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Do I qualify for a mortage with my scores?


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Here is my scenario:

I want to purchase a house (450 k) with 100 % financing and 3% interest only for 6 yrs. My income is above 90k ... Can I get a mortage with the following score:

EQ: 640

EP: 710

TR: 720

Is a 3% interest only for 6 yrs a good idea? Is my score too low for what I want? Can I get a mortage (in general) with those score?


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Most lenders go with the middle score of the primary wage earner. If you are the primary wage earner, I think you are in like a tall dog (as my boss would say).

How long do you expect to own the house? If you expect to own the house for only five years or less, that loan sounds like an excellent option (depending on the costs). If you are going to stay in the house for longer than that, here are some questions to ask yourself: What is your tolerance for risk? The loan you are describing has to be an ARM of some type; are you the kind of person that can live with the possibility of your rate going up, or are you the kind of person who is more comfortable knowing exactly what their payment is going to be for the next 30 years? Do you have expectations that your earnings will rise to meet the worst-case rate changes, or even if they don't, would you be able to handle the worst-case payments?

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Thanks for your prompt reply. Here is my situation:

As per your questions...

I'm 38 yrs old, single, my work stability is good and I plan to live in the house for 15-20 years or so... but you know; only God knows what's going to happen even tomorrow. :wink:

So, my goal with this technique is to be able to afford a better house with a lower monthly "fixed" payment while having the flexibility of making payments to the principal on a monthly basis as "per my wish and resources" without having a high "fixed monthly payment". Remember, I'm applying for an "interest" only mortgage.

The low monthly payment will also allow me to afford a second property as an investment in 2-3 yrs from now.

If in 6 years the interest rate goes up hopefully I can balance it out with a lower amount owed to the principal thanks to the extra payments made over the 6 year period. If my income decreases over that time, I can always choose to rent the property out and move to the less expensive second home.

As per my question...

It goes more into the area of qualifying for such type of mortgage. Here is why:

1- ) The length of my credit history varies...

It goes from 6 yrs on EQ to 11 yrs in TU and EXP consisting of mostly closed accounts and 1-2 open and active TL. Knowing that I only had few open accounts I applied and got 3 new revolving accounts (over the last 2-3 months) with credit line raging from $ 500 to 8,500.

2- ) I have a collection reported to EQ which I'm disputing as not mine because it is really a "not mine" account.

Will all of the above influence in my availability in getting the type of mortgage that I want or in the worse case, in my availability of getting a mortgage?

Thankss... your input is appreciated!

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My favorite new program is a 30 year fixed rate with interest only for the first 10 years. After the 10 years is up, then the remaining balance is amoritzed over a 20 year period.

The interest only payment is adjusted every statement, so if you do have the discipline to pay a chunk on the principal, it will actually lower your monthly payment to reflect the reduced principal. Many, many of the interest only programs do not take this important factor into consideration.

Ypour income will safely fit into this scenario as long as you are not overweighted in other debt obligations. By the way, how is your other debt? Do your monthly payments on other obligations exceed $1,000.00/mo?

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I recently had a client that was searching for the same program that i alluded to. It was a very large loan. He was the one who eduated me on this product. I never knew it existed. Basically, I spent the better part of two days searching for a lender who knew the answers. I even went as far as putting the program into mortgage broker search engines to no avail. I called more than ten lenders, they all had the same answer.

If you have an interim interest only ARM, the minimum payment will be the same regardless of the amount of principal you pay off on the loan, until the initial interest only (3/1, 5/1, 7/1) period expires. Sure there are those loans where YOU control the payment, and there are many of these products available, but they are tied to an index, and can adjust according to the index , or possibly have negative amoritization. The negative amoritization clause will NEVER let you obtain a HELOC or second mortgage as long as that clause remains on the first mortgage.

This loan is a SMART loan. Sooner or later other lenders will follow. The biggest advantage to this, is when the owner of the home wants to make a "lump sum payment". With all the other programs, if you contribute $40,000 to payoff, the payment stays the same. With this product, and an interest rate of 6% (simple math, because the interest only payment would be .005 of monthly balance), the payment would reduce $200.00 the following month. Make another $40,000 lump sum payment a couple years later, and the payment drops another $200.00/mo.. In the meantime between the two years, the consumer has saved $4,800.00 in minimum payments. This type of loan has it absolutely going on. Makes a creative cash flow math man like me stay ahead of the game.

Not ready to let the cat out of the hat, but if you want to private message, I will steer you to the lender.

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