First time buyer looking for advice

[comingthisway]

Hi,

I'm looking to buy our first house, I've read up a bit but would also like some advice.

We're looking to purchase a single family home in LA, Orange County area. Also, considering moving to either Austin or Houston, Texas. I work remote so that should be no issue.

We were looking at around 700,000 as a purchase price.

Currently we pay 2700 in rent and were hoping to keep the mortage payment around 3500ish

My income is $180,000

Credit Scores right now are: 

710 - Eq

733 - TU

691 - Exp

No late payments, no bankruptcies etc.

I will have 35K in down payment. I can stretch that a bit as well.

Credit Utilization is at 12% right now

I have approximately 8k left over in an auto loan with a $273 monthly payment

On a whim I went online and did a prequal with BofA (i bank with them), they didn't show me the rates instead gave me a phone number to call to get in touch with one of their lending officers.

I'm open to trying other lenders if they offer me a better rate, any recommendations would be very welcome.

Should I talk to more lenders? does FHA make sense for someone like me? Should I bring my utilization down even more? 

Just not sure what my next steps should be, so any advice would be very welcome.

Thank you!

[NC_Mtg_Loaner]

With credit scores > 680 lenders typically can provide better terms  (APR really) on a 95% conventional loan.   I'd say you are pretty much there if you have $35k saved up but you would need a seller to pay some closing costs unless you shop for a  home a bit less than the $700k range.

Once you get into a home, you can decide if you want to accelerate some payments in order to generate equity faster so you can eliminate PMI, but it appears to me that you'd be good to go.

[ldkcivilservant]

You should always talk to more than one lender.

Overall util below 8.9% is best, but honestly I can't see it making that much differance to your rate based on the information you have given.

Don't forget, when considering stretching to a down payment, that you have closing costs too. On $700k you could easily eat $35k+ in closing costs. Ouch. 

[Anonymous]

Considering taxes and insurance on a 700k home payment and pmi with 35k down and seller paying all closing and interest rate mid 3% your payment would be north of 4500 a month.

[CreditInspired]

Hi OP

Since you have no baddies and low UT, I'm wondering why your scores are not higher, so it leads me to believe something is going on in your credit profile.

Also, are those your mortgage scores?

Any student loans?

Any monies owed to IRS or the state? 

[comingthisway]

CreditInspired thanks for the response.

I don’t think they are, I’ll let you know tomorrow. I would have my latest credit report available through MyFico then.

Mortgage scores pulled on 12/03/2019 were:
713 EQ
705 TU
679 EXP

And no, I have no student loans and nothing owed to IRS or state or federal gift

I assumed it’s relatively low because of my low AAoA, I only ever got my first credit card in 2015.

[Anonymous]

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@comingthisway wrote:

Hi,

I'm looking to buy our first house, I've read up a bit but would also like some advice.

We're looking to purchase a single family home in LA, Orange County area. Also, considering moving to either Austin or Houston, Texas. I work remote so that should be no issue.

We were looking at around 700,000 as a purchase price.

Currently we pay 2700 in rent and were hoping to keep the mortage payment around 3500ish

My income is $180,000

Credit Scores right now are: 

710 - Eq

733 - TU

691 - Exp

No late payments, no bankruptcies etc.

I will have 35K in down payment. I can stretch that a bit as well.

Credit Utilization is at 12% right now

I have approximately 8k left over in an auto loan with a $273 monthly payment

On a whim I went online and did a prequal with BofA (i bank with them), they didn't show me the rates instead gave me a phone number to call to get in touch with one of their lending officers.

I'm open to trying other lenders if they offer me a better rate, any recommendations would be very welcome.

Should I talk to more lenders? does FHA make sense for someone like me? Should I bring my utilization down even more? 

Just not sure what my next steps should be, so any advice would be very welcome.

Thank you!

---

Living in Texas will give you the best bang for your buck. 700k you can pretty much have a whole estate.

[comingthisway]

So I went ahead and applied with a couple of lenders for $700,000. My plan was to ask for that amount but hopefully find a house for much cheaper now that I'm looking to buy a house in the Houston area exclusively.

The lenders were Bank of America, New American funding and Rocket mortgage.

BofA and Rocket said that I had a median score of 695 and so they will only offer me a FHA loan

New American Funding said they had approved me for a conventional loan.

Not sure how New American Funding was able to do that because loan officers from BofA and Rocket both said that I needed a minimum score of 720 to be considered for conventional.

My biggest concern right now is that the house(s) we're looking at are in the 375-450K range in houston area and from my understanding FHA limits for Harris County in 2020 are $331,760.

So I'm not sure how that will work out with the approvals i have.

Would I have to wait for my score to go up some more? Or is there a way that I could still be able to buy a house in that range?

Also, is it normal for one lender to approve you for a conventional loan while another doesn't?

[Mortgage-Specialist]

Lenders guidelines vary quite often.  You can in fact still do an FHA loan there but if you purchase a 400k home you'd have to put down $68,240 so that your loan amount reaches $331,760.  How much were you hoping to put down? 

[comingthisway]

I can easily put down about 35K but I was hoping to put down 5% actually. I don't think if we do go ahead with the house at 380K right now that we'd be able to bring it down to ~331K.