I intend on applying for 300k house. Without wanting to ignore reality, here are the data:
FICO Mid-Score = 650
Credit Report: 55k student loan paid off (but with a few baddies reported in 2005 - over 90+ days)
Credit Cards Ratio = precisely on 10% - never late on credit cards since 2003 (the college years ofcourse)
Current Major Loan: Leasing 2008 BMW approx $1200/month (yes I know - dont remind me) - never late. Expires in Jan'2010
Monthly debt: only my cellphone really and ofcourse groceries.
Loan: FHA (first time)
Maritial Status: Married
Employment: Federal (1 year) - full medical benefits, retirement savings etc etc...
Income: 61k (gross) 3k (net/month) excluding her income b/c we are assuming worse case scenario.
State: Northern Virginia
Investments in stocks: 10k (if liquidated)
Down Payment Capability: $10,000 (excluding tax credit - and no I do not intend on cashing my stocks out)
Hi there and welcome to the forums.
You didn't mention when you were planning to buy although i assume soon because you mention the taxe credit. It may get extended but that hasn't been confirmed yet and you'd really need to get the process going immediately to close by 11/30. The $1200 car payment is going to be a problem. If you wait until the lease is up and trade down (way down ) you'll be in a better position to qualify assuming your previous employment is in the same field. They're typically looking for 2 years at the same job or at least in the same field. They'll also want W-2's for at least the last two years so if your previous income was less that could also be a problem.
Do you kinow what the average annual taxes are in the area you're looking to purchase? I highly doubt you'll get in at the $300k range though. Your income, even without the car payment, will probably qualify you for only $200k - $250k. You also need to consider closing costs because downpayment alone on $300k is $10,500.
What is your wife's situation? Low scores? Short employment history? Maybe you'll be able to add her and qualify for more.
(FYI with the current car payment you'd probably only qualify for $80k)
Thanks Lady. Wow! Just 80K. Well it certainly makes sense given the situation. But yes once the car is out then that will push me.
Wife is Canadian and just recently moved down to US. She has had good credit in Canada but that good credit is non-binding in the States.
Most likely I will buy early next year. The tax credit is going to be extended. There is no doubt. The question is how much. To say that it will not, is to deny reality.
Anyone else? Second observation? Please advise. Thanks!
Lady was pretty much dead on. For 61K income - 5100 per month. Standard DTI guidelines are 31% housing and a total of 43% debt. That means:
1600 housing payment and 2100 total monthly payments. They will allow you to exceed these to a degree, but not even close to what you are looking at. Depending upon taxes and other info, a 300K house payment is going to run you anywhere from 2100 to 3K per month (2100 being a fairly low tax area and no HOA's while 3K being high tax, HOA's, etc) Those numbers are obviously just ballpark numbers, but show how even in the best case, and without the car payment, a 300K house is going to be at the limit for a 61K income for total debt, yet alone mortgage debt.
It is almost an absolute that they will raise it. To deny it, is completly ignoring reality. Again, the question is HOW MUCH or will it remain stable.
Just take a look at the totality of circumstances ---
1) Harry Reid on record http://www.lasvegassun.com/news/2009/aug/05/reid-congress-will-extend-8000-home-tax-credit/
2) Unemployment at 10% currently and will continue to rise.
3) Housing numbers are not going up (the reason why you see a head fake of sales is because of all the foreclosures)
4) The 3-year adjustable rate mortgages are going to reset in 2009, 2010 and 2011 (there is going to be a WAVE of foreclosures that are coming)
5) U.S. Department of Treasury indicating - http://www.msnbc.msn.com/id/32756481/ns/business-real_estate/
6) Federal Reserve keeping interest rates at ridiculous low amounts (this tends to invite teaser rates)
7) Tax cuts everywhere
8) Deflation will cause less buyers.
9) Housing stocks / realtors all down and continuing to go down
10) A surplus in houses in the United States.
Shall I go on?
It is probably 85% that it will get renewed.
Judging by most reports:
It will not be enlarged
It will remain a 1st time home buyers plan
There are even talks of reverting it back to the tax credit that has to be repaid. No news on that one, but I have heard that bandied around to silence critics and keep the defecit from increasing more.
Extend, yes.... Raise... very unlikely... raising it would only cause people like you to buy outside their means thinking they can use the tax credit money to make monthly mortgage payments, but when that money runs out after a few months they will end up in foreclosure.