Profile picture for elbeyisimo

ready to apply for a home mortgage, first time, high cc debt, good scores

Hello people of Zillow,

I hope you all can provide me with some great advice.  I want to buy a 2 family home, so I can rent out one of the habitation to help me with the mortgage payments.  Between my wife and myself we have 27K in credit card debt, all current which we pay on time above the minimum balance.  her credit score is 680 and mine is 723.  She makes 31K/yr I make 50K/yr.  We also have approx. 23K in savings, we are 24 years old.

Will banks be willing to lend to us? And im kinda paranoid about missing out on these lower than 5% rates, which are above 5% as of today. Obviously i would want an FHA loan, but i really do not know what to do....should i wait it out longer?
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June 04 2009 - Richmond Hill
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Answers (10)

Profile picture for Ken Kopper
elbeysimo, I think if you feel comfortable in purchasing a home as a long term decision you should definitely look into it but would strongly recommend you work on a budget to make sure you can

1. Live comfortably
2. Maintain plan to pay off the credit card debt
3. Continue your savings habits
4. Make your mortgage paymnent

As you are working up a monthly budget, be honest with yourself and realistic about your spending and consider these spending habits in this order because you are going to be putting #4 1st once you purchase.

Best of Luck,
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June 15 2009
For an accurate answer visit any qualified loan officer to see what your budget can handle--that is if you already haven't done so--anyway, paying down your debt may be recommended.  
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June 15 2009
Banks are willing to lend to individuals with credit scores above 620, which you both have.  Your income is decent, but your credit debt is very high.  Based on the information given, we cannot say whether your are able to qualify for an FHA loan until we know your outgoing obligations monthly.  Rates are still reasonable and I cannot recommend you to "wait it out" because you don't know which way the market will go.  If you are able to qualify now and rates end up coming down, you are able to "streamline" refinance via FHA to lower your rate&payment.  Any other questions, feel free to ask.  I hope this helps...
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June 15 2009
Profile picture for Optimus012
I think you should pay some of that 31K debt with your 23K savings. Leave a little left for a 3.5% downpayment and maybe you'd qualify for a house that's 100K to 150K. You'd have to talk to a lender to see how much you'd qualify for.
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June 07 2009
Profile picture for BMFPitt
As a taxpayer that will eventually be paying for the loan that you will surely be approved for due to the bank having no real risk in FHA loans, I must shake my head at the fact that you don't see having 1/3 of your gross income as credit card debt as a giant neon sign that you can't manage money and that lowering it should be your #1 priority - not taking on more debt.  I hope you remember this post when you get your foreclosure notice.
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June 07 2009
Good learning experience Patty. The best ones who get you when you're new are the ones who want to see million dollar houses no preapproval. More and more of my clients come to me preapproved now, but not all. Without a good lender there is no way to know which properties to even show them! Elbeyisimo I HIGHLY recommend that you set an appointment to meet a reputable financial planner. From my experience the pro will recommend something similar to: leaving 4-6 months expenses in savings(rainy day fund), paying down drastically on the c.c. debt, and staying away from new c.c. debt. Rates are indeed low but house values are falling! Personally I would rent till house values in your area can hold steady.  
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June 06 2009
Profile picture for wetdawgs
Your debt to income ratio is very high.   

Will banks be willing to lend to you?  Why don't you put in a query with the Zillow mortgage marketplace for no cost evaluation of your situation.    Don't waste your time (or an agent's time) looking until you have a clue if you will be approved and the amount of the preapproval.  (I strongly recommend purchasing for less than the preapproval amount).

My humble guess is your desires are a bit ahead of your ability to purchase.  
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June 06 2009
I agree with task. Pay down the CC debt. Nevermind the used house sales lady screaming buy now. She just wants to get paid. SHe doesn't care about your future.
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June 06 2009
Profile picture for Tasksgirl
Use all or most of the savings to pay down the credit cards.. that is WAY too much debt.. then definitely use FHA to put down 3.5%
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June 06 2009
Next time for your future reference, try to keep some of this Private! , the internet is not that good of a place to put all of this out there, anyway---
Are there any student loans involved?-NO , DONT WAIT IT OUT !!
I recently have been taking buyers out in my car, without a lender letter, and am very sad that they could not buy once they went to a lender , so my NEW  rule , which I should always go by -GET THE BUYER TO THE LENDER FIRST !! it is a sad day to find the home of your dreams and then NOT BE ABLE TO BUY IT !!

You are smart to want to grab these rates and the $8000.00 credit only goes till Dec. 09 , so JUMP OFF THE FENCE AND GO !!
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June 04 2009
 
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