i want to finance a $200,000 home.I'm 25 years old I make about $55,000/yr and 2 credit cards to pay off.?

Question

I have about $20,000 for a down payment and around a 700 credit score. I am currently renting a house at $535/month but want to own my own home and we need more space. would this be a good move? will I have any trouble financing? Please advise. Thank you. Oh yea,I live in ohio.

Answer 1

I think this is gonna cut you tight. Is there another income in the home?

Although, you do have a very good down payment! Go to your financial institution and have them figure what your monthly payments will be with the current interest rate. (Shop around for the best interest rate right now.)
Then examine your monthly budget. Gas, food, clothes, utilities......EVERYTHING. Make sure you have money included for incidentals and entertainment. Then see if there is enough left over for that house payment. You don't want your budget to be so tight that you can't go to a dinner and a movie every once in awhile or take a vacation.

Answer 2

Hey,

First, let me tell you that I used to be a mortgage underwriter, so what I'm telling you is based on years of experience, not just opinion.

Buying a new home is usually always a good idea if you can afford it. You get away from dumping your money on rent, and start owning something yourself.

From what you've said, you are more than qualified to buy a home. a 700+ score will get you qualified with FHA (government loans) which usually have the very best rates. You will also qualify with "A paper" lenders who cater to those with good credit, reserves, etc...

I would not necessarily recommend paying off your credit cards. In many cases, paying them off can actually LOWER your credit score, because one of the things you are rated on is the number of trade lines (active or inactive credit lines) open, and how they have been paid. For most 1st time buyers, cancelled rental checks, a few good tradelines, and some reserves (your 20k) will get you a nice, low rate.

I don't know a lot about the Ohio market, but I have heard that some lenders have pulled back in that area because of depreciating markets. Just make sure you get a quality realtor who gives you a good market analysis so you know if you're buying into an area with stable home values. You want to make sure the house you buy is worth what you pay, and that the value won't decline.

Just do your research, pick a good realtor, and a good mortgage bank. I would suggest trying LendingTree.com (it doesn't cost anything) to get an idea for what rate you can expect to pay, as well as how much you can get qualified for.

If you have any specific question, feel free to e-mail me. I'd be happy to answer.

Answer 3

If you can live on $1500/ month. The longer you save up for a down payment. Then the less you will spend in interest. I'd think at age 25 (I'm age 25), you could fit in a smaller house. The most economically way to get a big house is to start small and trade up to a bigger house every 10 years.

As to the credit cards, you didn't say the balance. They surely have higher interest rates than 7% (which is the highest mortgage rate you could find for a conventional loan). That means that you would save money by paying the cards off.

Answer 4

That is a 10% down payment. Closing cost will eat up a great deal of those funds. I would pay off the 2 credit cards first. Find the home you like. Ask for some closing costs from seller. Just be sure that your expenses wont chock you. Rule of thumb. 1/3 of your house hold income for the purchase of a home. Take the 55k and divide it into 33.33%=1527.77 There abouts. The home loan, plus the property taxes, plus the insurance should equal this amount. Best of luck in your home purchase.

Answer 5

The big question will be what are your payments per month in relation to the new house payment and your income per month. Also, living in Ohio could pose some problems due to the foreclosure rates in that area. Lenders are requiring more down payment in declining markets sometimes 5% more. Your credit will go a long way for you to get a loan. You might have to do 10% down plus your closing costs but the seller can pay up to 3% of the sales price for you towards your closing costs. The 10% is with the added 5% down you may need to pay. I would contact a Bank to do your loan because they are scrutinized by the Feds for fair lending practices.

Answer 6

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Answer 7

You should have no trouble at all provided you get the right loan officer working for you. I suggest Hometown Banc Corp. My mom used them. They may be your best opportunity for someone to say yes. If your credit does not measure up, they don’t simply “forget to call you back.” They help you get into a credit repair program you can afford regardless of income. Check out the free evaluation form at www.totaldebtsolutionsllc.com and a Hometown loan officer will contact you .

Answer 8

Based on your income you qualify for a $211,000 loan at 6% 30 year fixed.

The total payment on a 211 loan would be around 1460.