Im on a small income and it is impossable to buy a property so I can live in my own house. even when I have been paying rent I cannot get a morgage, even at the same expense.
2006-10-11 10:47:23 · 9 answers · asked by thedazzleman 1 in Business & Finance ➔ Renting & Real Estate
Two reasons: down payment and credit worthiness. It's simply not that easy to find a mortgage company that will take a chance on a person with a "small income" unless they can make a sufficiently substantial down payment. If you don't have like 20% of the purchase price for a down payment, they worry that the costs and hassles involved in foreclosure will eat up any profit they may have. The mortgage company must, quite reasonably, be confident that you can and will pay the mortgage payments regularly and not default.
2006-10-11 10:57:24 · answer #1 · answered by auntb93again 7 · 0⤊ 0⤋
When you take out a mortgage, the application and approval process depends on several aspects, mostly your income, assets, liabilities and credit, and is much more involved than renting.
One of the major qualifiers used is your debt-to-income ratio. Most lenders will allow a mamimum debt-to-income ratio of 50%. This means that if you make $2,000 a month, that your maximum allowable outgoing monthly debts INCLUDING your new house payment cannot exceed $1,000 (50% of the income).
2006-10-11 11:21:25 · answer #2 · answered by Justin 3 · 0⤊ 0⤋
Because when you buy your home they look at what's called a Debt to Worth ratio. They know according to your bills and how much you make how much you should be able to afford. Granted you're paying that much in rent, monthly but you're borrowing several thousand they look at the bigger picture.
See if you have a first time home buyers program in your local city and maybe they can help you. We have something called Community Action Project here that helps people with lower incomes and gets them into very nice homes, they usually waive the closing fees etc...
2006-10-11 10:59:17 · answer #3 · answered by Heather S 4 · 0⤊ 0⤋
You're not liable for the total cost of the house. The landlord is. The bank doesn't care about how much you've been paying in rent. They care about how able you are to continuously pay a mortgage since it's their money at risk.
2006-10-11 10:59:20 · answer #4 · answered by Anonymous · 1⤊ 0⤋
A mortgage company has to feel it's worth it... and a safe investment... They are paying for the house... if you don't pay they get stuck with thehouse... yes they can sell it, but they have no guarantee it will not have been abused... so if you want a mortgage...you have to have a down payment to reduce their risk.
If you don't have the down payment or if principle, taxes and insurance exceeds 33% of your income...no mortgage! 33% is a stretch and only for those with great credit...25% for those with good credit.
2006-10-11 10:59:45 · answer #5 · answered by westfield47130 6 · 0⤊ 0⤋
If you don't pay the rent, your landlord just evicts you and gets someone who will, his risk is limited. If you don't pay your mortgage, the lender has to repossess and sell your house. The lenders risk is far greater than the landlords, and the lender is exposed to a far greater potential loss than a landlord.
Talk to a mortgage broker, they will be able to advise you on whether anyone will consider you for a mortgage.
2006-10-11 12:00:33 · answer #6 · answered by itom200 2 · 0⤊ 0⤋
Well on rent someone is only trusting you to pay the amount due month by month. On a purchase they have to trust you to make about 240 of such payments over a period of about 20 years so it is a bigger decision,
2006-10-11 11:01:00 · answer #7 · answered by Anonymous · 0⤊ 0⤋
The banks seem to consider you a risk. Look for a seller that offers seller-financing (the current owner of the house issues you a mortgage directly instead of through a bank). The seller can be a lot more flexible in who he/she lends to.
2006-10-11 10:59:01 · answer #8 · answered by CPAKeith 3 · 0⤊ 0⤋
i no its hard im in a simillar position
2006-10-11 10:54:37 · answer #9 · answered by Anonymous · 0⤊ 0⤋