topic Re: How to start the process and advice? in Mortgage Loans

How to start the process and advice?

ShatteredReality — Wed, 11 Nov 2015 18:15:51 GMT

Hi,

My wife and I are about to move to a new area with new jobs (where we are making a lot more than we currently are) and we are having the debate about rent vs buy.

We know that we are going to be spending a long period of time in our new location so we would love to buy. The question for us is timing.

As part of this move we are going to be getting a pretty large signing bonus. I'm currently guessing that within a month of starting (once my first paycheck comes though) we will have very close to $15,000 in savings that could be used toward a down payment.

Our bank has pre-qualified us (assuming a 20% downpayment which won't happen) for over a 500k mortgage (I know they didn't run our credit so I don't really know what pre qualfiy vs pre approved means). We are looking more in the 3-400k range.

We have a great credit history (no negatives) but have higher than ideal credit utilization. As a result our FICO 8 scores are between 710 and 720 (both my wife and I are in that range) depending on with beuru is looked at (MyFico says if we pay off the debt we would probably be over 800).

Our household income will be about 170k gross (I have offer letters supporting this as our current W2s/Paystubs would suggest closer to $115k annualy) not including bonuses.

Our main question is should we sign a 12 month lease and work on getting our scores above 740 (where our bank gives us the best rate) or should we take the signing bonus, really cut costs for a month or 2 and try to buy in Jan or Feb (we have the option to live with parents virtually rent free for a few months). If we went that route we could probably have a full 30k (plus emergency fund) in the bank by March that would cover 5% of a 400k home + 10k in closing costs (is that a reasonable number).

So any advice? How do I go about shopping for a mortgage? What timeline once we decide to go that route should we plan on?

This is all 100% new to me so any tips would be great!

Thanks!

Re: How to start the process and advice?

mynameainttracy — Wed, 11 Nov 2015 18:20:47 GMT

I'm not going to offer financial advice here. I suggest waiting just to get a better feel for the neighborhoods where you are relocating to. When you move to a new town you need time to figure out where you want to buy. We did that, not really by choice, but I am so glad we did.

Re: How to start the process and advice?

ShatteredReality — Wed, 11 Nov 2015 18:39:05 GMT

Thanks for the reply!

We are actually from that area originally (moved about 2 years ago for a different job and now are moving back) so we know the area decently well.

I just spoke to my bank and it sounds like we will need to hold off. They want to see 2 years of employment in the same field and my wife does not have that (due to a medical issue she went from working in a lab doing chemistry to working as an administrative assistant) so we need to wait until she has been doing her current position for another 14 months, otherwise we can't count her income towards what we can borrow.

Re: How to start the process and advice?

Anonymous — Wed, 11 Nov 2015 19:55:41 GMT

Are you sure you need her income to qualify for a loan? Did you have them run the numbers to see what you can qualify go alone?

Just because she's not on the loan doesn't mean she can't/won't be on the deed. I wouldn't rule out buying just yet until you run that scenario. Also talk with a real LO, not just a big bank paper pusher (no offense to anyone) and see what they recommend you to do based on your scores. Do you have your actual mortgage scores yet or are you guessing you mortgage scores are as great as your 08? I would pay the money and pull them here just to find out what you're starting from and where you need to get.

Re: How to start the process and advice?

ShatteredReality — Wed, 11 Nov 2015 21:35:51 GMT

So you're right, it sounds like I do qualify on my own.

I spoke to a person at a mortgage brokrage firm my best friend and his wife used.

It sounds like with just my income and my debt I still qualify for the same amount wiht the same downpayment that I would if my wife was on it.

Are there any downsides do doing a mortgage that way?

As far as my credit score goes, I'm not sure. I have the FICO Ultimate 3B monitoring plan.

Looking at the "versions" section

My Fico Score 8:

Ex: 717

TU: 713

EQ: 717

My Fico Score 4 (which is marked as Commonly Used in Mortgage Lending):

EX: 713

TU: 710

EQ: 727

Is there a different score I should be looking at? Since I qualify on my own I plan to work to get my score to 740+ before moving forward wiht the mortgage process.