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Answers (16)
- Shane Milne, "ShaneTheMortgageMan"
- Contributions:463
Sellers are usually willing to negotiate, however I am in California so I am not exactly sure how flexible builders in Stephenville, TX are being right now. I would definitely recommend you seek out a local real estate agent who has experience with helping people buying from builders in your area - they should be able to provide insight on which builders are looking to wheel & deal. Also, the tax rate I am using is 3%, I am not sure how much that varies from the actual property tax rate where you are at... if it's more like 2.5% then that decreases your monthly payment, etc. I know some areas of Texas are even 3.3% or higher, so to pinpoint that down you'll want to speak with the county assessor/treasurer to see how they'd tax specific homes you are interested in (takes some research but that is how it's done).
- hotdigitidam
- Contributions:7
That's kind of what I figured as well. Although I guess I was a little off, I thought it would be between 900-1000 on the monthly payment. Thank you for you help. I'm hoping we could get more around 950 if not less so lower than 140k on home price. I wonder if some of the newer homes that are being built and are move in ready that run around 134-137k , that the ones who have them homes would come down some on them to be more in our pice range. Have you ever seen that happen? How strict are some on the prices? I know when my ex husband and I bought our house, of course we offered below their asking price and they took it. But it was not a new home.
- Shane Milne, "ShaneTheMortgageMan"
- Contributions:463
You won't ever look like a fool by trying to qualify for a home... but the debt ratio is going to be in the upper 50's for the price range you are looking in so you'll need to make sure the lender you are going to get pre-approved with allows debt ratios that high. If they don't, they you don't even need to bother since you'll just be wasting your time... but if they do, then you have a chance and should go through the pre-approval process. $140k sales price will likely have around a $1,100/mo payment though.
- hotdigitidam
- Contributions:7
Should we try for a house between 130-140k or would we look like fools?
Here is an actual break down of our financial stats as of today...
Income:
Actual Work: 35,048.26/year without OT
VA Disabiltiy at this time: 644/monthly
We also bring in 957/monthly from educational benefits. Which does not count towards income, but will count for extra funds. (save)
Total Debt:
1070/month (does not include a home PITI)
Of course we have different FICO scores but last time they were checked which was recently 1 was 620's and the other was 680's. We would be using a VA Loan!
- hotdigitidam
- Contributions:7
Oh my... I just typed a reply and it's gone :(
So, here we go again..
Yes, my husbands compensation is VA Disability. I don't understand the whole can be grossed up by 125%. BUT, there is a lot I don't totally understand!
The notes on my vehicles is set up the way I want them for 2 reasons.. I do not wanna pay out the hine in interest. I need my money and don't wanna just give it away. We didn't close out anything on our credit by trading a vehicle in for a new one. My husband came into this marriage with the cadillac that was traded in, which he paid cash money for.. So it was not on his credit. I also came into the marriage with a vehicle that is on a note.. I will not refinance due to the low interest rate I already have. I am pretty much down to paying principle on that vehicle anyway.. As for the new one.. We walked out at .09%. If you go over 4-5 years you can not always get the better int rate. So, I already know I will not refinance our vehicles.
Of course to have those rates, we have to have decent credit. I say we have good credit, not great/superior like some. I am ok with where we are and will always strive to improve.
As I said before, I was a home owner in the past. I know some of the pros and cons with owning a home. The home was 20+ years with the same A/C unit that was put in when built. It was pure heck and every year there was an issue.. nothing that wasn't manageable! There were other issues besides the unit.. had to get a new roof. Insurance didn't cover it, paid out of pocket.. Everything worked out. I know its not easy and it takes work.
Just so everyone knows. We have been looking into buying for almost 2 years. We, just like many others, had some things to clean up and get straight. I didn't wake up Friday morning and say we are buying. I just wanted some feedback from others out there. Help, information, advice, and that would be good or bad. Some info from someone other than the guy we have been talking with. I guess I'd like to know what the chances are of us getting approved for 130k-140k. I feel the chances are slim, but I can't help feeling a little positive that things may work out.
Looking forward to more feedback from you and others. Thanks :)
So, here we go again..
Yes, my husbands compensation is VA Disability. I don't understand the whole can be grossed up by 125%. BUT, there is a lot I don't totally understand!
The notes on my vehicles is set up the way I want them for 2 reasons.. I do not wanna pay out the hine in interest. I need my money and don't wanna just give it away. We didn't close out anything on our credit by trading a vehicle in for a new one. My husband came into this marriage with the cadillac that was traded in, which he paid cash money for.. So it was not on his credit. I also came into the marriage with a vehicle that is on a note.. I will not refinance due to the low interest rate I already have. I am pretty much down to paying principle on that vehicle anyway.. As for the new one.. We walked out at .09%. If you go over 4-5 years you can not always get the better int rate. So, I already know I will not refinance our vehicles.
Of course to have those rates, we have to have decent credit. I say we have good credit, not great/superior like some. I am ok with where we are and will always strive to improve.
As I said before, I was a home owner in the past. I know some of the pros and cons with owning a home. The home was 20+ years with the same A/C unit that was put in when built. It was pure heck and every year there was an issue.. nothing that wasn't manageable! There were other issues besides the unit.. had to get a new roof. Insurance didn't cover it, paid out of pocket.. Everything worked out. I know its not easy and it takes work.
Just so everyone knows. We have been looking into buying for almost 2 years. We, just like many others, had some things to clean up and get straight. I didn't wake up Friday morning and say we are buying. I just wanted some feedback from others out there. Help, information, advice, and that would be good or bad. Some info from someone other than the guy we have been talking with. I guess I'd like to know what the chances are of us getting approved for 130k-140k. I feel the chances are slim, but I can't help feeling a little positive that things may work out.
Looking forward to more feedback from you and others. Thanks :)
- Shane Milne, "ShaneTheMortgageMan"
- Contributions:463
So your husband receives some VA compensation, as in VA disability income? That is almost always non-taxable, and if it is for your husband, then that portion of the income can be grossed up by 125% for qualifying purposes.
Also, just because you want to pay off your cars in a short period of time doesn't mean you need to have a car loan that requires you to - refinancing them for a longer period of time and reducing the monthly payment on paper will help you qualify for more of a sales price, and there isn't anything that says you can still make that shorter term (higher) payment and pay them off in the same amount of time you are currently doing.
Before you'd do anything, please realize that closing/opening accounts often will hurt your scores for a few months afterwards.... however, you can refinance your car loans mid-application/after the initial credit report is pulled, so that way you can utilize the scores before the car refinancing occurs while still using the payments from the new car loans.
And +1 to "Home buying is not an emergency, but something that ones works towards."
Also, just because you want to pay off your cars in a short period of time doesn't mean you need to have a car loan that requires you to - refinancing them for a longer period of time and reducing the monthly payment on paper will help you qualify for more of a sales price, and there isn't anything that says you can still make that shorter term (higher) payment and pay them off in the same amount of time you are currently doing.
Before you'd do anything, please realize that closing/opening accounts often will hurt your scores for a few months afterwards.... however, you can refinance your car loans mid-application/after the initial credit report is pulled, so that way you can utilize the scores before the car refinancing occurs while still using the payments from the new car loans.
And +1 to "Home buying is not an emergency, but something that ones works towards."
- hotdigitidam
- Contributions:7
Wetdogs,
Yes, I know it all so well! I never mentioned this before now in any of my posts... But I was a home owner with my 1st husband... Which at that time everything from the paperwork to the loan was only is his name. So, of course that does not show up in my credit history. Which also has its ups and downs! LOL. but of course being in a community property state it didn't hurt once it sold and I too was a winner!
What gets me is... We can pay up to 1000 a month in rent. I am very good with finances. Why in the heck would I wanna invest 1000 a month in rent? 750 is close enough and as I stated we live in a duplex.. it isn't even a rental house!!! If we can do that, we can buy! I'm just not going to settle in a ran down sided house that more than likely is gas electirc and window units in this town... not to mention in a ran down part of town!
I'll figure something out & I know it won't be over night. Thanks ;)
Yes, I know it all so well! I never mentioned this before now in any of my posts... But I was a home owner with my 1st husband... Which at that time everything from the paperwork to the loan was only is his name. So, of course that does not show up in my credit history. Which also has its ups and downs! LOL. but of course being in a community property state it didn't hurt once it sold and I too was a winner!
What gets me is... We can pay up to 1000 a month in rent. I am very good with finances. Why in the heck would I wanna invest 1000 a month in rent? 750 is close enough and as I stated we live in a duplex.. it isn't even a rental house!!! If we can do that, we can buy! I'm just not going to settle in a ran down sided house that more than likely is gas electirc and window units in this town... not to mention in a ran down part of town!
I'll figure something out & I know it won't be over night. Thanks ;)
- hotdigitidam
- Contributions:7
Also, we are no longer active military. Our income is strictly what my husband brings in. It is 42k as of right now. That includes VA Compensation and his regular employee. That is not counting the GI Bill BAH.. I did not include that in the origional post because I had a feeling it did not count as income due to it not being a for ever pay!
I am a SAHM. I do not bring in any extra income. We are in a community property state, which has its up and downs.. If it weren't for being in a community property state, we would buy under my spouse only because he isn' listed on one of our vehicle notes. HAHA.. wouldn't that be nice! I guess there is nothing more I can do until we have ZERO debt. I have no clue how I would find someone that would trust us and go over the 50% dti. I won't even continue talking to the guy we were talking with.. You can't win with him!
I am a SAHM. I do not bring in any extra income. We are in a community property state, which has its up and downs.. If it weren't for being in a community property state, we would buy under my spouse only because he isn' listed on one of our vehicle notes. HAHA.. wouldn't that be nice! I guess there is nothing more I can do until we have ZERO debt. I have no clue how I would find someone that would trust us and go over the 50% dti. I won't even continue talking to the guy we were talking with.. You can't win with him!
- wetdawgs
- Contributions:26830
Sounds like you've had an interesting learning experience as you've gone through your studies related to home purchase. Taking what you've learned recently, you may have more tools for make a plan. Home buying is not an emergency, but something that ones works towards. You'll get there, and it will be more comfortable than if you were to purchase today. While rent and mortgage may be similar, home ownership means you pay for the furnace and the roof, the paint and the clogged toilet. It adds up.
- hotdigitidam
- Contributions:7
Sorry all, I tried to reply and my message would not send. Any who, I knew the educational bah would not count at monthly income after a little research. I have spoken with someone but they hav not done a prequalification on us. He stated we would only be approved at 80k. Well in my home town that will not get us much. It's sad. A decent house in a decent area runs around 120-140k it's a college town and it makes it hard for families. As for our debt it is vehicles.. We do not like to pay then out over 7 years! We get our notes for 4. We have a little less than 2 yrs on 1 & the other is new. We had given up on house searching due to other reasons & decided to get rid of a vehicle that was given us a lot f problems & got a new one as a family vehicle. I knew it would hurt us to add that debt but didn't think it would hurt as much as it has, once I started back up on a home search! The mortgage broker I had been talking to swears we won't get better than 80k and no one will go over 50% debt to income ratio. I feel so down about this because I feel I'm no asking for them to go 80% dti... I know we would be pushing it wanting like 60% dti... Ugh! I use the calculators and we can do it but others don't see that. We currently pay 750 in rent & we just now started using the gi bill.. So the last year and half we have live in our duplex we weren't getting the extra funds. We were recently going to take over a lease at 950 a month but decided not to because if we could swing that why wouldn't we buy?! To be honest we were looking at newer built single family homes.. They start around 130k.. I guess we are stuck here! Thanks for your help.
I hope I answered every question...
I hope I answered every question...
- sunnyview
- Contributions:25139
You could run a few numbers through a mortgage calculator like this one here to get an idea or see how different debts affect your qualification amount, then give a good lender a call. They can tell you what you might qualify for and what you can do to improve your application before you apply for a mortgage.
- Shane Milne, "ShaneTheMortgageMan"
- Contributions:463
The original poster says "957 a month in BAH using a gi bill", the G.I. Bill is commonly known as providing educational benefits. I looked up and see that BAH can be provided in relation to a G.I. Bill for distance learners (I assume that means those who take classes online) and related to tuition. If you know of another situation that is non-educational related where someone would get BAH in relation to a G.I. Bill I'm all ears (eyes).
I found my information the information on BAH & G.I. Bills at http://www.gibill.va.gov/benefits/post_911_gibill/index.html and http://www.gibill.va.gov/gi_bill_info/ch33/benefit_comparison_chart.htm.
I wouldn't assume that someone is active military if they are getting BAH, but I would do some research on it ahead of time and I wouldn't automatically assume it could qualify.
Regardless of the situation with BAH, more details need to be known, as I said before.
Gordon, there are several lenders allowing manually underwriting up to 60% DTI with VA financing (Flagstar will even approve debt ratios over 60%, as crazy as that is), and the 41% debt ratio that VA publishes is a guide, and says it is secondary to residual income, and should not automatically trigger approval or rejection of a loan. It says to take it into consideration with all other factors.
http://www.benefits.va.gov/WARMS/docs/admin26/pamphlet/pam26_7/ch04.doc is where all of that information can be found.
I found my information the information on BAH & G.I. Bills at http://www.gibill.va.gov/benefits/post_911_gibill/index.html and http://www.gibill.va.gov/gi_bill_info/ch33/benefit_comparison_chart.htm.
I wouldn't assume that someone is active military if they are getting BAH, but I would do some research on it ahead of time and I wouldn't automatically assume it could qualify.
Regardless of the situation with BAH, more details need to be known, as I said before.
Gordon, there are several lenders allowing manually underwriting up to 60% DTI with VA financing (Flagstar will even approve debt ratios over 60%, as crazy as that is), and the 41% debt ratio that VA publishes is a guide, and says it is secondary to residual income, and should not automatically trigger approval or rejection of a loan. It says to take it into consideration with all other factors.
http://www.benefits.va.gov/WARMS/docs/admin26/pamphlet/pam26_7/ch04.doc is where all of that information can be found.
- Gordon Haraway, "1stTimebuySpecialist"
- Contributions:250
I'm totally confused by Shanes answer. Hotdigitidam makes no mention of an educational VA benefit. Since he mentions he is getting BAH should we all assume he is active military?
As for Shane's statement that the VA doesn't have a debt ratio limit per se' that is totally incorrect, it is published right in the VA lender Mabnual at 41%. It does go on to say it can be exceeded with compensationg factors. But I know of no lender who will go past 50%.
Also these is another underwring guideline that must be addressed and in itself will help determine the maximum debt ratio. That is the residual income requirement. Residual income is the excess income left over each month after all debts are paid. VA has a chart in the manual show the minimum residual required. Borrowers who exceed these minimum have a much higher chance of being approved at higher debt limits.
- Shane Milne, "ShaneTheMortgageMan"
- Contributions:463
VA educational benefits cannot be used as income, so if that is the what you $957/mo is from (GI Bill) then you can use it towards your "funds to close" at the end, but it can't be used as qualifying income.
If it's not an educational benefit, then it may be able to qualify but further details would need to be known.
If you have $1,070/mo in payments (remember that should not include what you currently pay for rent since you are replacing that with the new mortgage payment) & $3,500/mo in income ($42k/12 months) then your debt ratio without any mortgage starts out at 30.5%. VA financing doesn't have a maximum debt ratio per se, but most lenders will cap out at about 50-60%. Assuming a 60% max debt ratio, a 3% tax rate, a 4% interest rate, and $1,200/year for homeowners insurance, that would put your max sales price at about $125k. The total debt ratio in that situation would be 59.749%.
How does your $1,070/mo in debt break down?
If it's not an educational benefit, then it may be able to qualify but further details would need to be known.
If you have $1,070/mo in payments (remember that should not include what you currently pay for rent since you are replacing that with the new mortgage payment) & $3,500/mo in income ($42k/12 months) then your debt ratio without any mortgage starts out at 30.5%. VA financing doesn't have a maximum debt ratio per se, but most lenders will cap out at about 50-60%. Assuming a 60% max debt ratio, a 3% tax rate, a 4% interest rate, and $1,200/year for homeowners insurance, that would put your max sales price at about $125k. The total debt ratio in that situation would be 59.749%.
How does your $1,070/mo in debt break down?
- Gordon Haraway, "1stTimebuySpecialist"
- Contributions:250
You state you bring in $957 a month. is this your gross or net pay? Lenders will abse their debt to income limit on your base gross pay. In addition to your BAH there is also your BAS. In both cases these are grossed up 25%because of their non taxable nature.
As to your monthly debt we are not going to look at debts like cell phone, utilies ect. The only wey to know for sure is to contact a lender. I'm in maryland and aslo serve many other states along the atlantic seaboard.
Also being a first time home buyer there may be programs available to you.
As to your monthly debt we are not going to look at debts like cell phone, utilies ect. The only wey to know for sure is to contact a lender. I'm in maryland and aslo serve many other states along the atlantic seaboard.
Also being a first time home buyer there may be programs available to you.
- wayne lancaster, "funds2"
- Contributions:1177
There are many factors in qualifying for a mortgage loan particularly a VA loan. Best option is get a referral to a local loan officer or go on Zillow Professional and contact a loan officer. Talk with a few and select one that you feel is competent and you feel comfortable. You should be able to know on what basis pre approval is possible in less than 24 hrs.
How much will we be approved for?
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