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What would you do?

New Contributor

What would you do?

I plan to apply for a mortgage through the NACA program in October of this year and this is my current situation.

 

 

I will need $11759 to buy my interest rate down to 0.0625% on a 15 year mortgage (I already have my MRF and payment shock covered and theres no downpayment or closing cost). My only debt is a car loan with a $8251.22 balance with a monthly payment of $351.34

 

 

OPTION 1 : Pay off car loan by October, apply for $5000 in downpayment assistance and pray like nobodys business the seller will meet me half way with the balance

OPTION 2 : Pay down car loan to 10 remaining payments ($3513.40) Save $6000 for buydown and apply for $5000 DPA

OPTION 3: Save $11759 for buydown continue with regular car payment (DTI will be tight, very tight)

OPTION 4: ????????THROW SOMETHING AT ME!!!!

 

 


10/20/2015
Starting Score: 499
Current Score: 697
Goal Score: 720


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11 REPLIES
Frequent Contributor

Re: What would you do?

Option 1 would be off my list. Relying on the seller to reduce his profit would stress me out to no end. 

 

I think I'd go with Option 2 unless one of our resident financial geniuses has a better idea. 

Thanks to this forum, I stayed sane while buying our 1st home via USDA Direct & closed on July 31st, 2015, our 108th day under contract. Two weeks later, we applied for an auto loan from DCU & got approved! Now, all we need is the white picket fence installed.
Moderator

Re: What would you do?

Do you have to buy down the loan that far in order to qualify?  Isn't there options in between or is the car loan making it mandatory that you buy it down to less than 1%

New Contributor

Re: What would you do?

I don't have to buy down that much. But this will be my forever home and buying down to 0% increases my purchase power. May I add that I an basing my dti ratios off my base salary but I do receive monthly bonuses.

10/20/2015
Starting Score: 499
Current Score: 697
Goal Score: 720


Take the myFICO Fitness Challenge
Valued Contributor

Re: What would you do?

How much are you going to save over the life of the loan with the buydown? Do you need to buy it down the full .0625%? Are you speculating on the DTI numbers, or has your lender confirmed you wont make it with the full car payment? Have you thought about refinancing the car (and paying it off as quickly as possible after you close)?

Mortgage Loan Officer in Northern California - lending in The Golden State from the Oregon border down to San Diego!


New Contributor

Re: What would you do?

One of the builders that I'm looking at usually offers $3000 in closing cost. However I have not contacted him to see if that's with his preferred lender or not (doesn't say on the listing)

10/20/2015
Starting Score: 499
Current Score: 697
Goal Score: 720


Take the myFICO Fitness Challenge
Moderator

Re: What would you do?

Doesn't NACA have a income limitation? Do you meet that limitation with the monthly bonuses? I ask because I really am not familiar with the NACA program.

New Contributor

Re: What would you do?

My total interest on a $200000 loan for 15 years would be less then $900. I don't have to buy down that much but given the opportunity I think it's smart. Dti is based off base salary not including bonus. I think of my bonuses as just that a bonus and don't use it to budget. The lender would approve me with car payment but again I could get more house without it. My parents are aging and I want to make sure I will have enough room for them once the tines comes, also I plan on adopting. Refinancing the car is not an option. I don't want the credit pulls.

10/20/2015
Starting Score: 499
Current Score: 697
Goal Score: 720


Take the myFICO Fitness Challenge
New Contributor

Re: What would you do?

No there's no income limits with NACA

10/20/2015
Starting Score: 499
Current Score: 697
Goal Score: 720


Take the myFICO Fitness Challenge
Valued Contributor

Re: What would you do?


ms_cora wrote:
My total interest on a $200000 loan for 15 years would be less then $900. I don't have to buy down that much but given the opportunity I think it's smart. Dti is based off base salary not including bonus. I think of my bonuses as just that a bonus and don't use it to budget. The lender would approve me with car payment but again I could get more house without it. My parents are aging and I want to make sure I will have enough room for them once the tines comes, also I plan on adopting. Refinancing the car is not an option. I don't want the credit pulls.

Are you sure? That would be a 0.06% interest rate.

 

Bonuses can sometimes be included as income depending on your situation. I think you should ask your LO how much, if any, monthly bonus can be used in your qualifying income.

 

After that, it is truly up to you whether you want to either A) pay off/down the car to afford more house or B) use the money to buy down a lower interest but potentially not afford as much house. You can always look into DAP too, but those are nowhere near guaranteed.

 

Best of luck!

Mortgage Loan Officer in Northern California - lending in The Golden State from the Oregon border down to San Diego!