Will I be able to get a mortgage loan for $175,000?

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I live in the state of Texas and will be making 43,000 dollars as a teacher this year. I have just graduated college and only have my student loan debt (56,000) and a small credit card debt of (4,000).
I am in a situation where my rent will not be much less than purchasing a home.

There are certain mortage incentives that I can get for being a teacher in Texas (5.99% apr, as well as some money towards a home).

Will I be able to qualify? I am worried about trying but would love to buy a house instead of renting. However, I do not think that I have the funds to get the loan.

Just a litle more information
– I am married
– with child
– significant other is in last year in college (will be making 40k after graduation in december).
-Parents will help pay for house until then but their credit report is shot.
I do not want to hurt my credit report by having too many people looking at my credit.

We need a house before graduation becaue the fixed 5.99% rate will increase which is a great deal at this time.

My parents also do not have any money that they can help with for a down-payment.

I have a chapter 7 bankruptcy discharged 2 years ago. My husband and i both have good jobs, (he a school teacher and me in insurance). We are wanting to purchase a home and the only option we are getting is this 2/28. of course the loan officer is advising us this will be fine to refinance in 2 years.. Has anyone had an experience with this. We are kinda freaked out and don’t want to get overwhelmed financially again

16 Comments
  1. Reply
    tonalc1
    January 29, 2011 at 5:52 am

    The best way to qualify is to put down the biggest down payment you can. That’s where your parents can help.

    If you wait until your spouse is working, that’ll help.

    And what can you lose by trying?

  2. Reply
    Zacko
    January 29, 2011 at 6:33 am

    Wait until you and your significant other both have a reliable income. You might even have to move to another location.

  3. Reply
    djgriffinny
    January 29, 2011 at 7:21 am

    I doubt it, maybe when the SO is done with school and has a job. I assume that he will not be as debt heavy as you are.

    If you call up a bank, they will give you the numbers that you need to qualify for a mortgage. There are income to debt rations, I don’t remember them right now.

    I would say, get a 2nd job (I know you have a kid and it is tough) but pay off the plastic.

    Make sure the SO does not have any plastic. If that is the case, one SO get a job, I would thinkg that you could qualify.

    And you don’t want to get in over your head, it will screw up your credit rating and it will make life miserable. I know someone who did something stupid, but when they realized they could not afford their house, the housing market had gone down the tubes and they could not sell the house for what they paid for it.

    Both parties ended up working 7 days a week just to stay afloat. Eventually sold the house and bought one 1/2 the size and were happy.

    So be careful

  4. Reply
    Geni100
    January 29, 2011 at 8:15 am

    OK, sounds like a beginning. Here’s what your loan officer is going to be thinking about. He’s basically got two ratios: the inside and outside ratios. The inside ratio is the percentage of your monthly income that goes towards your house. That number’s generally got to be under 28%. So, if you’re bringing $ 3,583 home a month (gross), then you can afford $ 1,003 per month for your mortgage payment (inside ratio). Your outside ratio is usually around 42%, and that includes all your debt payments. So, your student loan, credit card payments, mortgage, car payments, etc. all have to be less then $ 1,505 per month. They’ll use your credit report to get these numbers.

    So, that’s how much they’ll let you get.

    Now, there are a lot of ways to finance a home. Depending on your down payment (if any), your credit score, the quality of the home (can it pass FHA standards–no pealing paint, generally in good condition, etc.), and the type of loan you get, your actual payment may really vary quite a bit. There are a lot of good programs today that can get the job done for people in about any situation. Maybe the low interest rate because you’re a teacher will be the best move to make. Maybe a variable-interest rate is the way to go. There are interest-only loans, direct investor loans, FHA loans, ARMs, etc. Your loan officer is going to have a lot of ideas about how to get things done.

    I would recommend that you talk to a mortgage broker, rather than a banker first. They’ll have more options than a bank, and their motivation is to find a good fit for you. If you are a member of a credit union, they are usually better than the banks as well.

    For me, I believe that your home will generally appreciate over time, plus you get your interest paid as a tax writeoff. It’s generally a better idea to purchase a home than pay rent, even if you pay 20% more for the mortgage. The way to make that work in your monthly budget is to check with an online service (irs.gov, turbotax.com, etc.) and find out what your taxes will be with and without your interest writeoff. Then, make sure your witholdings match what you’re actually going to have to pay. That way you actually get enough in your paycheck to pay the extra for the mortgage, if that’s the situation.

    Feel free to contact me via Yahoo! Answers if you have any followup questions (Email is generally better than IM). Good luck.

  5. Reply
    vegasb2k
    January 29, 2011 at 8:51 am

    If your credit is ok, you should have no problems getting qualified.

    Your income looks ok for that size purchase since you don’t have a lot of other debt. It’s up to you if you are comfortable with the monthly payment though.

    You can finance 100% of the purchase price and if you find a good lender with low fees, your closing costs will be minimal.

    It is really a lot easier than people think to qualify to buy a home.

    Greg

  6. Reply
    lendermark1
    January 29, 2011 at 9:46 am

    You should try the “Teacher next door” program offered through HUD. You will get a deep discount on your home. http://www.hud.gov/offices/hsg/sfh/reo/goodn/tnd.cfm

    http://www.lendermark.com

  7. Reply
    satarnag
    January 29, 2011 at 10:44 am

    What you state is fine. Don’t let any broker run your credit. You can run your own credit and it won’t ding your score.

    Anyway, the reason I responded was because the government loves Teachers (someone has to educate the illegals in Texas!). They will help with your down payment and loan. Here is a website that will lead you down to the right path:

    http://www.hud.gov/offices/hsg/sfh/reo/goodn/main.cfm

    Good luck and I am happy you chose a honorable career.

    Regards

  8. Reply
    fluorescentsurfer
    January 29, 2011 at 11:30 am

    refinancing in 2 years will probably REALLY suck…

    Interest rates will be going up in the coming years and you could set yourself up for another round of bankruptcy

  9. Reply
    mnvikings1973
    January 29, 2011 at 11:32 am

    With 2/28 ARMs, your interest rate is fixed for the first two years after the note date (the number before the slash refers to the number of years that the initial rate is fixed), after which the interest rate can change every year to the index value plus the margin (subject to the interest rate caps).

    These programs (often called “B paper loans”) are primarily offered for borrowers with less-than-perfect credit who don’t qualify for an “A paper loan”. They allow you two years to rebuild your credit, at which point you may refinance at a better rate. 2/28 ARM loans offer an initial higher interest rate than the fully indexed rate (index plus margin) during the initial period of the loan and usually have a two year prepayment penalty.

    http://mortgage-x.com/library/2_28_loan.asp

  10. Reply
    sunshine_today
    January 29, 2011 at 11:37 am

    http://www.naca.com check them out. they are a non-profit housing advocacy group that offers their own mortgage programs. They got their money from taking on Fleet Bank for predatory lending, and they won. Now they use that settlement money to help people own their own homes.

    You are smart to be wary of “creative” financing. Insist on seeing everything in writing, including the contract that supposedly doesn’t have a prepayment penalty if you refinance. A lot of mortgages do have a penalty.

    Also– many places are starting to offer programs for teachers to purchase homes. Check with your local school board and see if your husband is eligible for any of those if your district has them. Good luck!

  11. Reply
    ineednostinkingid
    January 29, 2011 at 12:08 pm

    Find a new lender. try on-line services like Lending Tree etc. Don’t ever take just one persons advice or opinion. Good luck.

  12. Reply
    nanu569
    January 29, 2011 at 1:01 pm

    i am mortgage broker as well i would be happy to look over your situation to see if it is a good deal for you. As it stands rite now i do not have enough information to say. I am not triing to get your business i just want to help you can email me a nanu569@yahoo.com or on aim nanu596

    please take me up on this most people on here will not have the best advice

  13. Reply
    VaTreasures
    January 29, 2011 at 1:21 pm

    If your husband has decent credit, you might be better off financing in his name alone. You can put both of your names on the house title. It will limit how much you can qualify for, but usually they will loan you far more money than you can afford to pay.

  14. Reply
    bigrob
    January 29, 2011 at 1:23 pm

    You REALLY need to talk to some more mortgage brokers. And don’t go around paying fees for them to pull your credit report at each place. Pull your own, all three bureaus, and take it with you. They will eventually have to pull them but for “just walked in the door preliminary conversation purposes,” your own will do just fine. Also take a set of all your bankruptcy papers, including the filing, all schedules, and the discharge. Don’t give them the original set just let them make a copy if they want one.

    If you have established new lines of credit and kept them clean for at least 12 months you should be able to get a normal 30 year fixed. I’ve been out of the mortgage business for a couple of years, but for the 10 years I was in it I did loans for people in that situation regularly. Usually FHA. They can be very forgiving and the rate is usually only about a point higher that FNMA.

    With FHA the rules were basically if you had been Discharged for 24 months and had established 2 or 3 lines of credit that you had kept perfect for the last 12 consecutive months minimum, you got the deal if you otherwise qualified (debt to income ratios, time on your job or in your profession,etc.)

    If you have not established (or carried over) any clean lines of credit you should do that immediately and save your money for another year while they mature. The easiest way is to go to http://www.cardweb.com/cardtrak then click on “find a card”, then click on “Secured” and you will see a list of secured cards in a comparison chart so you can find 3 Good Deals. Most of the stuff you get in the mail is not in that category. A reasonable annual fee is ok but any type of Application Fee or Account maint. fee etc is nothing but junk, rip you off fees.

    If you are setting up new accounts as soon as you get the card activate the account, lock the card up, and pay off any balance on the card (the annual fee is usually charged on the first statement.) The LEAVE IT ALONE.

    The way interest rates have been trending upward for a good while now, I would be very uncomfortable about getting locked into a variable/adjustable rate mortgage. They can be dangerous to your financial health. If it were me, I would go Fixed Rate or nothing.

    If rates improve in the future you can still do a refinance to a lower Fixed Rate Loan as long as you have continued to keep your credit “perfect.” When you have a Chapter 7 on your credit report you are not allowed anymore mistakes by most people in the credit world. So Perfect is the way you Really need to stay. On Time–Every Time. By the way, the best way to keep a credit line perfect is to have it paid down to ZERO and keep it that way. If you have any credit cards lock them up in a safe deposit box at the bank, then hide the key to the box. Outside of your home and if necessary a car–NO CREDIT SPENDING!

  15. Reply
    jgmeier93592001
    January 29, 2011 at 2:02 pm

    I would recommend that you source out a state bond program. Most states offer this program for first time home buyers, however the interest rate are lower than your normal FNMA and FHA rates. It’s a 30yr fixed program, and you will pay MI on it, however if you do a cost analysis, your payments might be better off with a MI option. Secondly you can request the MI to be removed in a few years, and reduce your payment with out refinancing. Most Realtors dislike them, because they don’t understand them, and mortgage brokers hate them, because they can’t milk the client. Look into it, contact me if you have any questions.

  16. Reply
    ryanwoodtlc
    January 29, 2011 at 2:53 pm

    As a branch manager for a direct lender/brokerage, I would stay away from the 2/28 at this time. We may have more rate hikes, hindering you from refinancing in 2 years due to whats called payment shock! It is a risky loan at this time as nobody knows if rates will decrease. You will be fine to refinance in 2 years; at the going rate at that time.. The 2 year fixed is a way for that loan officer to earn income off of you two times. It may not be the best program for you after seeing your hesitance. Email me at ryan.wood@truelend.com for other options.

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