Will adding my high income/less than perfect credit help Husband's approval?

[SoCalPrincess]

We're in a predicament and trying to determine the best approach to resolving it.

Husband has excellent credit, high 780+ scores, makes $125k/yr W-2'ed, $25 monthly debt (credit card we pay in full monthly) and 28% down payment on a $930k home, appraised for $965k. He was preapproved on his own but based on the increased HOA and Property Taxes for the house we are buying, his preapproval is now $35k short.  The house is fine but needs a lot of work per our standards which we've budgeted to do with cash on hand, but paying the extra $35k toward down payment will severely cut into that budget which we don't want to do.

My scores as of 9/6 are: EX2 696, EQ5 709, TU4 742.  I make $100k/yr W-2'ed (includes $7k bonus), total monthly debt is $320 which includes a car payment and a credit card payment.  Credit is perfect other than short 4-yr credit history and a satisfied state tax lien, $26k opened in 2/14 and released in 6/16, haunting me for the next 7 years.

I'm aware that if I got approved, my scores would drag down the rate to Tier 2...but would I be approved at all with the tax lien history on my report? Would it be better to take out a separate loan for the $35k home improvement project and not lower the rate on the 30-yr fixed jumbo loan?

Thanks in advance for your input!

[Anonymous]

Based on this -"I'm aware that if I got approved, my scores would drag down the rate to Tier 2...but would I be approved at all with the tax lien history on my report? Would it be better to take out a separate loan for the $35k home improvement project and not lower the rate on the 30-yr fixed jumbo loan?"

That will be the better option here thus, taking a home improvement loan.  You don't want a Tier 2 rate here because you want to think long term.  You will end up saving money on having a better rate.

[StartingOver10]

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@Anonymous wrote:

Based on this -"I'm aware that if I got approved, my scores would drag down the rate to Tier 2...but would I be approved at all with the tax lien history on my report? Would it be better to take out a separate loan for the $35k home improvement project and not lower the rate on the 30-yr fixed jumbo loan?"

That will be the better option here thus, taking a home improvement loan.  You don't want a Tier 2 rate here because you want to think long term.  You will end up saving money on having a better rate.

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Agree with Yes-its-Me ^^^.

Mortgages are long term. You have the ability to get a Tier 1 rate with your husband's credit - take advantage of it since you have the extra DP funds. Getting a loan for improvements after you close in the range you are seeking should be relatively easy. Even if you get an unsecured LOC for the $35k or a couple of zero interest cc's (for materials at Lowes or HD) after you close. You might have to cobble something together to make it work without a HELOC, but IMO its better than taking a hit on the whole $900k+ loan.  

Remember, once you close you will get tons of offers for zero interest cc's. 

[SoCalPrincess]

@StartingOver10 wrote:

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@Anonymous wrote:

Based on this -"I'm aware that if I got approved, my scores would drag down the rate to Tier 2...but would I be approved at all with the tax lien history on my report? Would it be better to take out a separate loan for the $35k home improvement project and not lower the rate on the 30-yr fixed jumbo loan?"

That will be the better option here thus, taking a home improvement loan.  You don't want a Tier 2 rate here because you want to think long term.  You will end up saving money on having a better rate.

---

Agree with Yes-its-Me ^^^.

Mortgages are long term. You have the ability to get a Tier 1 rate with your husband's credit - take advantage of it since you have the extra DP funds. Getting a loan for improvements after you close in the range you are seeking should be relatively easy. Even if you get an unsecured LOC for the $35k or a couple of zero interest cc's (for materials at Lowes or HD) after you close. You might have to cobble something together to make it work without a HELOC, but IMO its better than taking a hit on the whole $900k+ loan.  

Remember, once you close you will get tons of offers for zero interest cc's. 

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Thank you both for your input.  We are planning on paying the house off in 12 years, which throws a wrench in it.  I ran some calculations, and the cost of interest at the 4% rate is roughly $6k more than we were paying at 3.875% over 12 years.  Vs a 10-year HEL or LOC at 3.75% which would cost us $5200 in interest accounting for the lower morgage interest.  I'm guessing that he will probably rather pay $800 extra to not deal with the hassle of having a secondary loan...

[Anonymous]

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@SoCalPrincess wrote:

@StartingOver10 wrote:

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@Anonymous wrote:

Based on this -"I'm aware that if I got approved, my scores would drag down the rate to Tier 2...but would I be approved at all with the tax lien history on my report? Would it be better to take out a separate loan for the $35k home improvement project and not lower the rate on the 30-yr fixed jumbo loan?"

That will be the better option here thus, taking a home improvement loan.  You don't want a Tier 2 rate here because you want to think long term.  You will end up saving money on having a better rate.

---

Agree with Yes-its-Me ^^^.

Mortgages are long term. You have the ability to get a Tier 1 rate with your husband's credit - take advantage of it since you have the extra DP funds. Getting a loan for improvements after you close in the range you are seeking should be relatively easy. Even if you get an unsecured LOC for the $35k or a couple of zero interest cc's (for materials at Lowes or HD) after you close. You might have to cobble something together to make it work without a HELOC, but IMO its better than taking a hit on the whole $900k+ loan.  

Remember, once you close you will get tons of offers for zero interest cc's. 

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Thank you both for your input.  We are planning on paying the house off in 12 years, which throws a wrench in it.  I ran some calculations, and the cost of interest at the 4% rate is roughly $6k more than we were paying at 3.875% over 12 years.  Vs a 10-year HEL or LOC at 3.75% which would cost us $5200 in interest accounting for the lower morgage interest.  I'm guessing that he will probably rather pay $800 extra to not deal with the hassle of having a secondary loan...

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Alot can happen in 12 years [ Future].  No one knows what will happen then.  Better be safe than sorry.  I have seen people with perfect plans for a mortgage fall apart a few years in. Not saying it will happen in your case, but I hope you guys discuss thoroughly the discussion.

If you are guessing he'd rather pay $800 extra, has he weighed the pros and cons of such decision?  But it is certainly up to you guys of course.

[StartingOver10]

Agree again with YIM, a discussion with your hubby is critical here.

It is much easier to pay off a small second (HEL or HELOC) in the amount you are considering ($35k). In fact, with your income, it is easier to use the zero interest cards for the improvements without affecting the interest on the mortgage. Much, much less than the added $800 per month convenience factor for a higher rate loan. 

[SoCalPrincess]

In going over all the options you both mentioned, he was surprisingly open to using two zero-interest CCs to cover the $35k if we had to.  Surprising because he gets overwhelmed if I make multiple payments to my one CC...I've been actively repairing my credit for the past 4 years and know all the tricks, whereas he's literally never had debt so I guess putting any more effort into it aside from "let the autopay take care of the one credit card" is too much for him.

They confirmed with my scores that our rate would increase .125%.  In discussing, we couldn't figure out how they now had his DTI coming up 5% higher than our calculations.  Some back and forth emails determined they were using the wrong #s for income and hazard insurance which is $0 since it's included in the HOA.  ??? Kinda a big and obvious mistake to make. Figures.  I guess all is well, at least until tomorrow! lol

[Anonymous]

I agree HELOC after close or credit cards