Profile picture for aerogirl7210

Buying a Home in Colorado

My wife and I are planning to move to Colorado in September of 2015. I'm originally from there and still have family there. I am currently in HR and would be seeking another HR job in Colorado. My wife would likely be staying at home with our child. My wife receives monthly retirement income - non-taxed - from her former job as a police officer, so we'd still have two incomes and at LEAST one upon the move itself even if I didn't have a job straight away. We both have credit scores over 700 - her's over 720, mine close. I had a short sale that closed in April 2012, prior to meeting my wife as I moved across country for work. So, we'll be at the 3.5 year mark by September 2015 when we're planning to move. We have very little credit card debt and actually will have none by next year. I've run some numbers via the calculators on various websites, but I'm not sure if they can be trusted to be accurate. I know what WE are comfortable affording - but that may not be the bank's idea. So now that I've been long-winded:
- will my wife's retirement income be counted just as regular gross income would be counted from working a job or would it be factored differently, especially since it isn't taxed?
-we'll be moving with approximately $25,000 in the bank. Would it make more sense to use that to pay off a $13,000 loan (11.99% interest) prior to buying a home, OR should we save for downpayment? (I lean towards paying off the loan because I think it would increase our buying power, correct?)
-how will the short sale affect our ability to buy? Are we basically limited to FHA?

Any advice would be greatly appreciated!! Thank you!
  • February 20 - Denver
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Answers (9)

Profile picture for danielstoj
Your first step is to consult with a knowledgable loan officer!
  • May 12
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[Content removed by Zillow Moderator. Please see our Good Neighbor Policy]  My suggestion would be to pay off the debt that you have in order to increase your credit score and lower your debt to income & credit utilization ratios.  Welcome to CO, it is a great place to live
  • April 02
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Aerogirl
I think that you will be ready to begin your search next Spring. Some factors that are going to be considered/needed by the lender.
Debt to income ratio
2 years of tax returns
6 months at the current job
3.5% down payment
Regarding youre question about your debt, Suze Orman would recommend that you pay off the debt. A lender will want to see that all credit lines are under 30% of credit available. I wouldn't do ANYTHING until you met with a Lender...and made a "plan".
I am starting a Post Forclosure seminar in March that you may wish to attend. My lender will be there to offer specific counseling, Title info and Real Estate info as well.
call or email for an invite

  • February 20
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The Short-Sale is going to be the biggest hurdle...most of the time, this is considered the same as a foreclosure, and you will most likely need to wait until April of 2015 before you can purchase a new home.

However, there's a new program out from FHA called the Back to Work Program....it's allowing folks to forego the typical 3 year waiting period if they can document a qualified extenuating circumstance that caused the Short-Sale.

Here's an article on the program:  http://www.homeownersblueprint.com/mortgage-loan-programs/fhas-back-to-work-program-taking-off/

I'd be happy to discuss this program further if you like.

Welcome to Colorado!

  • February 20
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Profile picture for davidhawke
There's a great program in Colorado that is backed by CHFA (Colorado Housing & Finance Authority). It's a conventional loan only requiring 3% down.  Best of all it has absolutely no mortgage insurance whatsoever, even at only 3% down.  It requires a 680 fico score, and follows conventional guidelines.  So, you would have to be 4 years out of the short sale to qualify for it.  It also has a household income limitation of approximately $114,000 yearly (you can't earn more than that, less is OK). 

This is a PHENOMENAL loan product, and I sold 4 houses last year to clients who used it.  You have to attend a one hour class (by phone), to qualify, but other than that it has no difficult restrictions.   However, only about 30-40% of the lenders in Colorado have access to it... so, not every lender you speak with is familiar with it.  It typically saves most buyers $175-$200 per month, compared to the payment that an FHA loan would have for the same loan amount. 

From what you're saying, it sounds like this loan might let you have the best of both worlds... paying off your debt, and still avoiding MI on a loan.  
  • February 20
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Great questions.

As mentioned we would be able to gross up your wifes retirement income since it is non-taxable income which will be a great benifit to the two of you as far as buying power.

I would say prior to paying off the $13,000 loan to talk to your lender and have hime run numbers both ways to see which one will be more of a benifit to you as far as buying power so you know if it is worth it to pay it off as it may not increease your buying power to where you want it to be.

Your option as far as loans go you would have the option for FHA you would also have the option to go conventional if you follow the guidelines below.

4 years from date sale closed and transfered to new owner or transfered back to bank with 10% down
2 years from date sale closed and transfered to new owner or transfered back to bank with 20% down

I hope this information helps, please feel free to reach out to me with any additional questions.

  • February 20
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Aerogirl, 

First off regarding her pension income you are correct in the fact that since it is not taxed we would be allowed to ''gross up'' that income by 125%.

Secondly as long as teh new job here in Colorado is the same position and line of work there is a good chance we can use it to qualify with the correct amount of time on the new job.

On the savings question this is going to boil down to opinion but if it were me I would save as much as you possibly can for the down payment.  Avoiding FHA would be the primary goal and the larger the down the more likely you have other options.
  • February 20
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Sounds like you have many options and Welcome to Colorado. Its a great place to live and most of us are from another part of the country. Very friendly folks here.

A knowledgable mortgage broker is your first step in this process. I highly recommend Pamela Todd of Megastar Financial, [Removed by Zillow Moderator. Please see our Good Neighbor Policy.] Pamela will run through all the scenarios with you, and when you're ready to go will truly pre-approve you (not just prequalify) so that your offer on the home of your dreams is stronger than the rest.

Best of luck!
  • February 20
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Profile picture for shapiroamg
I would contact Nic who is a great Loan Officer in CO:

http://www.zillow.com/profile/Colorado-Lender/
  • February 20
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