Anyone with knowledge of real estate that could respond to that?

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My mother is retired living on Social Security and VA disability. She is currently paying $ 699 for rent, but she wants to buy a house. She can not go VA (already used). He made 1800 per month. What is the original price they could afford to maintain or to qualify for already? Is it true that companies will not give you a loan, if the income ratio mortgage of more than 33%? It makes no sense to me because there are so many people in our area to buy $ 300,000 homes on 20,000 dollar profit.

  1. Reply
    April 30, 2011 at 12:50 am

    I think the mortgage income ratio not being greater than 30 percent refers to the monthly mortgage payment versus the monthly income.

    So, if the monthly payment was $ 500 and the monthly income was $ 1666 I think you’d be okay.

  2. Reply
    DJ B
    April 30, 2011 at 1:11 am

    Not enough information. What I would suggest is finding a loan company near by and having her pre qualified. It doesn’t cost anything. They can provide her with a wealth of knowledge about loans programs that might suit her finanicial situation. I’m thinking condo 1/1. Just go with her and make sure they don’t try to stick her with some interest only loan programs. Try FHA loans. Good Luck!

  3. Reply
    April 30, 2011 at 1:42 am

    a lot depends on her credit rating, the debt she now carries. She makes $ 21,600/yr. with no other debt and the ability to put down a decent downpayment 10-20%, then no more than 40% towards mortgage, her payment should not exceed $ 720/month (about what she’s paying now for rent)

    Given a decent downpayment, she can probably afford $ 135,000 place with little trouble. Remember, in addition to the mortgage payment is taxes and insurance, and PMI if LTV is greater than 80%

  4. Reply
    You Ask I Answer
    April 30, 2011 at 1:54 am

    Your house payment should not exceed 25% of your take-home income…. absolute MAX is 33%.

    And people buying a 300k house making only 20k a year are probably getting interest only or ARM’s, and eventually they will be foreclosed on or will be forced to sell… that is why foreclosures are at an all time high right now.

    She needs to get a 15 or 30 year fixed interest loan, with a payment of no more then $ 600 a month.

    That only buys about a $ 100,000.00 home… which is not much… but it is all she can afford to buy while keeping lights on and eating.

  5. Reply
    April 30, 2011 at 2:16 am

    The rule of thumb is that you pay a quarter of your monthly income or what you make in one week. As far as these people making 20,000 thousand a year and buying 300,000 houses. No way .

  6. Reply
    Pete W
    April 30, 2011 at 2:32 am

    I won’t be able to answer your question in its entirety, BUT – if your mother has used her VA loan capability before she may use it again if the property for which it was used has been resold – not a loan assumption, a re-sale. This sale would free up the VA loan and it should be able to be used again. This is a good time to buy – the market is dead, lotsa’ houses for sale. Get hold of a good Realtor (millions of them in the phone book – Yellow pages)) and tell him/her what’s going on. There may be a way to get your Mom in a house. Good luck! Call ’em now! – no cost for finding out what’s possible!!

  7. Reply
    April 30, 2011 at 2:40 am

    True. However, VA is very cautious about that. They will expect her debt-to-income ratio to be below 43%. This means her house payment (principal, interest, taxes and insurance) should be less than $ 800 ($ 75,000 loan amount @ 8% with $ 250 in taxes and insurance).

  8. Reply
    April 30, 2011 at 3:39 am

    i think she should buy a house around a 150k but the people with that income buying expensive houses like that are in crazy debt and have aq high intrest rate like 20% u would want an intrest rate lik 6% so dont jump into it look around best wishes

  9. Reply
    April 30, 2011 at 4:04 am

    The FHA allows up to 55% case by case and the reason people can afford those houses is because they are in option arm and balloon programs, that will force forclosure when they switch over.

  10. Reply
    Mary B
    April 30, 2011 at 4:31 am

    Why can’t she go VA?

    You ABSOLUTELY can use a VA eligibility again. That is a huge myth in the mortgage industry. You can use it over and over, but you must only use it for your primary residence. The only disadvantage is each time you use it, the funding fee goes up.

    Another advantage to VA loans is the FRONT and BACK end ratios are 42%. They also don’t charge PMI and you can do 100% financing.

    VA loans do not have a minimum credit score…they only have a minimum credit criteria…there is a big difference.

    PS: Your neighbors may be in subprime loans where they will go up to 55% and 125% Loan-to-Value.

    Good luck! Tell your mother not to worry!

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