Here is the scenario:
A couple wants to buy a house. They do not have 5% to put down (expensive housing market). His credit is poor (in the 500's) but he makes well-above average income and his only debt is his vehicle (bad money management in the past). Her credit is good, but her income is just average and she still has a good amount of debt (college loans, credit cards, vehicle).
When applying for a mortgage, would it be better to use the combined income ($100K+ per year) even though it would pull his low credit score, or is the credit score so important that they should try to just get the mortgage on her alone, even though she has a high debt to income ratio?
Will most companies agree to run both scenarios to see what the better deal is?
2006-11-30
07:16:39
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8 answers
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asked by
duritzgirl4
5
in
Business & Finance
➔ Renting & Real Estate
I think that most mortgage companies will look at both scenarios & take both incomes into consideration. If both people want to be on the note of the loan they will look at both incomes.
2006-11-30 07:22:12
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answer #1
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answered by Diaper Delivery Services 3
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if the income is not a problem to prove (w2's, check stubs), and you can verify assets (bank accounts, i would go with an FHA mortage. The main reason, is that under an FHA loan, the credit score does not play a part in getting a loan or getting an interest rate. FHA loans are Not credit score driven. What is important is to prove income, make sure you can verify that rent was paid in the past yr (in time, but there are ways around this issue) and some other documents, (bank statements, ect..) even with a poor credit score, you can probably look at a mortage in the range of 6.25%~7.5%.
Since 5% is hard to obtain... Under FHA guidelines, only 3% is required and you can get up to 6% closing costs from the seller. So, if you can find a motivated seller, you probably wont pay any closing costs.
FHA allows a 31/41 Debt to income ratio, and in some cases these numbers are not set in stone. I've did FHA loans where the ratios ended up 35/44, every case is different.
If the debt is high, you would probably be looking at a subprime loan where the interest rates start at 8.5%++, while allowing debt ratios up to 55.
I would look for a mortgage company that does FHA loans, and talk to a loan officer. If you have any questions, you can send me an email.
2006-11-30 09:53:19
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answer #2
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answered by Anonymous
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You can always get a mortgage...but the question is if it will make sense for the couple.
What savings does this couple have? What budget are they on? Are they married? His higher income, lower debt risk will slightly negate his bad past credit score especially if he has some tenure at his job in my opinion.
The lady is who I am worried about. Why the credit card debt? What $ amount exactly is it? Can it be tamed and fixed sooner rather than later? College loans aren't a detterent usually for banks unless they've been defaulted on, from the way I've been explained.
Budget this out. What are your current expenses? What are you saving? What goes where, write it all down..to the penny. The answers will suprise you and shed some light on your situation. A house note isn't just the amount you finance...it's more. So if you're thinking that $500,000 30/year loan @ 7% interest will hit you for $1400 only...think again and budget even higher.
Get your credit scores and know before talking to a bank where you stand. Knowledge is power in this instance. Banks don't just look purely at numbers but they will play a big part in this. If it would make more sense to clear out your credit card debt and start some savings before trying to get a house, then take the opportunity now to do it. The houses can wait another year if that's the time it takes. Start with the smallest debt and work it up.
Beyond this rambling...I don't know!
2006-11-30 07:35:29
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answer #3
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answered by krakhed 1
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There are a lot of companies that would probably use their combined income to seek mortgage approval. I am very much into helping people to get out of debt. So many Mortgage companies get you in a home, you are paying astronomical interest rates, happy to be in your own home, but later it sinks in when you realize you are not having as much enjoyment as you would like because you have to work in order to keep your home and just live. I won't go into how much money you will be giving away if you don't find the right company that will do the right thing. That right thing is to help find a way to get into a home and not unable to enjoy some of life. Look for companies (like Primerica Financial Services) that can help you in resolving your debt buy developing a GET OUT OF DEBT GAMEPLAN/FNA
(Financial Needs Analysis). This shows you where your and and gives you a precise plan to get you on a better financial road. Good Luck!
2006-11-30 07:29:39
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answer #4
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answered by Jay 2
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the credit score is the most important thing in the process of getting the mortgage. his poor credit score will not help him to get 100% financing, but of course if both of them qualify for the mortgage base of their combine income, some lenders don't look co-borrower credit score, only his income. the other scenario will be if she will use her better credit and apply for no income verification program . every mortgage broker will look for the best deal for this type of situation and will advise.
2006-11-30 13:13:21
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answer #5
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answered by bianca 4
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Well depending on how low in the 500's his score is they may still be able to just qualify with him. Depending on how good her scores are there may be several programs that she can qualify for without having to show all of her income. Also my company has affiliations with banks that will use a blended score program. All these programs are very competitive. You can get a fast pre-qualification if you log onto http://www.justgetaloan.net For further assistance feel free to contact at 866 530 7300 ext 7305 or by email at jfreeman@justgetaloan.net
2006-11-30 07:39:04
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answer #6
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answered by Anonymous
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Talk to Rural Development of the USDA about your situation. If you are a first time buyer (Not owned a house for three years) they can do wonders. Also your state's Housing Finance Authority.
Get a Buyer Agent to help you through all this. Now is the time to get started.
Good Luck
Email me if you want
2006-11-30 07:38:24
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answer #7
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answered by Anonymous
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Talk to a mortgage BROKER. They can shop for the best deal for you.
2006-11-30 07:19:26
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answer #8
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answered by pretzel2222 3
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