Posted on: 05th Apr, 2010 03:51 pm
Hello,
I curenently own a house that is too big for my wife and me. We are looking to let my brother and his family live in it and we will go buy a smaller house for the two of us (as I am almost at retirement age).
What would be the requirements to quality for the new house (which would become our primary residence).
Thank You
I curenently own a house that is too big for my wife and me. We are looking to let my brother and his family live in it and we will go buy a smaller house for the two of us (as I am almost at retirement age).
What would be the requirements to quality for the new house (which would become our primary residence).
Thank You
Hi Angus,
You can take a mortgage to purchase a new house, provided your credit scores are good and you have sufficient income. What are your current credit scores? Do you have any negative items from the past on your credit report? Do you have adequate income to afford both the mortgage payments? What would happen if your brother does not make payments to you? Will you be able to make the current payment besides making the monthly payment on the new mortgage?
You can take a mortgage to purchase a new house, provided your credit scores are good and you have sufficient income. What are your current credit scores? Do you have any negative items from the past on your credit report? Do you have adequate income to afford both the mortgage payments? What would happen if your brother does not make payments to you? Will you be able to make the current payment besides making the monthly payment on the new mortgage?
The mortgage payments for both houses will be included in the calculation of the debt ratios for qualification for a mortagge on the new house.
and based on what john's just told you, i surmise that it's going to be a difficult row to hoe. lenders are unable to consider rental income from a former property that you'll be retaining ownership of unless you have a plentiful amount of equity. all the fraud of the not too distant past has caught up with us, precipitating this standard.
my credit score is almost 800 - My wife's around 750 and we have never missed a payment or late payment in my life. Gross income per month is around 5200 - current mortgage is 1300. car loan is 235 student loan is 110, credit line payment 100 and we have no revolving credit card balances
We have about $25-$45k we can put down on the new house. How does all this look?
Looks to me like you qualify for an $85,000 mortgage at a 45% debt ratio.
Add your down payment of at least $21,250 and that is a purchase price of $106,250 with a 20% down payment and no private mortgage insurance. Add more of a down payment and you get a higher purchase price.
It may be possible to get approval at 50% debt ratio or maybe even 55% debt ratio with Freddie Mac and that could be a higher mortgage and a higher purchase price.
If you pay off the car loan or the student loan or the credit line the mortgage can be higher. For example, if you pay off the credit line the mortgage can be $100,800. I have no idea how much money it takes to pay any of them off. If the credit line is a HELOC on the existing house it may have to be paid off and closed.
Add your down payment of at least $21,250 and that is a purchase price of $106,250 with a 20% down payment and no private mortgage insurance. Add more of a down payment and you get a higher purchase price.
It may be possible to get approval at 50% debt ratio or maybe even 55% debt ratio with Freddie Mac and that could be a higher mortgage and a higher purchase price.
If you pay off the car loan or the student loan or the credit line the mortgage can be higher. For example, if you pay off the credit line the mortgage can be $100,800. I have no idea how much money it takes to pay any of them off. If the credit line is a HELOC on the existing house it may have to be paid off and closed.
it may be that you're better off using less for your downpayment and eliminating some of that debt. of course, that depends on just how much you owe at this time on each one.
i am in agreement with john; counting your existing mortgage debt in the ratio is really a drawback, but that's how the market is.
i am in agreement with john; counting your existing mortgage debt in the ratio is really a drawback, but that's how the market is.