Question about mortgages and debt

iVillage Member
Registered: 06-03-2006
Question about mortgages and debt
15
Thu, 10-16-2008 - 10:51am
The town I live in just starting a program to help people people who work in our town and are first-time home buyers to buy a home. They help secure a very low rate and also help pay for closing costs and a down payment. My only concern is my debt. Right know, we are in debt about $15,000. (If it matters,

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iVillage Member
Registered: 11-17-2007
Thu, 10-16-2008 - 12:11pm

Your total debt payment should not be more then 10% of your net. 20% if you add on a car payment


Before you call the bank list all our open

iVillage Member
Registered: 07-22-2008
Thu, 10-16-2008 - 12:53pm

Hey Sarah,


I applaud you for looking into home ownership! That is great! I just was wondering, not that you asked for advice about any of this :) , but.... you don't mention if you had been considering buying a home prior to knowing about this program in your town? While that program sounds fantastic, all the regular rules should still apply. Do you have a downpayment saved? And a significant emergency fund?


Forgive me if I am jumping to conclusions, I wish you all the luck! Let us know how it goes when you contact a lender.

iVillage Member
Registered: 01-25-2006
Thu, 10-16-2008 - 1:13pm

Let's see if I can clarify a few things:


1. The amount of debt to available credit is part of your CREDIT SCORE but the mortgage company is unlikely to look at that ratio.

iVillage Member
Registered: 06-03-2006
Thu, 10-16-2008 - 1:38pm
So when it comes to calculating your debt ratio, is it based on each credit card individually or the total on all your cards combined? Thank you so much for your detailed reply!

Sarah

iVillage Member
Registered: 06-03-2006
Thu, 10-16-2008 - 1:42pm
I actually have been thinking about buying a home for quite some time but our debt has been holding us back. I wasn't sure if we would be approved for a mortgage with the debt that we have. As far as a down payment, the program gives x amount of money toward the down payment and my parents are giving us a substantial amount towards a down payment, too. We do have an emergency fund, too, though it is not too large because I have been using all extra money towards paying off our debt. Thanks for your input!

Sarah

iVillage Member
Registered: 06-03-2006
Thu, 10-16-2008 - 1:49pm
So, basically there is no harm in having a bank check to see if I would be approved? We were actually looking to rent a home since I didn't think we were in the position to buy a home until I saw this new program. The price range we had for renting a home was $1600-1800 per month. I defintely wouldn't want a mortgage higher than that. I figured I could see what if anything would I be approved for and then see if there is something that we really liked that was affordable. If we can't afford it, then we will wait. I just really hate throwing out rent money every month, you know? BTW, do you know where I could obtain my credit score? Thank you so much for your advice!

Sarah

iVillage Member
Registered: 11-17-2007
Thu, 10-16-2008 - 2:57pm

gifting a down payment can be very tricky Have your parents put the money into a saving account for you a few months ahead In my day gifting a down payment was a no no.


Mary Ann


iVillage Member
Registered: 01-25-2006
Thu, 10-16-2008 - 3:12pm

I can't say for sure if a single inquiry against your credit would hurt your score or not because there is just too much black magic in how they do credit scores but I wouldn't not apply simply because of that.

iVillage Member
Registered: 10-10-2007
Thu, 10-16-2008 - 4:47pm

Just make sure you factor in that, as a homeowner, you'll have expenses that renters don't normally have. I.E. if something breaks down, you have to pay to fix it, you have property taxes, etc. etc. It's important to look at the total number (maintenance costs, mortgage, insurance, taxes) and not just the mortgage as compared to the rent.

iVillage Member
Registered: 06-03-2006
Thu, 10-16-2008 - 4:57pm
Thank you so much for your input. I didn't know that about "gifted" down payments. My parents did the same for my brother when he purchased his first home. How would they even know it was a gift? I'll look into that. Thanks again!

Sarah

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