Posted on: 07th Feb, 2009 01:30 am
Hello everyone,
I have a question for a friend regarding mortgage loans. and I'll try to make everything short.
A good friend of mine is Thinking about purchasing a home that is under 180k. previous year she didn't really make much money for net income, and around 30k for this year. A couple thousand dollars of credit cards debt with no other payment/debt. credit score are in the low 600s.
is it possible for her to get an 80% to 85% LTV loan nowaday with that income and credit score?
I have a question for a friend regarding mortgage loans. and I'll try to make everything short.
A good friend of mine is Thinking about purchasing a home that is under 180k. previous year she didn't really make much money for net income, and around 30k for this year. A couple thousand dollars of credit cards debt with no other payment/debt. credit score are in the low 600s.
is it possible for her to get an 80% to 85% LTV loan nowaday with that income and credit score?
The question is not really whether we can get her that loan. The real question is can she make the payments with that income? Yes it is possible.
I am a mortgage broker. If I can be of service, please let me know!
M Smith
email address removed by moderator - please do not solicit business here
M Smith
email address removed by moderator - please do not solicit business here
Hi,
As Eric stated, it is possible for just about anyone to get a loan but often the terms are not favorable. Your friend should really be concerned with their ability to repay the loan more than if the loan is possible.
I am going to give you some general calculations below that may help your friend when determining how much house can be afforded:
Gross Income Monthly = $2,500 ($30,000/12)
Multiply x .43 (std debt allowance for a mtg) = $1075
You should subtract the monthly payment for the cc debts as you listed an amount but not how much is paid out monthly.
Difference = Amt of mortgage payment most institutions will loan. This amount includes principal, interest, mortgage insurance, property taxes and insurance and also any special fees such as homeowner association dues or assesments.
Please feel free to let us know if you have any further questions or concerns.
As Eric stated, it is possible for just about anyone to get a loan but often the terms are not favorable. Your friend should really be concerned with their ability to repay the loan more than if the loan is possible.
I am going to give you some general calculations below that may help your friend when determining how much house can be afforded:
Gross Income Monthly = $2,500 ($30,000/12)
Multiply x .43 (std debt allowance for a mtg) = $1075
You should subtract the monthly payment for the cc debts as you listed an amount but not how much is paid out monthly.
Difference = Amt of mortgage payment most institutions will loan. This amount includes principal, interest, mortgage insurance, property taxes and insurance and also any special fees such as homeowner association dues or assesments.
Please feel free to let us know if you have any further questions or concerns.
When qualifying for mortgages, use gross income, not net income. If net income was $30,000, the gross income was probably $37,000 or higher.
If purchase was $180,000 and down payment was 20% the mortgage of $144,000 at 6% would be a debt ratio around 41%. That is probably the highest you should be at and I do not know what property taxes are so I just took a guess at $3,600 annual.
Fannie Mae and Freddie Mac are not pricing favorably with credit scores below 740 and yours are low 600s. Compare Fannie Mae rate and monthly payments with no private mortgage insurance to FHA rate which has Up Front Mortgage Insurance Premium and monthly mortgage payment. If putting less than 20% down payment, only look at the FHA rate and payments.
The buyer appears to be right at upper limit of what debt ratios should be.
Talk with local mortgage broker/banker to be more specific.
If purchase was $180,000 and down payment was 20% the mortgage of $144,000 at 6% would be a debt ratio around 41%. That is probably the highest you should be at and I do not know what property taxes are so I just took a guess at $3,600 annual.
Fannie Mae and Freddie Mac are not pricing favorably with credit scores below 740 and yours are low 600s. Compare Fannie Mae rate and monthly payments with no private mortgage insurance to FHA rate which has Up Front Mortgage Insurance Premium and monthly mortgage payment. If putting less than 20% down payment, only look at the FHA rate and payments.
The buyer appears to be right at upper limit of what debt ratios should be.
Talk with local mortgage broker/banker to be more specific.
A good rule of thumb is only 33% of your income should go to housing expenses. Please also note that the loan amt wouldn't be for 180K as you have closing costs, etc.
the above scenario would seem not to work. the potential borrower's income appears to be insufficient for this purchase price. not factored in is any information concerning real estate taxes, hazard insurance, mortgage insurance.
for example, in my marketplace in connecticut, a person could pay taxes of $2000 annually for a home worth $180K in one town, but pay well over the $3600 that John above cited for a similarly valued home in another town.
real estate taxes are altogether too often overlooked - by buyers, by realtors, by sellers, and occasionally by lenders who dont see the big picture.
honestly, the question posed is incomplete and cannot be answered fully at this time.
for example, in my marketplace in connecticut, a person could pay taxes of $2000 annually for a home worth $180K in one town, but pay well over the $3600 that John above cited for a similarly valued home in another town.
real estate taxes are altogether too often overlooked - by buyers, by realtors, by sellers, and occasionally by lenders who dont see the big picture.
honestly, the question posed is incomplete and cannot be answered fully at this time.
