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There is where I am. (on mortgage)


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Okay, I read all of your threads, and I really appreciate all of the encouraging words. Since you needed more info, this is where I am in my credit picture today. I am asking you so that in 5 months or whatever what I need to be doing to making my home ownership a reality.

BK7 dishcharged July 7th 2005

Since BK, I have had 2 auto loans, paid in full. only open each less than 6 months.

Credit Cards:

Crown Jewelers - open from 8-05 no balance

Orchard- closed open from 8-05 to 12-06 no balance

First Premier - closed open from 09-05 to 01-07 no balance

Unicorn Financial -closed- open from 03-06-01-07 no balance

Hooters- open-from 05-06 to currently no balance

Patelco-open from 07-06 to currently balance of 600. cl of 1000.00

Carnival - open 01-07 to currently no balance

US Airways - open 01-7 to currently no balance

Capital One Auto- open 12-6 to currently balance 24K

Inquires: TU =5 Eq- 10 EX- 11

I make 33K a year. and I get a raise every six months of about 1.45. I am hourly, been on job 5 years same employer.

401K balance 800.00

Divorced. First time homeowner, and 1 dependent. I am ORDERED child support, but I dont get it atleast all of it. And trust me, I have tried, CSE cant enforce when my ex-husband works under the table. So I just take what I can get in cash, which is about 50-75 a week. depends.

The place I looked at was 119K on 4 acres. And it was a home. Not manufactured. When I called someone, (broker) he said, my income was not enough.

So how much should I be saving? And where does my income need to be to have a house for that much or say up to 125K?

I appreciate all of your kind words, and all of your advice...I am determined to be a homeowner, with my little family, and our horse. :)

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Your house payment can be roughly 1K a month, based on your income ($2750/month)

The biggest problem I see with your financial picture is you make 33K/year and you have a car worth 24K (or more).

I'm curious what your car payment is, but I'm willing to bet it's at least $500 month, leaving you well less than $900 available for a house payment.

I'm talking about DTI (debt to income) ratios. 35% (roughly of your monthly is $962 - a pretty good ceiling of your mortgage payment).

Figure 50% total debt of gross, or $1375 can go towards car, house and other loans. Subtract your car payment from that $1375. Subtract your patelco monthly from there as well, unless it'll be paid off within 3 months of closing generally.

You own/owe too much on your car. If you could sell it/get out from that loan and get an older used car, that'd go a long way towards freeing up some income for a house payment.

Your payment/how much home you can afford is based on that 35/50% number as well as tax rate, association fees (if any) and the interest rate you get on your mortgage. A lower interest rate allows you to buy more home. Higher taxes lowers the max price you can afford.

Your income is probably enough IF you have very few other debts (that 24K car note is huge) and you qualify for a low rate (6% or lower). But even with no other debts, it's almost a stretch.

A good rule of thumb used to be 2.5-3 times your income, so you'd be looking at homes under 100K. With higher rates (8% or so) that's probably a good formula. With higher debt, even that could be a stretch. With lower rates and no other debt, you can probably push that up a little bit.

But that formula doesn't work for everyone.

50% of your income for your debt and house payment would leave you with $1375 for all other monthly expenses (insurance, food, clothing, entertainment, etc). It's doable on that income. Someone make twice what you make would have $2750 left over for insurance, food, clothing, gas, etc) if they used the 50% ceiling.

So in other words, the more you make, the easier it is to buy more house and still have money left over.

(I'm glad I wrote those last two paragraphs because they changed my mind. You don't make enough for a $125K house. Based on you income, I think you'd be more comfortable making the payments and not being totally cash-poor with a sub 100K home.

While everyone is telling you Yes - you can do it, it doesn't mean you have to do it right now.

I'd recommend exploring all options in regards to that car and trying to raise/supplement your income.

NACA.com is a good source of information and a great place to get a low rate. One of the things they'd make you do (assuming they service your area) is have you prove to them you can afford the monthly payments ahead of time. What is your currently monthly rent? If it's less than $1000, start putting away enough every month to make it $1000. If you pay $600/month rent, you should be saving $400. If you can't do that and still be comfortable, this house is too much for you.

Regardless of all of the above I typed - what are your scores?

yes, you can get a loan 2 months post-bk. But you're not gonna get the best rates (generally). Although NACA would be a great place to prove me wrong.

If you're looking at a sub-prime mortgage, your rates are going to be higher. 8+% for the first 80% and 10 or 11% for the last 20%.

So long story short:

1) a) Increase income

or B) look for less house

or c) wait until a) happens


2) a) get out of that 24K car note

or B) wait until car is paid off/mostly paid off


3) with your income, wait until you can qualify for a 'A' or Alt-A loan. Also look at NACA and other similar programs

and finally...

4) Investigate programs for first time homeowners and programs for getting free money to get a home.

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