Ask the mortgage man - Tilted Forum Project Discussion Community

sky_driver · 10-02-2003, 07:59 AM

To show my thanks for all the advice I have received from the TFP, I wanted to offer my advice or assistance to others. Other than being able to offer advice on flying Cessna 172's, the only other thing I know about is mortgages, having been in this business since 1989. So if anyone has a question, I will do my best to answer it.

irseg · 10-02-2003, 08:45 AM

Cool! Thanks for offering your advice. It's quite timely, as I'm looking to buy a house in the $120k range this winter.

Factors against me:

-I'm 21.
-Not much credit. 1 credit card which I've had since last December, a student loan in repayment, a few bank accounts, a few years of paying utilities, and that's pretty much it. 1 late student loan payment, everything else is fine.
-Don't want to put much down. Maybe $4000-6000 or so.
-The lease on the house I'm renting expires in February and I want to be into a house by then, so I'm kind of in a hurry. I'm getting sick of paying someone else's mortgage.

Factors in my favor:

-7 years steady employment, a little over a year at my current job.
-Making about $55k/yr.

Is it going to be hard for me to get financing because of my weak credit history and not putting much down? How do I get started? Also, is it easy to roll some extra money into the mortgage to pay for additional costs (furniture, repairs, etc)? Any advice you have would be greatly appreciated.

sky_driver · 10-02-2003, 09:14 AM

Irseg, from above information, you should be fine. Age has nothing to do with it. As far as credit, it sounds like you have enough. The one late student loan payment should not hurt you, just make sure all other payments are on time( this is a must or your credit history can be SCREWED and your credit rating will suffer which can make or break your approval). You should be able to get by with a down payment of $4000-$6000, as your steady employment and good income are great factors on your side. I do not know how much your monthly debt is, but still with your income, and average debt, you should be ok. As far as rolling extra money into the loan for furniture you probably won't be able to do that, but you can roll in the closing costs to save you some out of pocket costs. As far as rolling in money for repairs, you possibly can do that with some FHA loans. My suggestion would be to talk to a local mortgage broker about 3 months prior to buying the home, as you can go ahead and get pre approved ( not pre qualified... but actually approved ). Most approvals are good for 3 months. That way you can know that you have been approved, and can use that when negoiating for the home. I hope this has been helpful, and please if you have any more questions, or I have not been clear on some things, just let me know and I will try to be more clearer.

irseg · 10-02-2003, 09:11 PM

Thanks for the help! Your post is very informative. I'm going to talk to my bank next week and see what they say. As for debt I have about $9500 in student loans (payments are a little over $100/mo) and a few hundred on the credit card, so that shouldn't be a problem.

Oh, and one other question. About half my income is salary, the other half is a business venture (invoiced as a "consulting fee", taxed as misc income). Is the latter considered less significant since I'm not on a company payroll?

sky_driver · 10-03-2003, 04:50 AM

Irseg, you should be commended for having such little debt at your age, along with an excellent income. As far as your income being half salary and half consulting fee, it should not be a problem. I am not sure what you mean by half of it being a business venture, but I would suggest that you just say it is all income, and not detail that you have a business in addition to your regular job ( unless you have had the business venture for at least 1 year and it shows up on your tax return as positive income.) Many people have side jobs/businesses that they use to write off a lot of income in order to pay less taxes, but then when it comes to qualifying for a mortgage they have a tough time qualifying because of their lower adjusted income. A good mortgage lender can work with you on this. One final bit of advice, try not to make any major purchases before you close on the new home. In other words, don't buy a new car, or furniture for the new home until you have actually closed on the home. Even if you purchase something that you do not have to make payments on until a year from now, that debt will show up on your credit report and count against your debt to income ratio.

10-02-2003, 07:59 AM	#1 (permalink)
sky_driver Insane	Ask the mortgage man To show my thanks for all the advice I have received from the TFP, I wanted to offer my advice or assistance to others. Other than being able to offer advice on flying Cessna 172's, the only other thing I know about is mortgages, having been in this business since 1989. So if anyone has a question, I will do my best to answer it.

10-02-2003, 08:45 AM	#2 (permalink)
irseg Junkie Location: Florida	Cool! Thanks for offering your advice. It's quite timely, as I'm looking to buy a house in the $120k range this winter. Factors against me: -I'm 21. -Not much credit. 1 credit card which I've had since last December, a student loan in repayment, a few bank accounts, a few years of paying utilities, and that's pretty much it. 1 late student loan payment, everything else is fine. -Don't want to put much down. Maybe $4000-6000 or so. -The lease on the house I'm renting expires in February and I want to be into a house by then, so I'm kind of in a hurry. I'm getting sick of paying someone else's mortgage. Factors in my favor: -7 years steady employment, a little over a year at my current job. -Making about $55k/yr. Is it going to be hard for me to get financing because of my weak credit history and not putting much down? How do I get started? Also, is it easy to roll some extra money into the mortgage to pay for additional costs (furniture, repairs, etc)? Any advice you have would be greatly appreciated.

10-02-2003, 09:14 AM	#3 (permalink)
sky_driver Insane	Irseg, from above information, you should be fine. Age has nothing to do with it. As far as credit, it sounds like you have enough. The one late student loan payment should not hurt you, just make sure all other payments are on time( this is a must or your credit history can be SCREWED and your credit rating will suffer which can make or break your approval). You should be able to get by with a down payment of $4000-$6000, as your steady employment and good income are great factors on your side. I do not know how much your monthly debt is, but still with your income, and average debt, you should be ok. As far as rolling extra money into the loan for furniture you probably won't be able to do that, but you can roll in the closing costs to save you some out of pocket costs. As far as rolling in money for repairs, you possibly can do that with some FHA loans. My suggestion would be to talk to a local mortgage broker about 3 months prior to buying the home, as you can go ahead and get pre approved ( not pre qualified... but actually approved ). Most approvals are good for 3 months. That way you can know that you have been approved, and can use that when negoiating for the home. I hope this has been helpful, and please if you have any more questions, or I have not been clear on some things, just let me know and I will try to be more clearer.

10-02-2003, 09:11 PM	#4 (permalink)
irseg Junkie Location: Florida	Thanks for the help! Your post is very informative. I'm going to talk to my bank next week and see what they say. As for debt I have about $9500 in student loans (payments are a little over $100/mo) and a few hundred on the credit card, so that shouldn't be a problem. Oh, and one other question. About half my income is salary, the other half is a business venture (invoiced as a "consulting fee", taxed as misc income). Is the latter considered less significant since I'm not on a company payroll?

10-03-2003, 04:50 AM	#5 (permalink)
sky_driver Insane	Irseg, you should be commended for having such little debt at your age, along with an excellent income. As far as your income being half salary and half consulting fee, it should not be a problem. I am not sure what you mean by half of it being a business venture, but I would suggest that you just say it is all income, and not detail that you have a business in addition to your regular job ( unless you have had the business venture for at least 1 year and it shows up on your tax return as positive income.) Many people have side jobs/businesses that they use to write off a lot of income in order to pay less taxes, but then when it comes to qualifying for a mortgage they have a tough time qualifying because of their lower adjusted income. A good mortgage lender can work with you on this. One final bit of advice, try not to make any major purchases before you close on the new home. In other words, don't buy a new car, or furniture for the new home until you have actually closed on the home. Even if you purchase something that you do not have to make payments on until a year from now, that debt will show up on your credit report and count against your debt to income ratio.