do u think I can purchase or get financing?

Question

want a 2nd home
I make $2400.00/month after taxes and $28,800 per year after taxes
medium credit score is @564
my wife makes 12,288/year after taxes
together we make $40,288/year after taxes
our yearly expenses are $19,200
after that we have about $21,088 extra/year
I want to purchase a house listing at $79,900 (7.5%, 30 yr fixed) $10,000 down.
can I get the rest financed? I just guessed the 7.5 % because it is kind of high and my credit score is low.

excuse me, I rent an apartment now and live in another state, I want to keep my apartment and purchase a home in another state. how is tha going to work?

Answer 1

Your credit score requires 5% down if you live in it, 20% if you don't - and that's with sub-prime lenders.

Now expenses don't matter to loan qualification. It's debt service and cost of housing that counts.

So what are your monthly debt payments? What are your current costs of housing (loan, taxes, insurance)?

Seeing as the payment on $69,900 is less that $500 per month, add $100 for insurance and $200 for taxes and you come out with $800 per month, $9600 per year, not to mention rent you would receive, so I suspect you would qualify, but I can't prove it.

Answer 2

I'd doubt that you'd be looking at 7.5% or anything even close to it.

First off, your credit score is well into sub-prime territory.

Secondly, a second home is going to require a considerably higher down payment and will command a higher interest rate than a principal residence.

You're probably looking closer to 12% - 14% or even more with that credit score on a second home and you're likely to need at least 20% down just to get that rate.

For the time being, you should work on getting your credit score up above 680, and above 720 would be better still.

Answer 3

If your willing to put 10k down, your Loan to value will be low enough you can probably get a loan, especially if you are willing to pay a "sub-prime" (aka high-credit risk) rate.

You will probably have to co-apply and may have to get a 3rd party guarantor.

Always go to a bank first before going to a mortgage broker, because the fees are A LOT less. If the bank can't help you, ask them for the name of a broker that they trust. If you do use a broker, make sure they are licensed with your state's banking dept and find out from the Atty General and/or the BBB if they have any consumer complaints.

Answer 4

Lender will give you money for sure. Probably charge you a higher interests rate and extra insurance on the loan for not having the down payment or good credit.

Would you consider delaying your plan? As housing market continues to slump, it might save you 10% simply by waiting for a few months. Another way to look at it, you can increase profit by 10% when you are ready to sell it.

http://money.cnn.com/2006/09/08/real_estate/caught_in_the_bubble/index.htm?postversion=2006090814
http://money.cnn.com/2006/09/05/real_estate/Ofheo_home_prices/index.htm?postversion=2006090514

As housing market continues to slump, if you don't plan to delay your plan, please interview several and pick a good realtor or agent.

Bad ones will talk you into buying the largest property at your credit limit. Good ones will find you a good deal (Sellers are offering discount and incentives now).

Try to stay away from Adjustable Mortgage, because 30 year fix mortgage rate is very low right now. There is no reason to use Adjustable loans except fatter commission for loan agents.

Interests only loans are not good iether. Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it. If you want to use interests only loans, might as well rent, especially during market downturn, because housing price won't appreciate.

Finally, for tax benefits, talk to your CPA or tax accountant. Do not consult finance with realtors or agents. They get commissions when you sign the check!

Good luck!

Good article when you want to put in bid, negotiation.
http://biz.yahoo.com/brn/060909/19463.html

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Different perspective:

It is a myth that renting is always worst off than buying.

Rent vs. Buy as Housing Market Continues to Slump

As housing market slump, it is easier to calculate "Rent vs. Buy" scenario. Because "appreciation" is no longer a factor.

Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it.

If interests portion of the mortgage payment is roughly equal to rent of equivalent property, then it is a decent buy.

For example, let's buy a $500,000 condo with 0% down and apply interests only loan (just like renting a place). Mortgage payment would be $3250/month. It is a bad buy, because you can enjoy same property for $2000/month.

Please note that I assume the tax benefits from home cancel out fees from home association and property tax. For more accurate calculation, consult with your CPA or accountant. But NOT your realtor, whom will say anything to get the deal to go through.

And again, if you like a particular property, then paying more may be reasonable. You are the only person who can decide how much more premium you are willing to pay.