topic Re: Lifelong Renter, Good Income, No Assets - what should I do to change that? in Mortgage Loans

Lifelong Renter, Good Income, No Assets - what should I do to change that?

wallywonka — Mon, 10 Aug 2020 21:13:46 GMT

Hey Guys - here is the skinny on my situation.

Wife and I income: 250K Annually combined.

Debts:

(1) Car - 30K on balance about 450 per month
We owen about 12K on our credit cards.
(1) Debt consolidation loan - 20K balance with payment about 475 per month

Thus far I have taken all our left over income and been paying down debt agreesivly. Our FICO scores are all over 720+.

I want to know what should be my plan of action. I want to buy a house but we have NOT been saving but paying down debt. Do I continue to pay down debt and knock out the above debt OR start saving for downpayment and get into a house while rates are low? I can easily take another year to rent and knock out this debt, but i am just sick and tired fo renting?

Thoughts? Advice?

Re: Lifelong Renter, Good Income, No Assets - what should I do to change that?

Harvey26 — Mon, 10 Aug 2020 21:27:15 GMT

@wallywonka wrote:
Hey Guys - here is the skinny on my situation.
Wife and I income: 250K Annually combined.
Debts:
(1) Car - 30K on balance about 450 per month
We owen about 12K on our credit cards.
(1) Debt consolidation loan - 20K balance with payment about 475 per month
Thus far I have taken all our left over income and been paying down debt agreesivly. Our FICO scores are all over 720+.
I want to know what should be my plan of action. I want to buy a house but we have NOT been saving but paying down debt. Do I continue to pay down debt and knock out the above debt OR start saving for downpayment and get into a house while rates are low? I can easily take another year to rent and knock out this debt, but i am just sick and tired fo renting?

Thoughts? Advice?

I would continue to pay your debt down but not as agressive. That way you can save up some money. Your DTI is perfectly fine. I would try to save up a good amount at least 5% of what ever you idea of purchase price is.

Re: Lifelong Renter, Good Income, No Assets - what should I do to change that?

newmomnewme — Mon, 10 Aug 2020 21:30:28 GMT

Congrats on your pay down success so far!! Did you pull your mortgage scores from this site? If not, I'd start there. If the lower of both of your mid scores is 720, you can definitely get approved with a good rate. Since downpayment is an issue (I am in the same boat), You may be able to get approved for Navy Federal 100% financing?

Ask the pros, but I think 740 mid gets you the premium rates...My lender says these rates are going to be low for a while, but it's hard to stay patient watching the houses fly off the market and the prices go up!

Can you get someone to gift you a downpayment or closing costs? Do you have any cash to pay down your 12k in revolving to get as close to AZEO as possible?

I say go for it...

Re: Lifelong Renter, Good Income, No Assets - what should I do to change that?

wallywonka — Mon, 10 Aug 2020 21:40:27 GMT

Yep - have been approved thorugh NFCU and the Zero down program is what I am eyeballing. I think I can manage to pull some sort of closing cost together but it will be a pinch. I woud just hate to stop paying for debt and keep paying the minimums for a while.

Re: Lifelong Renter, Good Income, No Assets - what should I do to change that?

newmomnewme — Mon, 10 Aug 2020 21:50:43 GMT

@wallywonka Happy house hunting!!! It's the wild Wild West out here. Have your offer in hand while you are looking.

Re: Lifelong Renter, Good Income, No Assets - what should I do to change that?

sxa001 — Mon, 10 Aug 2020 22:14:35 GMT

I'll just add a little bit of encouragment. You are in a very similar spot where my wife and I were 1.5 years ago when we got married (albiet a little more income). With a combined income of ~160K for us but after paying for a wedding we had virtually no savings. We spent the last 1.5 years being agressive, and have saved ~45K, basically the bulk of her income over the last year going into a savings account.

Your DTI beause of income is in good shape, I would focus on getting the money for downpayment + closing costs, but also a buffer as you don't want to wipe our your savings. Even if you buy a new house unexpected expenses may come up. Also good to have money in savings to cover the mortgage in the case of loss of income. With your income it should be easy to do.

Re: Lifelong Renter, Good Income, No Assets - what should I do to change that?

wallywonka — Mon, 10 Aug 2020 22:54:51 GMT

Anyone have a good excel sheet that show be front end DTI vs Rear DTI?

Re: Lifelong Renter, Good Income, No Assets - what should I do to change that?

dragontears — Tue, 11 Aug 2020 17:27:16 GMT

@wallywonka wrote:
Anyone have a good excel sheet that show be front end DTI vs Rear DTI?

I don't have an excel spreadsheet for calculating DTI as I find the calculations to be straightforward

Front end DTI = PITI/monthly income

Back end DTI = (PITI + all minimum payments listed on credit report)/monthly income

The only exception is how student loans are handled when on IBR, some loan programs will use 1% of the balance (i.e. FHA) some will use 0.5% and some will use what is listed on your reports.