Mortgage Loan advice

[Anonymous]

Hello,

Thanks for all the great info you all provide on this forum.

I am planning to buy my first house in the next 3-6 months and would love your highly valued opinion on my chances and potential issues if any.

I am excited by the prospects of owning my own home

My credit/application profile looks like this:

1. Mortgage Credit Scores (Morgage FICO): 

• EX: 688
• TU: 668
• EQ: 668
• My actual FICO scores are EX: 740, TU: 741 and EQ: 717. But for some reasons, my Mortgage FICO are lagging far behind. My CC profile looks something like:

a. Old Navy: $30/$6000 (This will report $0 in a week)

b. Google $540/$4000

c. Discovery $0/$5500

d. Amex Everyday Card: $55/$1000 (This reports on the 27th, I'll pay it off before then)

e. Amex BCE: $0/$1000

f. CapitalOne: $0/$500

Both of my Amex hasn't reported yet, so hopefully, when it does, my mortgage middle scores will go up a little bit.

2. Credit Negatives: 

• None

3. Gross Income:

• $48,000/yr (Could increase to $57,000/yr starting this July, so the earliest I can have this show up on my paystub will be last business day in July).

4. Source of income.

• I work full time for an employer. Same employer for the last 3 years, part-time for 2 years, full time for the last one year. No overtime, just regular hours.

5. Monthly debt payments:

• Student Loan: $290
• Car Loans ($360 + $222 [co-signed] for someone else {worst financial decision I ever made}. If it's not a mortgage application, NEVER co-sign for anyone, family or foe.

6. Employment:

• W-2'd
• Same employer for the last 3 years
• Same career for the last 8 years

7. Assets/Reserves:

• Savings: $4000
• Checking: $100
• Retirement: $4000~

8. Location: 

• Indiana

9. Property Description: 

• Condo or Townhome seem appropriate for me at this point, nothing crazy.

10. Property Value:

• I'm looking within $90k- $120k

11. Occupancy:

• This will be my primary residence. I live by myself and do not expect anybody to be on the application with me.

I'm planning on FHA or other types of conventional loans with 3% down payment.

Thanks.

[JVille]

Any chance of making at least one of those car loans go away. Get the person you co-signed for yo refi at your local credit union. If the co-signed Loan is a family member maybe get another family member to help with the refi????

Thinking out load here.

[Anonymous]

JVille,

Their credit is way below average at this point, any attempt to refi on their own, the interest rate will skyrocket. There hasn't been any late payment on the car.

[me12345]

You show your balances and credit limits, for a mortgage loan those don't matter (it's already reflected in the score) ....its all about the payment amount on those accounts.

Because with a mortgage loan, the main factors are the FICO scores and the DTI ratios.

That being said, I think that you are fine, a little low in the savings area (but you still have 3-6 months to save more)...

I think at the price point that you are talking about, you are looking good.

Thanks,

[Anonymous]

Thanks. 

By July/August, I plan to raise savings to $7k. I won't rule out the possibility of moving forward even before then. I have toured some condos that were just perfect and my urgency to get this over with keeps getting higher. 

[Kree]

I agree that your numbers should be fine for your intended price range (perhaps a tad low due to DTI)

If you get that raise/promotion/new job  you should be golden.  I believe an offer letter would be enough, but someone else can give better information about that.

[Anonymous]

You could probably qualify for either FHA or conventional. Your credit score would probably favor FHA. Either way, you'll end up paying PMI. FHA rates might be lower. 

But there are significant constraints with FHA-qualified properties. Most single-family houses in good condition can be financed. But condos are completely different. All multi-family dwellings must be pre-approved by HUD before you can even begin the FHA loan process. Some large condo developments get FHA approval as they are built, but usually their approval expires about the time all the units are sold. buyers or individual owners are not able to renew FHA approval later on. Consequently, the list of FHA-approved condos is very limited. 

The type of 'condo' that is prevalent in my area is a side-by-side duplex PUD where the property owners also own the land their building is on. Typically the owners have an HOA agreement to satisfy legal requirements, but don't pay HOA fees. These units are not automatically FHA-approved. It is possible to get them FHA approved if all current property owners file for approval with HUD and go through an inspection process, among other things. The odds of you finding one of these units with FHA approval is the same as that needle in the haystack. 

But nearly any of these properties can be financed with a conventional loan. 

So, the type of property you settle on will likely determine what type of financing you use. 

[Anonymous]

Thanks for your detailed reply. The first time I'm hearing there are further restrictions on the type of condos FHA can approve. I'll make sure to bring this up when I have a formal meeting with a loan officer.

[Anonymous]

I only know this much because I was offered a specific property last summer at 20% below market value, but needed to arrange financing within a few weeks. FHA was my only option at the time, and I talked to several lenders who assured me it should be easy to process. A couple weeks later, after a few delays on my end, one lender I was considering suddenly needed to know exactly what type of property it was. The property was a side-by-side duplex with a half acre yard. It appeared to be a PUD, which I believe are treated the same as single family houses for FHA financing. But after digging out documents, it was actually classified as a condo by the subdivision developer when the project was developed 10 years earlier. 

The FHA loan option was immediately gone since the property was not originally FHA-approved. I had to walk away from it and it sold a month later for $30k more than I would have paid. So I had a painful lesson that the property classification can make a very big difference with FHA loans. 

I'm still trying to figure it out, but here's an article that can help explain it...

https://www.jvmlending.com/10075/

[me12345]

Yes, I've seen this many times.... I tell my Realtors all the time, that are looking for FHA Condos...."Make sure that its FHA eligible before you write an offer"  saves a lot of grief down the road.

Thanks,