Will Wells Fargo approve me?

[Anonymous]

HI,

I am in the process of purchasing a Co-op for $157,000 in queens, ny.  Putting 10% down and paying the closing as well.  With the help of myfico, i have raised my credit to 714 middle score.  The maintenance on the appartment is $722.  Wellsfargo is giving me a rate of 5.125% and i am going conventional.

Now my question is, what problems i might face on the mortgage side once they have all the documents. 

My salary is $40k annualy with commision.  Have been working this job for 15months and counting.  Have 0 debt on credit cards and DTI is 47%.  Think its fine???

I really need this apartment!!!

thanks in advance.

[Anonymous]

I don't know this process very well but i do know it can vary a little from lender to lender. You could call them up and ask for a prequalify instead of a preapproval (in other words, don't let them pull your scores!). They can tell you if they see any holes that would need to be filled before going through with preapproval.

Your scores look good, i've heard most lenders requires 2+ years employment, and the DTI might be a little high... but again, i'm no expert We were approved FHA 3.5% dp for $110k with a salary of $45k. I can't remember what our DTI was exactly though. $157k might be high for a $40k salary depending on the commission but that's FHA, not conventional and we were only putting 3.5% down.

I say give them a call and ask questions, can't hurt as long as you don't let them pull scores so you don't get hit with an inquiry

[Anonymous]

The maintenance on a $159k condo is $722 a month? That's pretty hefty.  Once you add the maintenance to the mortage and taxes you might be too high DTI wise.

[Anonymous]

The bank will most likley not accept commission as income unless you have 2 full years employment and have reported it properly to IRS (i.e have tax records showing it).  Then they would likely average the last 2 years income and use that as your income.

with 15 months on job, a commission based job, and upper 40's DTI this is a long shot.  The 714 score will help.  Home much reserves do you have?  That always makes a file stronger.

The real problem will be DTI and income.  Generally as I said above, they will only count your guaranateed salary unless you can show 2 full years of w-2's. 

Also, is the 722 in maintenance just the HOA/maintenance fee, or is that taxes and all.  Beacuse for DTI levels you are looking at:

Principle and Interest

Taxes

HOA/maintenance

PMI (under 20% down)

home owners insurance.

So

780  P&I

200 taxes (this is probably higher as NY has high property taxes if I remember)

722

70 PMI (just guessing on this and the home owners rate below)

70 Insurance

1842 payment on 3333 monthly income = 55%DTI

Now if the 722 was all that included except the payment then you would be at the lower DTI rate.

[Anonymous]

$722 is the complete maintenance.  The P & I + PMI + Maintenance brings the total to $1,569.  Which is 47%.  My wife works part-time and earns approx $16k.  Only reason i dont want to include her on the mortgage is that her credit score is only 660.  If i try using her the rate we get will not be in the low 5's.  Which is where i would like it to be. 

[emartin82]

DTI is quite high and being at your current position for a year and two months during a deep recession may mean you need to put some more thought into such a big purchase. Although I can see how you would probably want to scoop up a good deal on housing in NYC. But honestly, your DTI is high enough to send a lot of red flags especially now with increased scrutiny on mortgage applications. That's not to say you won't be approved; you probably may be approved, but with that DTI you should really think about this purchase. Good luck with your purchase!

http://www.bankrate.com/brm/news/mortgages/20070116_debt_income_ratio_a1.asp