How to qualify for a 40 year mortgage?

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So, My brother is a truck driver and makes about $ 40,000 a year after everything is taken out. He makes about 3,200 monthly. He wants to buy a home nearby that he really loved, 3 acres, big house, guest house, its worth $ 420,000 according to & it’s listed for $ 270,000 as a short sale.
He was only qualified for $ 205,000 on a 30 year mortgage. Will it make a big difference if he asks about a 40 year mortgage?

Another thing: My parents really want him to buy the house because we might loose our current one [the bank will not help my parents because they are not behind on any payments] and if my brother buys the house, my parents can take the main house and my brother the guest house and my parents can pay most of the mortgage.

The one we are in now was $ 259,000 in Jan. of 2006, and now its valued at $ 116,000.

So what other ways can he qualify for a $ 270.000 loan?

  1. Reply
    April 30, 2011 at 12:16 am

    If your parents are having trouble making their payments, maybe your brother could hold off on buying his house and help them with their payments until they can make them on their own again.

    Don’t over-buy…… EVER.

  2. Reply
    April 30, 2011 at 1:07 am

    The only way he’s going to qualify for a $ 270,000 loan is to increase his income. Adding another ten years to the loan doesn’t make it any more affordable, and honestly, it blows my mind that he qualified for a $ 205,000 loan, and I’d be wary of that lender. Very wary of that lender because they DO NOT have his best interests in mind.

    The cost of your home should be somewhere between 2.5 and 3x your yearly income, and 3x your yearly income is only doable if your debt:income ratio is extremely low.

    $ 3200 x 12 = $ 38,400. He should be looking at homes priced between $ 76,800 and $ 115,000. A house that costs $ 205,000 for him isn’t a home, it’s a financial grave. If you follow the news, you know what happens when people buy homes they can’t afford. The current economic climate, the plunge in home values (like your parents experienced), the foreclosure crisis, are tie in with that.

    Eventually the value of your parents home will start to rise [unless it’s built on a toxic waste dump or something]. If they can make the payments, they should continue doing so. If they’re having problems, they might try calling HUD for guidence. The bank will most likely work with them if/when they fall behind. If home values have dropped that badly in your area, the last thing the banks want is to take more properties.

    Even if the house was in your brother’s price range, your parents would have a hard time making mortgage payments if they let the bank foreclose on theirs. The bank would eventually sue them for the difference between the value of your parents’ loan, and what the bank was able to sell the house for at some point. Once the bank won their suit, and had a court order to collect, they might be able to garnish a portion of your parents’ income, or money that they had in the bank.

    Also: Zillow’s estimates are rarely factual 😛

  3. Reply
    Patty G
    April 30, 2011 at 1:54 am

    There’s a lot of good advice here. One thing about short sales. They rarely close. Most of the time, the offer sits there for months with no word back from the bank. They eventually foreclose then list it with an agent. Zillow? Not factual is right.
    This home is definitely too high priced for your brother’s income. You could always keep an eye on it though and see if the price comes down after foreclosure.

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