Been lurking here for a while. SO and I are getting our ducks in order for the mortgage process. Target application date is next spring/summer, so 12-15 months from now. Located in western PA.
I'll be the person on the application (longer credit profile/trade lines). Income is between 65-70K, monthly debt service is around 500 (230 car, 110 CC mins across 3 cards, 170 student loan on PAYE repayment plan, though the pandemic has put it into administrative forebearance until 9/20). No baddies, but all of my credit cards and car loan are under 2 years old (student loan reports as 10 years old from origination), and 5 total lines (3 CC, 1 car, 1 student loan). Utilization is around 25%, but working to get it closer to 10%. 10 current inquiries; more than 5 are almost 2 years old from when I bought the car in summer 2018. Newest is May 2020, when I graduated a secured card to a standard CL.
By my count, we're looking at around 200-250K as a rough budget, though obviously the lower the better. Experian mortgage score is 725; don't have an Equifax mortgage score yet, but will get one through DCU membership soon. Front end/back end for a 225,000 mortgage and my current load looks like 26%/35%.
Currently have around 3K in savings account, could have it up to 5K in the next few months. We are interested in any type of mortgage product - we're interested in USDA for the 0 down/low PMI, and are willing to buy in an eligible area. Not eligible for VA. Also interested in FHA or conventional with 3.5% down, and also interested in going through the Pennsylvania Housing Finance Agency for their down payment/closing cost assistance programs. Obviously, big priority right now is moving forward with relatively little in liquid assets for down payment/closing costs.
Basically, a few questions:
1. Would it be worth refinancing the vehicle loan - can get it down to ~$190 @ 3.49% (60 mos) versus the current $230 @ 5% (51 mos left). Would this be worth it for DTI purposes, or would the inquiry and a brand new account not be worth it for a $40 credit to DTI? Would plan to keep paying $230 regardless.
2. Student loan debt is $110,000 total - but it has been on PAYE since payment became due, and will continue to be in the future. Credit report in non-pandemic times show a $170 monthly payment. Will this present an issue with lenders? The "1% of total amount due" is scaring me because a $1100 payment will torpedo my DTI.
3. Realistically, what should my savings account look like when I give a lender a call nine or ten months from now? Cash on hand is the big issue right now, as previously stated.
Would really appreciate any guidance or help anyone can provide. Thanks in advance.
