Any realtors or mortgage loan people here?

[labgeek]

There are other ways of getting around PMI as well... The 80/20 split is a good one. If there's 20% equity in the home your buying (it happens sometimes), then even though most mortgage companies use the loan/purchase they don't on a refinance. They use loan/appraisal then. On the house in Louisiana, I took out a 6 month interest only loan at first. It was the bank's idea actually. Then refinanced it 6 weeks later. No PMI...

On the Virginia house we did a 80/20 split. It was better to pay the higher interest rate on the 2nd mtg than pay PMI. Not only cheaper, but also better tax wise.

 

[StageLeft]

Originally posted by: Jumpem

Originally posted by: QuitBanningMe
http://finance.realtor.com/homefinance/...c=FINLRNAV010&gate=realtor&poe=realtor

I put in $85k income, $1k monthly debts... and it gave me a maximum house price of $123K. That seems off.

It is. 85k you could get approval for $300k in normal cases.

 

[QuitBanningMe]

Originally posted by: Jumpem

Originally posted by: QuitBanningMe
http://finance.realtor.com/homefinance/...c=FINLRNAV010&gate=realtor&poe=realtor

I put in $85k income, $1k monthly debts... and it gave me a maximum house price of $123K. That seems off.

😕
I get 200K+ with your numbers depending on down payment

 

[QuitBanningMe]

Originally posted by: Skoorb

Originally posted by: Jumpem

Originally posted by: QuitBanningMe
http://finance.realtor.com/homefinance/...c=FINLRNAV010&gate=realtor&poe=realtor

I put in $85k income, $1k monthly debts... and it gave me a maximum house price of $123K. That seems off.

It is. 85k you could get approval for $300k in normal cases.

He plugged the numbers wrong

 

[QuitBanningMe]

Originally posted by: Skoorb

Originally posted by: QuitBanningMe

Originally posted by: Skoorb
The formula is fvcking nonsense. If you're relying on one, you do not understand your own finances enough. You know what you can afford far more than some skeleton math formula.

You don't get to decide what you can afford. The bank does and they use a "formula"

That's their opinion, which as I mentioned later is normally far more than most people's should be🙂

I agree with that.

 

[Jumpem]

Originally posted by: QuitBanningMe
He plugged the numbers wrong

I changed the default downpayment from $20k down to $10k. That's what made it so much smaller.

Like I said, I'll be able to afford a much larger mortgage than I plan on getting. However, I just have too much other stuff to spend money on to be able to come up with a huge down payment in less than a year.

 

[shilala]

Originally posted by: Skoorb
The formula is fvcking nonsense. If you're relying on one, you do not understand your own finances enough. You know what you can afford far more than some skeleton math formula.

Banks in our area use an income to debt ratio as an initial review to see if you've got enough income to afford a mortgage. It's just the first hoop they jump folks through before they dig into your personal finances.
It saves time and effort for the loan officers. If you flunk, they will hold it against you until you come back and lie to them.

 

[dullard]

Originally posted by: Jumpem
I put in $85k income, $1k monthly debts... and it gave me a maximum house price of $123K. That seems off.

That is definately off. $85k should let you get approval for ~$300k. Of course I would personally limit yourself to the more affordable 3*$85k = ~$250k.

Originally posted by: Jumpem
The amount you gave is even more than I was thinking of. A new ~1500sq.ft. house is in the $125-150k range around here. That's all I need. I'd like to even try getting by with a 15 year mortgage to save alot on interest.

$85k will get you any house in that range without any problem at all. Be happy and sit back and enjoy life. Heck, you may even want to consider a slightly more expensive house with that income. I personally would stay away from the 15 year mortage. You can always get a 30 year mortage and pay as if it were a 15 year mortage (and thus get all the interest savings). However, if times get tough, the reverse is not true. You cannot have a 15 year mortage and make payments as if it were a 30 year mortage.

 

[Jumpem]

Originally posted by: dullard
$85k will get you any house in that range without any problem at all. Be happy and sit back and enjoy life. Heck, you may even want to consider a slightly more expensive house with that income. I personally would stay away from the 15 year mortage. You can always get a 30 year mortage and pay as if it were a 15 year mortage (and thus get all the interest savings). However, if times get tough, the reverse is not true. You cannot have a 15 year mortage and make payments as if it were a 30 year mortage.

I guess that's true. Doubling up payments on a 30 year would come out about the same?

 

[dullard]

Originally posted by: Jumpem
However, I just have too much other stuff to spend money on to be able to come up with a huge down payment in less than a year.

People here have been trying to tell you the solution. Use the money you save up now to pay off the CC. Get a loan for $30k. Then use the $30k as a 20% downpayment on a house mortage. You don't need to struggle to save up. Of course you pay a bit more in interest on that first loan, but it isn't that much more.

Originally posted by: Jumpem
I guess that's true. Doubling up payments on a 30 year would come out about the same?

Should be pretty close. There may be slightly different base interest rates, but we are talking ~$10 a month difference probably.

 

[Jumpem]

Originally posted by: dullard
People here have been trying to tell you the solution. Get a loan for $30k. Then use the $30k as a 20% downpayment on a house mortage. You don't need to struggle to save up. Of course you pay a bit more in interest on that first loan, but it isn't that much more.

How good does your credit need to be for a bank to go along with that? My gf has good credit (725+). Mine was down around 590 since I didn't pay on a credit card a few years ago when things got bad and I was in school. My car loan has brought it up to 650 or so.

 

[dullard]

Originally posted by: Jumpem
How good does your credit need to be for a bank to go along with that? My gf has good credit (725+). Mine was down around 590 since I didn't pay on a credit card a few years ago when things got bad and I was in school. My car loan has brought it up to 650 or so.

You may be best of asking Vic on these forums, that is his job.

But I'd expect that you'd have no troubles with a 650 and a 725. You probably may pay a slightly higher interest rate than if you had higher scores, but I think that should be plenty to qualify for loans.

Oh, and if you do get two loans, instead of doubling up on the mortage, make the extra payments on the first $30k loan since it would be at a higher interest rate. You should be able to get rid of that loan quite quickly and then just have a regular mortage. Double up on the mortgage payments then if you wish.

 

[QuitBanningMe]

Originally posted by: Jumpem

Originally posted by: QuitBanningMe
He plugged the numbers wrong

I changed the default downpayment from $20k down to $10k. That's what made it so much smaller.

Like I said, I'll be able to afford a much larger mortgage than I plan on getting. However, I just have too much other stuff to spend money on to be able to come up with a huge down payment in less than a year.

That is why. It figures that your down payment should be at leat 5%.



Why $127,389 is the maximum house price: Your minimum down payment must be at least 5% of the house price. To afford a more expensive home according to these guidelines, you would need to have more funds available for home purchase.

 

[DeMeo]

Go sit down with a mortgage broker.
There are so many different plans avaliable these days.
There are some government programs in targeted areas also that will give you part of a downpayment. The name of the program escapes me at the moment.

 

[Vic]

Originally posted by: Skoorb
You can avoid PMI with a higher interest rate second loan for 20%, and in most cases it's the thing to do.

I have a program right now where I can do a 100% 1st mortgage with no MI as low as 6% 30 year fixed. Purchase or refinance (even cash out), 720 score and above. The whole thing in one. 🙂

I don't lend in NY though.

FYI: all lender debt ratio forumlas are based off gross income and do not include utilities and insurance (except home insurance is always included). Some lenders do have residual income requirements though.

Here's a quick formula (of my own making):
(Gross income - consumer debt) * 50% = monthly housing expense
monthly housing expense - estimated monthly property tax, home insurance, and HOA costs = maximum monthly mortgage payment
solve the follow equation for original principal (not interested in doing an identity this AM):
monthly payment = (original principal * interest rate) / ( 12 ( 1 - ( 1 + ( interest rate / 12 ) ) ^ (term * 12) ) )

🙂


edit: remember to enter interest rate properly, so 6% = 0.06 --- or just use a financial calculator

 

[Jumpem]

Originally posted by: Vic
I have a program right now where I can do a 100% 1st mortgage with no MI as low as 6% 30 year fixed. Purchase or refinance (even cash out), 720 score and above. The whole thing in one. 🙂

I don't lend in NY though.

FYI: all lender debt ratio forumlas are based off gross income and do not include utilities and insurance (except home insurance is always included). Some lenders do have residual income requirements though.

Here's a quick formula (of my own making):
(Gross income - consumer debt) * 50% = monthly housing expense
monthly housing expense - estimated monthly property tax, home insurance, and HOA costs = maximum monthly mortgage payment
solve the follow equation for original principal (not interested in doing an identity this AM):
monthly payment = (original principal * interest rate) / ( 12 ( 1 - ( 1 + ( interest rate / 12 ) ) ^ (term * 12) ) )

🙂


edit: remember to enter interest rate properly, so 6% = 0.06 --- or just use a financial calculator

Consumer debt includes credit card debt. What about car loans and student loans?

 

[SpazzyChicken]

Originally posted by: Vic
I have a program right now where I can do a 100% 1st mortgage with no MI as low as 6% 30 year fixed. Purchase or refinance (even cash out), 720 score and above. The whole thing in one. 🙂

Wow. Want to help a fellow Oregonian out?

Runs to check credit scores..........

 

[AntiEverything]

Originally posted by: Jumpem

Originally posted by: JulesMaximus
If you can put down 20% you won't have PMI, homeowners insurance varies based on where you live and the value of your home and personal property. My homeowners insurance is around $600/year.

PMI will likely be needed. We probably won't have 20% to put down, more like 5-10%. My gf has about $6k in credit card debt from four years of college. That would be first priority to get paid off.

So get an 80/15/5 mortgage, 5% down, an 80% mortgage, and a 15% secondary mortgage to avoid PMI.

 

[AntiEverything]

Originally posted by: Jumpem

Originally posted by: Vic
I have a program right now where I can do a 100% 1st mortgage with no MI as low as 6% 30 year fixed. Purchase or refinance (even cash out), 720 score and above. The whole thing in one. 🙂

I don't lend in NY though.

FYI: all lender debt ratio forumlas are based off gross income and do not include utilities and insurance (except home insurance is always included). Some lenders do have residual income requirements though.

Here's a quick formula (of my own making):
(Gross income - consumer debt) * 50% = monthly housing expense
monthly housing expense - estimated monthly property tax, home insurance, and HOA costs = maximum monthly mortgage payment
solve the follow equation for original principal (not interested in doing an identity this AM):
monthly payment = (original principal * interest rate) / ( 12 ( 1 - ( 1 + ( interest rate / 12 ) ) ^ (term * 12) ) )

🙂


edit: remember to enter interest rate properly, so 6% = 0.06 --- or just use a financial calculator

Consumer debt includes credit card debt. What about car loans and student loans?

All long term debt is included, long term debt being defined generally as anything with more than 10 payments still remaining. Student and auto loans with a year or more left are included.

 

[Vic]

Originally posted by: SpazzyChicken
Wow. Want to help a fellow Oregonian out?

Runs to check credit scores..........

Sure. Shoot me a PM. Bear in mind that a program that good is not necessarily easy to get though. Great if you can qualify though.

 

[Beattie]

Just go and talk to a mortgage broker. That way not only will you have an idea what you can afford, but they can prequalify you so that you can actually bid and whatever.

 

[AntiEverything]

Originally posted by: Beattie
Just go and talk to a mortgage broker. That way not only will you have an idea what you can afford, but they can prequalify you so that you can actually bid and whatever.

You can write an offer an property whether you're qualified or not. Just don't expect the seller to take you seriously without some serious earnest money. And you probably don't want to put a huge earnest check down without being certain you can get the loan.

Also, pre-qualification doesn't mean squat. As a realtor, I can pre-qualify somebody by asking them how much they want their monthly payment to be. Given a target monthly payment, I can easily figure out what their price range is. Pre-approval is a different beast. Pre-approval means that an loan officer has done some work and verified income and debt ratios.

 

[dquan97]

Right now, mine's about 50% of gross income :Q

 

[Vic]

Originally posted by: AntiEverything
You can write an offer an property whether you're qualified or not. Just don't expect the seller to take you seriously without some serious earnest money. And you probably don't want to put a huge earnest check down without being certain you can get the loan.

Also, pre-qualification doesn't mean squat. As a realtor, I can pre-qualify somebody by asking them how much they want their monthly payment to be. Given a target monthly payment, I can easily figure out what their price range is. Pre-approval is a different beast. Pre-approval means that an loan officer has done some work and verified income and debt ratios.

Exactly. When doing pre-approval work for a prospective buyer, I never try right off to find out for them what they can afford, I always ask them first what they want to pay. That is most important. If I first figure out, without asking them what they would like to pay, that they could afford a mortgage payment of $2500, and they answer back that their current rent is $1000 and they don't want to pay more, I've lost credibility right off the bat. They're gonna think I'm trying to stuff them into something they can't afford.

 

[CChaos]

I'd really advocate for researching on your own before sitting down with someone who's going to potentially be making money off you. That's just my opinion though.