Mortgage Possibility?

[Anonymous]

Hi All,

DW and I are looking to buy a house in the next 6 months. I have been doing some research into how mortgage payments and housing affordability are calculted and would like to get an outside pair of eyes to see if my math is (roughly) correctly calulated. Edits are in blue

There is also a builder subdivision across the street that is building still. Our credit union has a 0% down payment and no pmi option. Although our goal is to save 3-6K over the next 3 months if we go with this option, just cause.  If we go through the builder all that is required is 2K earnest to "hold" the house until the home is completed. We are also looking at a 3rd Mortgage company. The cost of the home is approx. $398,000 and is an inventory home.

Side note: initial numbers are after tax numbers or rounded down, i am conservative when budgeting. I know it should be calculated with pre-tax income but I wanted to be more realistic with the numbers I actually work with every month.

Data points:

Total Income: DW gross: $5,054 + My gross: $ 3,308 = $8,362 (Can't count VA Benefits @ $1224 or Mileage reimbursement @ $1,020)

Debt 1: $1,266 (two car loans)

Debt 2: $0 - payments are made weekly so there is never a minimum payment for CC's - apprx. 26 cards)

Debt 3: $150 114.46 (DW CU personal loan) I have no personal loans

Debt 4: $0 (my student loan - defferment) total $32,318, DW has no student debt

- On 10/19/19 - $11,300 (rounded up) in used credit reporting with total available being 60K (rounded down). Same day got a couple of CLI's on about 5 cards, totaling 20.4K. New available credit is approx. 80K - rounded down (just not reporting yet). Also made about 3K in CC payemnts.

I am expecting a 3K reduction on a Discover card within the next week.

- Both of our scores range from 620 - 680 Fico; not sure about mortgage fico, havent checked in a few months.

Mid mortgage score is 642

- Wife has been with the same company for 10yrs. I have been is the same industry for 10yrs; 3 different companies...2yrs, 2yrs, 7yrs new jobs was promotional move.

- About 11 inquires in throughout June (was planning on getting a house next year) - no new apps or loans since then

- AAoA is currently 1y2m; oldest acct is 3y6m

-  My payment history is 100%; but student loans are reporting 7 missed payments. She is at 99%; 2 missed payments from target 3 years ago. Ex-husband didnt pay during divorce, decree states that he was respsonsable for card.

- No collections/charge-offs

- No BK's

So, with that here are my calculations:

Current CC Uti is: $11,300/60K=18.83% UTI, should be 14.12% with 80K TCL in the next reporting cycle. But realistically under 10% if I estimate for the payments this week and any payments in the next weeks before reporting. Our aim is to get to 112K in TCL to stay under 10%. 

$2500 Estimated Mortgage + $0 Minimum CC payments + $1340.46 Monthly debt + $323.18 / 1% of student loan = $4163.64 Month obligations = $4163.64(MO)/$8362(Income)=49.79%(DTI)

Based on my numbers and trying out multiple calculators I think we could get a 409-500K home.

With these numbers can someone tell me how off or on my numbers are and if our information would possibly qualify us for that price home or my estimated home price; if so / if not what would you guys recommend we do to put ourselves in a better home buying position?

Also please let me know if any additional information is needed.

Thank you

[JVille]

Please go back and edit your post “After Tax” numbers don’t help us at all. We want to see it as the Lender see it. It’s good that you sit down and calculate how much you feel your budget will allow you to spend and what payment you feel comfortable with. But please just adjust your post to your actual income.
Please adjust to Gross Income so we can see what we are really dealing with.

[Anonymous]

Your student loans, although deferred, would also be included in your monthly debt calculation if I'm not mistaken. From what I have read here, they use 1% of total amount owed as a monthly payment amount if your loans are in deferment. I could be wrong, but you may want to do a little research on the topic and include your total student loan balance for further assistance from the mortgage experts here.

[Anonymous]

Also just for clarification are you saying you have a balance on 26 cards?? Because you calculated minimum payments of $910 or is this hypothetical as well.

[Anonymous]

As Lunchbreak mentioned, need to factor in the student loans. Whether you have 20k or 200k is going to have a big impact on what you'll need to do to buy the house.

I see you mentioned trying to save 3-6k in the next few months. Do you have any other savings right now? Depending on how student loans impact your DTI you may need to put more down to buy the house, or pay down your other debts to lower DTI.

[CreditInspired]

Hi OP and welcome

Please just provide this info for both you and DW:

*Monthly GROSS income, not net (please dont round anything up or down)

* Please provide the lowest middle mortgage score. Example: If yours is 720, 690, and 700 and DWs is 640, 660, and 700, the lowest middle score that will be used is 660 for mortgage

*Please provide minimum payment on all CCs and loans. 

*Please provide total monthly vehicle payments. 

*Please provide any alimony/child support payments, if any. 

*Please provide student loans and status. 

*Are there any baddies--liens, judgements, lates, charge offs, BK?

*Are there any NSF fees? If yes, less than 3 mos ago?

This info will help us immensely. 

Also, even if you go with the $0 down/no PMI financing, you will still needs funds for closing costs. Of course, mortgages do allow Seller concessions, which is a good thing.

One more thing. I get the impression that you believe getting CLIs to lower UT is the answer. It really is not because you still owe the debt. Paying your debt down/off is the answer for lowering UT. 

[Anonymous]

I guess I would say all "worst case" credit scenario. I only carry a balance on about 4-5 cards. I just took my highest ever minimum payment and assumed I had payments on all cards

[Anonymous]

At the moment we have about 1K saved....from the first of Oct

[Anonymous]

*Monthly GROSS income, not net (please don't round anything up or down)

DW gross: $5,054

My gross: $ 3308

*Note: found out that VA Benefits and Expense reimbursement do not count (non taxable income) towards, but is consistently 2K+ of "income" hence the new discrepancy

* Please provide the lowest middle mortgage score. Example: If yours is 720, 690, and 700 and DWs is 640, 660, and 700, the lowest middle score that will be used is 660 for mortgage.

642

*Please provide minimum payment on all CCs and loans. 
JSC FCU Personal: $114.46

I currently do not have any minimum CC payments, they are paid down weekly; so no minimum is generated except $0, not sure how to accurately answer.

*Please provide total monthly vehicle payments. 

$1266.00

*Please provide any alimony/child support payments, if any. 

$0

*Please provide student loans and status.

Deffered status; accounts closed - $32,318

*Are there any baddies--liens, judgements, lates, charge offs, BK?

100% payment history but 7 missed student loan from September; was enrolled in school

*Are there any NSF fees? If yes, less than 3 mos ago?

No NSF fee's

This info will help us immensely. 

Also, even if you go with the $0 down/no PMI financing, you will still needs funds for closing costs. Of course, mortgages do allow Seller concessions, which is a good thing.

That was my reasoning for additional savings while the house was being built. Our passive savings plan is 1K/mth aggressive is 3K/mth

One more thing. I get the impression that you believe getting CLIs to lower UT is the answer. It really is not because you still owe the debt. Paying your debt down/off is the answer for lowering UT. 

Correct that information may have not been needed for this, but I dont not 100% know the process - yet - so I was not sure how relevant UT% is. Also there was a 3K payment made in addition to regular paydown. So my actual CC debt is around 8K

[Anonymous]

50% DTI is definitely on the high end. You'll want to go through these numbers with your CU and see if they are OK with 50% for the 0 down, no PMI loan, or may want a lower DTI.

Assuming you needed to get your DTI down some to get approved for the house, the first place I'd be looking is the cars. You have a lot tied up in those car payments IMHO.