Went to buy a house poor Debt to earning ratio, ren to won mabey?

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Hey guys i need some advice, i applied for a home mortgage for my first house. but they told me i have too much debt to earning ratio. the only debt i really have is my car and student loans. my credit cards are all paid off, and my credit score is 700+

Downfall, I live in Connecticut so the property values are quite high, im looking for a loan around the 180k range

so i was going to try again buy with my girl friend, but unfortunately her credit isn’t good at all. We are working on it but its not there yet.

So here are my questions, we have a 1 bdroom apt now, but we are out growing it fast.

Is there any other types of mortgage that help for college students like me?

should I just look at bigger apartments for now til we can qualify?
I just hate paying someone elses mortgage each month and cant claim it on my taxes

How about the rent to own option.

Please I would love some advice guys

im in a rock and a hard place right now

  1. Reply
    May 17, 2011 at 1:01 am

    How much longer do you have on your car loan? I would suggest you stay where you are for now or rent something bigger and pay extra on your car loan to get it paid off early. Then your debt to income ratio will be lower and you can qualify for a mortgage. You could look for rent to own properties but usually they are few and far between. If you find one be sure and read the contract thoroughly and have a lawyer read it too. You would still just be paying rent until you get a loan so it wouldn’t help on your taxes. Also, you have to file a Schedule A, itemized deductions to take mortgage interest on your taxes. If your itemized deductions aren’t higher than the standard deduction then the mortgage interest wouldn’t help anyway.

  2. Reply
    May 17, 2011 at 1:26 am

    if your only still in college it would not be wise to buy anything. What happens if you get a job offer in another state after graduation ? Last thing you want to do is get yourself in a financial pickle and have a foreclosure or bankruptcy when you are applying for employment.

    Just rent and clean up your liabilities so a few years after you get the permanent job you can rethink the idea of buying and be able to qualify for a real mortgage. Property prices will be even further down in the next few years.

    Stay far away from the loan scammers online and for gods sake stay even further from any rent to own deal.

  3. Reply
    May 17, 2011 at 1:53 am

    The market is tough right now, if your DTI is 60% or more, you probably won’t qualify.

    For a 180,000 loan in Connecticut the monthly payment would be around $ 1,500. Thats base of $ 1,200 + taxes (probably about $ 250 per month) + insurance (probably $ 100 per month) and your payment is likely to be around $ 1,500.

    If you’re not putting a 20% down payemnt, you’ll have to pay mortgage insurance, which ranges from $ 50 per month to $ 250 per month, depending on the percentage of down payment so you could be in for a $ 1,700 mortgage payment.

    Assuming you have school loan debt of $ 200 a month and a car payment of $ 300 per month you’ll be in debt of appx $ 2,200 per month. Also, you still have to buy gas, feed yourself, and pay for entertainment, clothing, etc.

    If you don’t pull in at least $ 4,500 per month, you probably won’t qualify for a house that expensive. Today’s typical ratio is to never get a housing payment that is more than 30% of your gross income. If you make $ 4,000 a month make sure your housing payment is $ 1,200 or less.

    Be careful of people who say they can get you a loan… you do not want to be talked into a house you can’t afford like so many people have been and caused this terrible crisis in the market. An “ARM” loan means you get a low rate (and low payment) to start. After two or three years your rate will jump A LOT and if you got a payment of $ 1,200 to start, it may jump up to $ 2,000 per month after 2 or 3 years. Always make sure you can afford a 30 year fixed rate loan.

    Google some ratio calculators to type in your total monthly income and debts to see what you can afford.

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