Reply to House buying conondrum

Forum Index » Money and Finances

Reply to "House buying conondrum"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous]I currently am trying to buy a home at 380k. I make 96k a year but have 100k in lawschool debt. I owe nothing in credit cards and about 26k for an auto loan. I have about 55k to put towards closing and a down payment. I was told today that I only qualify for an FHA loan up to 260k as my dti is over 36%. I really want to go conventional even if only at 5% and I want to qualify for more as I saw a house that I love.  Is is more prudent for me to take 26k of the 55k and pay off my car loan and hope I can get to conventional where I only need about 20-25k down.  Will this even help me? I'm stuck. [/quote]

Okay, I'll jump on the bandwagon, but hopefully in a more polite way.

OP, the key here is that you cannot take on that much debt.  Something, somewhere has to give.  In general, banks and lending companies will not grant you new loans that will require payments to exceed approximately 33% of your income (credit cards will lend with a higher DTI ratio, but mortgages will be lower, the actual target numbers vary).  So, in order to buy a house under the conditions you want, you will need to either decrease your existing loans or increase your income.

Some options:
- pay down the car loan, but note that if you do so, you decrease the amount that you will have to borrow (since you'll have less cash in hand) which will increase the lending interest rate, which will increase the payment, and will decrease the total amount that the lender will be willing to lend you.

- save a lot more - you can change your living habits so that you cut back your food (eating out, get generic brands instead of name brands, cut back on more expensive items like meats, Starbucks) and luxuries (cell phone, cable, gym membership, wine) so that you can either save more or pay down more debt.  Live bare bones, student style for a  year and make your income work on the savings and debt

- decrease monthly expenses (move to a cheaper rental, adjust your thermostat to colder in the winter and warmer in the summer, make more use of energy efficiency, CFL or LED light bulbs, cut back on big appliance use, trade in the expensive car for a car with lower monthly payments and lower loan amount).  Apply the savings to debt

- make more use of cost saving tools.  If you have a CC that has a cash back program, but things on the card and pay off completely monthly.  You will not accrue interest, but you'll get the cash back savings.  By doing this, I earn about $600 a year on my Discover.  Coupon for groceries - spend the time collecting and using grocery coupons on items you need to buy.  My office mate does this and saves about $50-60 per month.  Shop sales - if an item you use regularly goes on sale, but multiples at the sale price and store so that you aren't buying these items at the full price.  Get gas at the gas station that has a discount on Thursdays.
    [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics