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Message
Mortgage qualification
Posted on 1/12/17 at 5:02 pm
Posted on 1/12/17 at 5:02 pm
Are there any reliable sites to tell me how much of a mortgage loan I'm likely to be approved for? Every site I try tells me a number that seems rather high.
Also, if my car note will be paid off in 6 months is it factored in my ratio? Or should I go ahead and pay it off even though it's 0 percent?
Also, if my car note will be paid off in 6 months is it factored in my ratio? Or should I go ahead and pay it off even though it's 0 percent?
4
Posted on 1/12/17 at 5:26 pm to cfa626
Don't pay it off if it only has 6 months left. They will not have to use it in your ratio's. Most people are surprised how high of an amount they would qualify for.
If you want to do the basic math yourself. Use 45% back ratio for a conventional loan or a 55% back ratio for an FHA loan. Include all debts on your credit report, Plus child support(if any), and other property(if any) obligations. After totaling together with your proposed housing payment divide by your monthly income.
Again don't pay off the car note especially since it is at zero. You will probably need that extra cash either for DP, closing costs, or all the expenses it takes to fill up a new home.
If you want to do the basic math yourself. Use 45% back ratio for a conventional loan or a 55% back ratio for an FHA loan. Include all debts on your credit report, Plus child support(if any), and other property(if any) obligations. After totaling together with your proposed housing payment divide by your monthly income.
Again don't pay off the car note especially since it is at zero. You will probably need that extra cash either for DP, closing costs, or all the expenses it takes to fill up a new home.
Posted on 1/12/17 at 6:23 pm to HYDRebs
quote:
Don't pay it off if it only has 6 months left. They will not have to use it in your ratio's
Why not? It's almost all principal at this point so it's his money either way.
Posted on 1/12/17 at 9:58 pm to Mr.Perfect
Serious?
It is all principal. He's not losing any thing to interest and if he keeps that money in any account that accrues a savings interest he will end up ahead by not paying it off right away. TVM.
quote:
It's almost all principal
quote:
Zero percent interest
It is all principal. He's not losing any thing to interest and if he keeps that money in any account that accrues a savings interest he will end up ahead by not paying it off right away. TVM.
Posted on 1/12/17 at 11:30 pm to HYDRebs
Ok ok. I clearly missed that tiny lil detail
Posted on 1/13/17 at 6:48 am to Mr.Perfect
They use all your monthly payments on debt you owe, so it doesn't matter how much your car loan is it matters what your monthly payment is. Then they use a debt payment to income level, it has to be below 45% generally. So if you make $4000/ month you would qualify for a monthly payment of $1800 mortgage.
Posted on 1/13/17 at 9:02 am to baldona
quote:
o if you make $4000/ month you would qualify for a monthly payment of $1800 mortgage.
The thought of spending almost half of my salary on mortgage makes me uncomfortable.
I guess the estimators I was using probably were accurate, and I'm just not one of those people to buy the biggest house I can qualify for, but rather one that I can afford. I just assumed the estimates were wrong.
Thank you all for your guidance. I am glad to know I don't need to rush and pay the car off.
Posted on 1/13/17 at 12:53 pm to HYDRebs
When my wife and I were in the market we basically just built a budget to see what we were comfortable paying.
We used our after tax & retirement earnings. Included our current expenses (gas/food/TV/phones...) that would not change with a new house, plus our current monthly obligations; then spoke to family and friends that had similar size houses we were looking at to see what there costs were for their utilities, insurance, maintenance, etc. Also set how much we wanted to budget for savings (Vacation, kids tuition, home repairs, auto repairs...). After that we used the remaining balance to back into what we wanted our mortgage payment to be and figured out how much house we wanted. We qualified for almost 150% of what we actually wanted to buy just to make sure we could maintain our standard of living.
All future bonuses & raises were then used to pay off debt, upgrade sections of the house, vacations....
We used our after tax & retirement earnings. Included our current expenses (gas/food/TV/phones...) that would not change with a new house, plus our current monthly obligations; then spoke to family and friends that had similar size houses we were looking at to see what there costs were for their utilities, insurance, maintenance, etc. Also set how much we wanted to budget for savings (Vacation, kids tuition, home repairs, auto repairs...). After that we used the remaining balance to back into what we wanted our mortgage payment to be and figured out how much house we wanted. We qualified for almost 150% of what we actually wanted to buy just to make sure we could maintain our standard of living.
All future bonuses & raises were then used to pay off debt, upgrade sections of the house, vacations....
Posted on 1/13/17 at 1:44 pm to cfa626
quote:
The thought of spending almost half of my salary on mortgage makes me uncomfortable. I guess the estimators I was using probably were accurate, and I'm just not one of those people to buy the biggest house I can qualify for, but rather one that I can afford. I just assumed the estimates were wrong. Thank you all for your guidance. I am glad to know I don't need to rush and pay the car off
I'm more knowledgeable about the effects of credit card applications/accounts on a credit report, but another reason I think I've ran across not to pay that car off before you look for a mortgage is because, if your credit file is "thin" that recurring payment on your file is probably helping your score, and its removal by being paid off completely may have a small negative effect.
If your credit file is thick (lots of accounts and types) I wouldn't even worry about it.
This post was edited on 1/13/17 at 1:45 pm
Posted on 1/13/17 at 9:31 pm to cfa626
Any debt that has less than 10 months of payments is not figured into your DTI so you are good.
Posted on 1/14/17 at 10:54 am to cfa626
Use the 33% rule. Pay off debt with a third, invest with a third and enjoy a third on something fun like a vacation.
Posted on 1/14/17 at 1:11 pm to MadDoggyStyle
OP, don't listen to anyone in this thread about their suggestions.
Before you make a move, call a mortgage professional and ask them to pre-qualify you. You'll be giving them permission to pull your credit and you'll need to provide them documentation about your income, confirm your residency/addresses over the past two years or so and a few other pieces of info.
I suggest reaching out to a mortgage broker in order to have this conversation and get these questions answered. A mortgage broker may work for a company, but has access to an array of different lenders and can use the single credit pull and match you up to the best value for your money.
Someone working for an in-house mortgage company or a bank is going to prefer you to be a, "cookie cutter," type of loan that fits their exact requirements and guidelines. This means that if you make moves with your trade lines (credit cards, car notes, etc) that it may work well for their product or mortgage. But if you want to see if that's the best deal for your money out there, the hoops you jumped through for them may not apply to everyone.
A broker will give you solid advice on how to put your credit into the best position possible to qualify for the best deal you can get. Once they've taken their initial application, confirmed your income and credit, they'll come back to you with a basic pre-qualification that tells you how much home you can afford, some general ideas about an interest rate and even more general-if not outright rough-ideas about payments and house-notes based on what loan amounts you tell them you're comfortable with.
They may also come back with frank advice about how to pay off trade lines like a car note or credit cards that will put you into a better position financially or credit-wise (read: increase your credit scores). You may not be ready-immediately-for the range of home you can finance because your rate's a little higher than what you want because you've got some work to do on your credit.
Once you've got their prequalification letter from the broker, you can bring that with you to find a realtor and present that info to them. From there, it's a matter of finding a house you like in the range you're financially comfortable with.
Don't make a move on anything until you talk to a professional who helps people with mortgage financing FIRST...and do not find a realtor first. They're oftentimes going to steer you to a person they have a relationship with on a referral basis. This person may not always be the best person for your mortgage. They are probably always the person who sends the realtor the most business however.
That's not always a good deal for you as a borrower and home-hunter.
Good luck, bro!
Before you make a move, call a mortgage professional and ask them to pre-qualify you. You'll be giving them permission to pull your credit and you'll need to provide them documentation about your income, confirm your residency/addresses over the past two years or so and a few other pieces of info.
I suggest reaching out to a mortgage broker in order to have this conversation and get these questions answered. A mortgage broker may work for a company, but has access to an array of different lenders and can use the single credit pull and match you up to the best value for your money.
Someone working for an in-house mortgage company or a bank is going to prefer you to be a, "cookie cutter," type of loan that fits their exact requirements and guidelines. This means that if you make moves with your trade lines (credit cards, car notes, etc) that it may work well for their product or mortgage. But if you want to see if that's the best deal for your money out there, the hoops you jumped through for them may not apply to everyone.
A broker will give you solid advice on how to put your credit into the best position possible to qualify for the best deal you can get. Once they've taken their initial application, confirmed your income and credit, they'll come back to you with a basic pre-qualification that tells you how much home you can afford, some general ideas about an interest rate and even more general-if not outright rough-ideas about payments and house-notes based on what loan amounts you tell them you're comfortable with.
They may also come back with frank advice about how to pay off trade lines like a car note or credit cards that will put you into a better position financially or credit-wise (read: increase your credit scores). You may not be ready-immediately-for the range of home you can finance because your rate's a little higher than what you want because you've got some work to do on your credit.
Once you've got their prequalification letter from the broker, you can bring that with you to find a realtor and present that info to them. From there, it's a matter of finding a house you like in the range you're financially comfortable with.
Don't make a move on anything until you talk to a professional who helps people with mortgage financing FIRST...and do not find a realtor first. They're oftentimes going to steer you to a person they have a relationship with on a referral basis. This person may not always be the best person for your mortgage. They are probably always the person who sends the realtor the most business however.
That's not always a good deal for you as a borrower and home-hunter.
Good luck, bro!
This post was edited on 1/14/17 at 1:14 pm
Posted on 1/14/17 at 1:16 pm to cfa626
What you can qualify for and what you can afford are not necessarily the same thing.
I can qualify for a note MUCH higher than I would be comfortable with paying, like double or triple.
I can qualify for a note MUCH higher than I would be comfortable with paying, like double or triple.
Posted on 1/14/17 at 8:47 pm to GFunk
quote:
OP, don't listen to anyone in this thread about their suggestions.
Before you make a move, call a mortgage professional and ask them to pre-qualify you.
What if the ones giving suggestions in this thread are mortgage professionals? Mind Blown!
Posted on 1/14/17 at 9:53 pm to npt817
The A-Team posted in this thread? My apologies for the oversight!
ETA: Overlooked your post completely.
ETA: Overlooked your post completely.
This post was edited on 1/14/17 at 9:55 pm
Posted on 1/14/17 at 11:38 pm to GFunk
Thank you all for your help with this. I really appreciate it.
Really glad you said this. Guess what I had planned on doing next week?
But now I'll be doing this
Thank you, Money Board!
quote:
do not find a realtor first
Really glad you said this. Guess what I had planned on doing next week?
But now I'll be doing this
quote:
call a mortgage professional and ask them to pre-qualify you
Thank you, Money Board! Posted on 1/15/17 at 12:07 am to cfa626
Call Nathan - Eustis Mortgage in Prairieville
Posted on 1/15/17 at 8:05 am to npt817
quote:
Call Nathan - Eustis Mortgage in Prairieville
Solid suggestion.
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