Buying A Home
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question about getting a good mortgage rate
So here's my question..
We just got married in november and my wife short-saled her condo just this month. We plan on living with her parents for 7-8 months while we save money for a bigger downpayment on a house. So, now she'll have an issue with credit (otherwise it was perfect). I consider my credit good, will our combined credit be enough to get a mortgage/good rate in the 350k range ? We live in the boston area and have a combined income of 130k.
Thanks
Re: question about getting a good mortgage rate
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- the mortgage rate and even ability to obtain a mortgage depends on a lot of factors in your financial profile such as savings, salary, history, credit rating. you should definitely contact a lender.
- if you can afford a 350K mortgage (20% down = 70K) with the taxes for the area you are buying in on your salary alone and you have a better than good history then do it in your name without her.
- is 130K your take home pay or before taxes? At 350K you are probably looking at 1200-1800 in mortgage plus taxes/insurance. Are you looking at spending what percentage of your take home pay? It kind of sounds to me, depending on taxes in your area, that you would run the risk of over-extending (again?)
- if 130k is pre-tax and it includes her salary - you may not be able to obtain a mortgage for 350K let alone talking about what rate you might obtain.
to clarify.. the 130k is not take home, thats more like 90k. She makes 75k/year, on a condo she bought for 180k.. She had no problem affording it, but with me in there it was wayy too small for us.
It was on the market with a million other condos like it for 1.5 yrs..no luck. We resorted to the shortsale since she owed more than it was worth.. I'm not on the mortgage at all.
We have great credit history, have been employed by the same company each for 5+ years, and literally zero debt, minus about 7k in student loans
You are looking in the same range as we are and have about the same combined salary as we do. I know that in our area, a mortgage plus taxes, HOA, PMI and Insurance will end up being about 2600 a month on that size of mortgage (we do have high taxes here though). We are comfortable with that number, but make sure you are too. It works out to be a little less than 35% of our take home, which is OK in a HCOL area.
As ofr the credit, I have no idea
When we applied for a mortgage two years ago the lender looked at our credit scores from the three credit unions, picked the middle score of the three, and then only used the lowest score of our middle ones to calculate our interest rate. So, if I had scores of 750, 760 and 770 and my DH had scores of 600, 620, 640 only the 620 score would be used (my higher scores would be completely ignored). If that same scenario applies when you want to get a mortgage, the short sale will really hurt your ability to get a loan. Generally a lower score means a higher interest rate. A really low score may mean they won't even loan you the money.
Your best bet is probably to try and qualify for a loan by yourself. We were able to get qualified for a $300k loan on an income of $75k. We're only an hour away from Boston.
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if she's on the mortgage, her credit score will be trashed, and you will have a really high interest rate, if she can even get a mortgage.
if she's not on the mortgage, they'll only consider your income. if she makes 75k, then you make about 55k. the maximum they'll let your PITI be is about 40% of your gross, so a little over $1800.
if you buy a 350k house with 20% down, you're looking at a loan of about 280k. at 5%, the principle and interest is about $1500. if your property tax is 1% (google leads me to believe it's a little over 1% before homestead exemption), that ads on about $300/month. throw in insurance, (mine is just under $100/month, and that's for a 200k house), and that'll put you close to $2k/month.
i'm going to guess 250k is about the most you will be able to borrow.
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IN a HCOL area 130k gross is enough to afford a 350,000 mortgage, as that is what we are looking at. It will be around 30% of our takehome pay - and with no credit card debt that is more than doable. After all of our bills we will have 1500ish dollars to put into savings every month.
As far as qualifying on his salary alone, no. But with both their salaries that is not overextending.
ETA: That 30% includes PMI, HOA, Insurance and Taxes.
Actually pamela, our numbers work quite easily after running them countless times.. If we spend 30% of our take home pay on the mortgage (hypothetically at a very conservative rate), that would be about 2200-2300/month. We also probably wont go as high as 350k... thats the price range of the homes we're looking for, with our 40k down payment...(which should get much higher after living with the in-laws for the next 7-8 months. So to further clarify, we're probably looking more for a mortgage in the 310-320k range.
We're hoping the combo of our lengthy employment history at our current jobs, on top of zero credit debt, will help us in the long run
IF she's on the mortgage. talk to a couple banks or brokers, and see what they say. you will probably end up with really high interest rates. I'd also check her credit scores in a month or two.
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