Mortgage question for Shane or anyone else

[Anonymous]

This is my first post, so please bear with me. In about 2 months my fiance and I are going to be looking for a mortgage to purchase a condo shortly before our wedding in May. She has a relatively short credit history (about 5 years) and an average credit score around 735.  My situation is a little different. About 3 year ago I was out of work, and racked up some debt and some late payments on my credit cards (never missed rent, never late on Student loans though). I got a good job about 2 years ago working for a university and settled my past due accounts, the last of which was settled about 18 months ago. Since then I have no late payments and now only owe about $3500 in student loans, and $250 cc's. I have worked very hard and have gotten my middle credit score up to about 690.  My fiance and I combined have a DTI of about 9%. What do you think our chances are of qualifying for a good rate on a fixed rate mortgage for less than $125,000 in NH?

Thanks so much for your help.

[ShanetheMortgageMan]

Sorry for the delay, been real busy the last couple days.

Your credit looks real good to qualify since it appears all of your negatives were over 2 years ago.  I would need to know more about the minimum payments on the student loans & credit cards, as well as any minimum payments your fiancee has.  Also would need to know your income level.  A 9% DTI is a start, but you could have $50/mo payments and $555/mo of income or you could have $350/mo in payments and have $3,888/mo of income... one would be able to take on a $125k mortgage, the other would not. 

Also, how much in assets/reserves do you have, and how much do you plan on putting down on the new place (if anything)? 

Have you checked out what the homeowners association fees are for the type of condo you are looking at?  It can range anywhere from $100/mo to $300/mo+.

Where in NH are you looking to buy?

[Anonymous]

Thanks for the reply Shane. Between the two of us, our income before taxes is about $3700/month. As for minimum payments, mine is $15 on a CC, about $190 on my student loans. Hers is about $25 on her CC and about $250 on her car loan.  As far as assets and reserves, we have about $5000 in savings, but are looking at a 100% LTV loan that our local CU has available, right now at 6.5%. The fees for the condos we are looking at are around $175,s o not too bad. We are looking in the Dover area. She works in Portsmouth and I work at UNH in Durham.

Thanks so much!

[ShanetheMortgageMan]

Again, sorry for the delay... was real busy with work this week and I've been looking to take a break to watch the football games this weekend and my basketball team (Lakers) in the evenings.

Your guys debt ratio is close to 45%, 45% is usually the limit to where loan programs don't want you to exceed, but with good scores and good reserves (both of which you have) that can permit a higher debt ratio to qualify.  I'm not sure what your CU's loan program criteria is, but most of them are based on Fannie Mae/Freddie Mac, so in order to get approved you go through something called automated underwriting.  Automated underwriting takes into consideration your credit, debt to income ratio, down payment (if any), and reserves... since you seem to be OK on all of them I'd say your chances of qualifying should be pretty decent.  Your CU could probably let you know within a few minutes of submitting all paperwork to them.

[Anonymous]

Thanks for the information Shane. To be completely honest, my fiance is worried about the wedding, I am worried about the condo/house purchase.  What concerns me the most in all of this is the impact that my prior missed/late payments and settlements might have on the whole process. Like i said before, they were back in the middle of 2006 and my score is now up to 690, so I am hoping that they will not have an extremely detrimental affect on our chances of qualifying.

[ShanetheMortgageMan]

Yeah I'd be a bit stressed if I was trying to buy a home & plan a wedding at the same time... when we bought our home I was in charge of it all, and it wasn't too stressful, my wife planned our wedding and I had little to do with it - but it was stressful on my bank account.  Generally clean credit for at least 12 months is needed to qualify for the better loan programs, however with compensating factors it can be overlooked... if you don't qualify now, don't sweat it, get married and then after your derogs are over 12 months old re-apply.  Of course it'd be great to own a home at the time you get married, but it's not the end of the world if you don't.

[Anonymous]

Yeah, the next few months will be stressful with the wedding and buying a house, but I am going to be working 2 jobs for extra money too, so that means lots of coffee! I am hoping that with about 18 months of clean credit and a score near 700 we should be okay.