mortage questions?

Question

I am fresh outta college making 31k, my plan is to work at my job for a year and apply for a loan on a house...I moved home with my parents to save money to make a big downpayment on the house (roughly 20k, mabey less to hold for repair costs/fluxuations)...I have had a car since I was sixteen, worked many jobs through highschool/college (4 yrs as a flooring installer)...my question is, should I pay off my debt and keep my steady job while saving most of my paycheque (living at home, way cheaper then on my own during college) would the banks finance my mortgage so I can start repairs to sell it? if not, what else can I do to improve my odds? thanks

Answer 1

Scott C,
Sir, I work with people like you who have got in over their head and drown.
1st Pay off your debt All of it.
2nd save 1000$ emgergency funds, 3 - 6 months of
operating funds.
Save 25% of mortage as down payment
(2nd jobs help). Get mortage payment = 1 week take home pay on 15 yr fixed local/state bank.
NOT what the bank says you qualify for. They win when you lose.
Be prepared to hold for up to 2 yrs if this is your 1st flip.
I suggest this because what happens is you will be last in & first out in any job adjustment.
Visit Dave Ramsey.com to learn what the banks do not want you to know.

Go with L.U.C.K

Answer 2

#1 - Never pay off all your debt. Keep it low, but keep accounts open. Aged tradelines in good standing are what compose a good credit score.

#2 - Save all you can. The biggest investment you can make is your home, therefore you want to pay as little as possible; this means bigger down payment, managing your credit, and showing income to the bank thereby proving what you make.

#3 - Tradelines. Banks are looking for at least 3 tradelines over 5K each. Any more than that is gravy, but try to cap your amount of open tradelines at 5 including car payments and student loans.

#4 - Get a good real estate agent and mortgage broker (me!).

Also, banks are going to look at you living with your parents as a negative. If you can, try to receive mail at an aunt's house that doesn't have the same last name. You can claim you were renting there and when you go to apply for a mortgage, your aunt can tell them you've never been late on a payment. It'll help your case out a bit. If you have any further questions, send me an e-mail.

[e-mail]

Answer 3

You'll want to have a good mortgage broker. He/she will get around any issues. Since you are going to flip homes (I read/answered another of your questions tonight), you're not too worried about the interest rates up front.

As far as debt goes, you've got two ratios, your inside and outside ratios. They measure your payments against your income. The inside is just your housing (28% or $723 in your case) and the outside is the rest of your debt (40% or $1033 in your case). As long as your total payments aren't too high, they won't get in your way.

Now, as far as mortgage brokers go, find the ones offering 100% financing on investment properties. You may or may not qualify for those programs, but this is how you find the people that are the most flexible/informed for investment homes.

Good luck

Answer 4

Go for 100% financing using the Seller's Concession to the max that the lender will provide.
Also since you will be at your job for a year, most lenders require 2 years employment for a full doc. Not to worry there are lenders that will still give you 100%.
Than you stated that you are living at your parents. Another curve ball to this at home plate home run. Same lender that provides one year employment will more than likely also provide private VOR(Verification of Rent). Meaning mom's and dad's it good to go.
Stay away from local Banks since their guidelines are structured toward 2years employment and VOR of two years. You will need a mortgage broker who knows there buisness to help you structure this loan.

Keep the money in the bank!!! Seasoned money = closing escrow. The only help you can get is from parents but hey its your money you saved it. Keep it for upgrades to the new home.

Hope this helps need anything else just ask.

Answer 5

how much does the home u want cost? where i live, saving 20000 is not enough at all. figure closing costs at least 5000. general repair/new carpet/paint/appliances/furniture etc. =$10000 minimum. down at least 5%...optimal is 20% (of the price of the home). don't forget moving costs.
plus u should have at least 3 months of mortgage payments saved up somewhere just for emergency use.
-in regards to paying off ur debt...depends. if u have a really low interest rate then u shouldn't because the mortgage interest will be way higher and so having a smaller mortgage will be better.

Answer 6

With all due respect, JonathanC is wrong about #1. For house buying, paying off your debt is indeed a good thing. For a credit score, showing you call apply for credit and then pay it off is solid, and being delinquent on your debt will hurt you. But when you go for the mortgage, the loan institutions will examine your obligations (debts) vs. the money you bring in each month. No debt with money coming in is better for your loan.

For credit score might be a tad lower if you pay off your debts too quickly, but your mortgage chances will be better.

Answer 7

There are some useful tips here.