first time homebuyers...can anyone advise/help what to do?

[divinemadness]

so heres the scenario..

our lease is up in june, and we want to buy a home, but we are young, 23, and have limited credit history.. i alone have 4 years of it, and my dh has only 1 year. our home is picked out and actually dh's mom is living there now renting it. we will be doing a 3 way mortgage for the property --me, dh, dh's mom. but heres where it gets tricky, dh mom, had a bk in 2005. its discharged, and half of the 14 accounts iincluded with it have been deleted from her report as of 12/07, we just started repair on her report 12/2007. my reports are almost done, and dh is perfect.

the home is appraised at 765,000.00 the owners, are good friends to dh mom, and will give her the home at what they paid for it 8 years ago, 400,000.00 firm. its a deal that cant be passed and its a beautiful italian mansion. i mean gorgeous, something from a movie, and sooo big its good for us and in the future, our family.... a mortgage on 400k .. the payment is comfy and fine for the 3 of us. dh mom makes 40k a year, i make 40k a year and dh makes 30, so about 120k combined income for the mortgage. if needed his brother can go on the mortgage too, hes 21 though, no credit history what so ever, but does have a job that pays 30k/ year, we have combined only 6000k in revolving debt which we are paying down now, and my car note at 15k left.

but heres the thing, whats the best road we can take to getting a mortgage based on a.) BK - if they pull public record. and b. ) limited credit history for me and dh? dh mom has credit hisotry back until 1981.

should we try for fha? and the downpayment- do u think we would be able to get a grant for that??? anyone have any advice or ideas? im really lost as to what to do...im very very confused on the whole process..

[jq26]

I'm not a broker...but fyi based on recent experience. I think there are a lot of "IF"s that need to all happen for the deal to occur.

1) FHA has limitations. I think it goes by county. For single family properties in Jersey, the limit is in the mid $300s. Please check this. But the idea of FHA is to provide capital at below market rates to help lower income buyers. A $750k mansion probably doesn't fit that profile. Being that you will likely be non-FHA, then you are looking at a jumbo loan, which are currently experiencing tight credit conditions and much higher rates.

https://entp.hud.gov/idapp/html/hicostlook.cfm

2) My wife and I make a lot more than $120k combined in a lower tax state (Pennsylvania), and I don't think we qualify for $400k of mortgage with no current credit card debt or vehicle loans. I don't think having multiple people with lower incomes all chipping in will allow you to buy more house. Especially in NJ, where property taxes are through the roof and living costs are relatively high. Very doubtful you'll get approved. Just being honest. In NJ, with a $765,000 appraisal, you're probably looking at $12000 in RE tax per year plus insurance (maybe $1800), so you are looking at roughly $4000/month in total housing payment. That's steep, even for someone with $120k of income and no debt.

3) The BK itself shouldn't really matter as long as her scores are high. Two years out of BK with 720 credit scores gets you pretty solid rates as long as credit is restablished.

4) A grant for a down payment? From who? I'm not sure charitable organizations or government assistance programs are going to spend resources to get you into a luxury home. We're not talking about low income assistance for poor working families here.

[Magdalen77]

2) My wife and I make a lot more than $120k combined in a lower tax state (Pennsylvania), and I don't think we qualify for $400k of mortgage with no current credit card debt or vehicle loans.

I live in PA like you do and, during the wild times a couple years back, I was told that I could qualify for a 450K loan on my 60K salary. I didn't believe it or the loan broker who was trying to sell me on the idea. I'd wouldn't be able to sleep at night with that kind of mortgage over my head. Now, once my scores are better and I clean up a few little things, I'm looking for a 150-175K mortgage.

[jq26]

I live in PA like you do and, during the wild times a couple years back, I was told that I could qualify for a 450K loan on my 60K salary. I didn't believe it or the loan broker who was trying to sell me on the idea. I'd wouldn't be able to sleep at night with that kind of mortgage over my head. Now, once my scores are better and I clean up a few little things, I'm looking for a 150-175K mortgage.

That sounds reasonable. Quite honestly, that broker was probably going to put you in a stated loan on a IO payment (or worse, less than required interest) and then you would have had to cross your fingers that your home went up in value so you could continue to make below market payment without getting creamed. Fortunate for you, you didn't take the bait and now you aren't one of the millions that are being squeezed.

We bought a home in 2005 which has a $200k mortgage at 5.00%, and our minimum required payment is $1300. We pay $1500/month & make lump sum payments from time to time (this isn't necessarily financially wise because this is low cost tax-deductible loan money that we are paying back and it would better allocated in an investment, but it makes wife feel secure).

I bought another home in 2007 (as an investment) which has roughly a $200k mortgage at 6.375%, and my minimum payment is $1500. I pay $1650/month.

I'm in the Philadelphia area. Both of these figures include monthly RE taxes, principal & interest, insurance, and MI (only on the investment).

Hope this helps to give you a guide on what you have to lay out per month! Keep in mind that both houses have a few hundred in additional monthly bills for utilities, etc. Plus, repairs/improvements will be necessary as well. In the last 6 months, I've had unexpected expenses of: $2100 for cement steps, $400 new door (I installed it), $600 sewer back-up, saving $8000 for new roof (March 2008), and $300 HVAC service. Home ownership is not cheap!

[Magdalen77]

We bought a home in 2005 which has a $200k mortgage at 5.00%, and our minimum required payment is $1300. We pay $1500/month & make lump sum payments from time to time (this isn't necessarily financially wise because this is low cost tax-deductible loan money that we are paying back and it would better allocated in an investment, but it makes wife feel secure).

I bought another home in 2007 (as an investment) which has roughly a $200k mortgage at 6.375%, and my minimum payment is $1500. I pay $1650/month.

I'm in the Philadelphia area. Both of these figures include monthly RE taxes, principal & interest, insurance, and MI (only on the investment).

Hope this helps to give you a guide on what you have to lay out per month! Keep in mind that both houses have a few hundred in additional monthly bills for utilities, etc. Plus, repairs/improvements will be necessary as well. In the last 6 months, I've had unexpected expenses of: $2100 for cement steps, $400 new door (I installed it), $600 sewer back-up, saving $8000 for new roof (March 2008), and $300 HVAC service. Home ownership is not cheap!

Yeah, that does help. I was figuring with a 150K loan I'd be making mortgage payments around $900/month, then another couple hundred for RE taxes and insurance getting me up to around $1200. Adding utilities maybe another $300 or $400, depending on the weather (some of these I already pay). My boyfriend/fiancee lives with me, but I'm doing all of this on my salary, so anything that he contributes is just gravy. And he does contribute, he's paying more than half of the expenses in our current place. I'm just getting the financing on my own because the man had a foreclosure in his past and a bankruptcy. He won't let me pull his credit, but I suspect his credit isn't even as bad as mine was when I started working on it two years ago.

Anyway, this is TMI and oversharing. Thanks for your insight.

[divinemadness]

see thats what i needed to know. me and johnny should probably get a home for alot less for us, and not worry about the other thing. i dunno whats gonna happen but i had a feeling it was going to be quite expensive and not going to work. thanks guys!! so its back to square one and we will buy something in our price range.

[jq26]

see thats what i needed to know. me and johnny should probably get a home for alot less for us, and not worry about the other thing. i dunno whats gonna happen but i had a feeling it was going to be quite expensive and not going to work. thanks guys!! so its back to square one and we will buy something in our price range.

Just trying to give you rough ideas here. Please speak to a professional before you make big decisions so you can get a more accurate picture.

Good luck!!

[2001Badyear]

If mom-in-law is great friends with current owner, will they accept a lease option or take back paper? A lease option would allow time to get credit and salary up to par and you might then be able to finance it. Depends on what they need to get out of it right now. Some older folks, retirees, are looking for income and don't need the principle balance right now.

I think trying to bring that many "co-signers" to the table is a huge red flag, and with the low income, credit histories you mention likely would never happen in this economy. Too many lenders took a bath and will continue to do so.

One other thing to remember is that money is probably the single biggest factor that causes relationships (friends and family) to fall apart. Never a really good idea to mix the two if you can avoid it.

[jetscarbie]

Hope this helps to give you a guide on what you have to lay out per month! Keep in mind that both houses have a few hundred in additional monthly bills for utilities, etc. Plus, repairs/improvements will be necessary as well. In the last 6 months, I've had unexpected expenses of: $2100 for cement steps, $400 new door (I installed it), $600 sewer back-up, saving $8000 for new roof (March 2008), and $300 HVAC service. Home ownership is not cheap!

There was NEVER a truer statement made than this one.

Our house we bought in Oct07 is 227,000. We pay 1900 a month...that's with everything.

Got to be prepared for the UNEXPECTANT expense THAT will happen. Our propane bill was $522 and we were on some kind of automatic fill up so 2 weeks after we paid the $522 they filled up again and so now we have another bill for way over $500. Trying to work with them to get a bill-budget plan.

[divinemadness]

well i talked with her, and her sister will cosign for her to get the home. her sisters income is about 60,000 per year. me and the dh will figure out something to do. im not living in a house anymore unless my name is on a mortgage.. dont care how or why, but im sick of renting. we are paying 26,000 a year to rent this townhouse!! it makes me sick to think that 26 grand gone down the drain for nothing.

[LVMortgageMom]

, but im sick of renting. we are paying 26,000 a year to rent this townhouse!! it makes me sick to think that 26 grand gone down the drain for nothing.

I felt the EXACT same way right before I bought my first house. It was my dad who pointed out that I'm not paying for "nothing" and that money wasn't "going down the drain". I was paying for a place to lay my head. I was young and figured that I could spend that money on a house note instead of rent. But I then learned that homeownership cost a lot more than the house note. When something needs to be fixed now, you can call the landlord, once you own it, there is no one else to call.

[divadend]

Looking at your scores...what did you do from August to December to get your EQ score like that? That is what I'm trying to do!

[hasas13]

I am in the house business. I can tell, 1. The FICO is one. 2. Even if you a 450 max you do not want to use it all. 3. Do not get emotional with the house. 4. Get a fix rate and not a ARM. 5. Get approved and have on paper, black and white.

Listen, now is the time to buy, get pre approved look at a lot of houses do not settle on any. You will know when you have good deal. Make friend with a good agent.

[divinemadness]

I am in the house business. I can tell, 1. The FICO is one. 2. Even if you a 450 max you do not want to use it all. 3. Do not get emotional with the house. 4. Get a fix rate and not a ARM. 5. Get approved and have on paper, black and white.

Listen, now is the time to buy, get pre approved look at a lot of houses do not settle on any. You will know when you have good deal. Make friend with a good agent.

thankyou, i am an agent. LOL i just sold vacation property for the last 2 years with a private company. now im on my own and will be able to use my license to my advantage when we buy a home. i just dont know s*** about mortgages LOL

thanks for the advice, akes a lot of sense.. thats what im following. whats a healthy FICO for buying a home?

[divinemadness]

Looking at your scores...what did you do from August to December to get your EQ score like that? That is what I'm trying to do!

i got all the baddies deleted completely!!! all i have on my EQ now is 3 good loan notes. 2 paid off, 1 for $500, 1 for $4500, and my current car note at $19k with $14k left.

[2001Badyear]

thankyou, i am an agent. LOL i just sold vacation property for the last 2 years with a private company. now im on my own and will be able to use my license to my advantage when we buy a home. i just dont know s*** about mortgages LOL

thanks for the advice, akes a lot of sense.. thats what im following. whats a healthy FICO for buying a home?

Devine,

Really, you should put that on your business cards.

[hasas13]

I do not get it. You sold vacation house and do not have a contact to answer this question. Hey I just try to help.

[divinemadness]

I do not get it. You sold vacation house and do not have a contact to answer this question. Hey I just try to help.

in NJ...vacation property= timesharing with deeds in perpetuity. the mortgages were through our company directly. not like tradiontal housing stuff.

i should just go ask my grandma whos a broker but im scared.. havent talked to that side of the family in almost a decade.

[divinemadness]

Devine,

Really, you should put that on your business cards.

ROFLMAO. i know right. a realtor that doesnt know s*** about mortgages. haha. i need to get in the general business.. but the markets so slow now, not a good time to up and leave a steady job for that.. maybe down the road. my license is something to fall back on..

[TTigggers]

ROFLMAO. i know right. a realtor that doesnt know s*** about mortgages. haha. i need to get in the general business.. but the markets so slow now, not a good time to up and leave a steady job for that.. maybe down the road. my license is something to fall back on..

Hey Divine you could sell me some beautiful beachfront property (Swamp Land) LOL

[bellupperdarby]

hello im val and i was reading your post and i see where your credit score has risen very high and my ? is how did you go from 500,s to that 647 because im trying to buy a house too and like yourself im also pay too much in rent 1200 per month and i just wanted to know if i start to pay off the negs on my report will my score increast like that please let me know

[divinemadness]

hello im val and i was reading your post and i see where your credit score has risen very high and my ? is how did you go from 500,s to that 647 because im trying to buy a house too and like yourself im also pay too much in rent 1200 per month and i just wanted to know if i start to pay off the negs on my report will my score increast like that please let me know

i regret paying off the negs and chargeoffs on my report. it was a waste of money. save your money and just dispute it. i wasted about 2 grand paying charge offs and they creditors said oh we will delete it from your report completely... and they never did!!!! LIARS. LOL so save your money for your future home

[divinemadness]

Hey Divine you could sell me some beautiful beachfront property (Swamp Land) LOL

!!!!! i dont sell swamp land..im above that.

[TTigggers]

!!!!! i dont sell swamp land..im above that.

LOL It was just a thought.

Ya know some people want to buy swamp land!!

[divinemadness]

LOL It was just a thought.

Ya know some people want to buy swamp land!!

EWWW