probably save up $10K by then. Also, i recently doubled my 401K contribution from 6 to 12%. Employer only matches 6%. Would i be better off putting that money in my savings account or leave as is?  In regards to my wife's debts, she doesn't have any. I pay all of the bills. She buys groceries and things that we need around the house. Would that count against DTI? Also, since i will be the only one applying for the mortgage with my $60k salary, would they look at my wife's $35k salary as a means for approval?

[ShanetheMortgageMan]

If your wife isn't going to be on the loan then her income wouldn't be used to qualify.  An underwriter may consider it has a minor compensating factor, but the extra income you make from your LLC (which can't be used yet) would be a better compensating factor since it's income that a borrower on the loan receives (you).

Your debt to income ratio is on the high side, low 50's, but that can still qualify for FHA.  FHA doesn't require any reserves (I'm sure BlueShark means well, but the information he/she is saying about qualifying isn't too accurate), but it does require a 3.5% down payment ($8,750 on a $250k sales price).  Of course having extra reserves certainly will put you in a more comfortable financial situation.

Texas has a down payment assistance program (https://www.tdhca.state.tx.us/homeownership/fthb/down-payment-assistance.htm) but it appears your household income will exceed the max limit (there is a table on that website).

As far as putting more money into the 401k vs. saving it in checking/savings.  The most you should need for FHA is the down payment + closing costs (which on that price in Texas, could very well be $10k+, as property taxes are expensive in Texas, so the escrow account part of your closing costs will be a significant amount).  If you can borrow from your 401k for the down payment/closing costs, then putting more money into it would still allow you to access the funds in case it's needed for the purchase.  Worst case is you don't end up buying, and you've put more money into your 401k for retirement (assuming stocks don't tank).

[Anonymous]

I decided to move forward with the mortgage process and am now in the processing stage. It has been quiet the experience so far. The processor said everything looks good and just asked for minor documents. Hope everything works out.

[Anonymous]

Well ladies and gents, everything is a go. I close on my home on friday!!! I still can't believe it