I have a friend who is married and him and his wife want to purchase a house. The thing is his credit is not that great but her's is very good. She also makes about $10,000 more per year than him. I know those two things matter greatly when it comes to mortgage loans. The thing is, he is reluctant to pursue this because of his credit. I told him my assumption was they would use whoever had the higher income and credit score (her) and just use his income for the amount the lender would actually loan. Some additional details: They have 2 children and student loans but they are in deferment because the wife is in grad school and the husband is still in undergrad both still work full-time though. They say they have paid off all of their good credit cards and accounts and only use them sparingly now. He said his bad debts and accounts that he has left have payment plans set up on them. I have to admit, I am not knowledgeable of this myself because I have never been through the arduous task of looking for or purchasing a home but I know many of you have. Furthermore, with the credit market the way it is, it may be completely different than what I assume. Is my assumption on this correct or would another method be used. Should they pursue further?
I'm going through something similar but not quite the same. I have very good credit and a very good income. My wife's credit is very good too. However, she co-signed for my brother on my brother's new house (since he had bad credit) so she has debt under her name. I don't have any debt since our current house is paid off for. I tried to get a loan under just my name. The loan officer was okay with that but the loan officer told me that they would still prefer to have her on the loan since it gives them more people to 'go after' if the loan went into default. That even though my wife had another house she was responsible for, it was still better to have her on this one. That was only one loan officer so take that for what it is worth. Texas being a community state I'm not sure if it makes a difference.
If both are on the loan, the credit scores of both will factor into the process. Also, in the stimulus package is a tax credit for either $7500 or $8000 (or 10% of the home price whichever is less) for first time home buyers. From what I understand this is for a house purchased in this calendar year (although the details aren't final until the bill is signed). Also, it appears this is a true credit (last year when this credit initially passed, it was essentially a $7500 interest free loan payable over 15 years). In other words, it won't have to be paid back. Just pointing that out becuase it may influence their decision.
I knew about the tax credit from a previous thread but I did not mention it to him. So, if he is a co-applicant does his criteria matter just as much as her or what? How does that work?
My parents are closing on a house right now. It cracked me up our realtor forwarded the signed contract without permission to a friend of hers who is a loan officer. I wonder what her cut is. When my dad asked her why the loan officer's name appears on the fax header of every page of the signed contract (like she had used his fax machine to send the documents to the seller's agent), she wouldn't answer him and said it's okay to use your own bank. Shady shady shady.
I figure there is a lot to research and know before buying a house and that there are a multitude of ways you can get ripped off. That's why I am happy renting my 3 bedroom house for $400/month right now. My friend on the other hand pays nearly $600/month for a 2 bedroom apartment.
On the house I am renting? No, I really just lucked into it. I moved in about 5 years ago and rent then was like $390 and it has only increased $30 since that time period. I do not know the owner personally at all. Everybody thinks it is a sweet deal, except my cousin at one of the local banks. She is a COO and swears I could be buying a similar house paying about the same per month. I doubt it and that's why I have not looked into it myself. I'm content.
My wife (who used to be in the mortgage business) informs me that it depends on the lender/investor, but in many cases they will use the lower credit score although some investors will average the two.
So my friend and his wife got approved for $90,000 but they would have got more had their debt-to-income ratio been lower. I have no idea what this is but I remember i being mentioned on here before. What is it? Is there anyway to lower that number quickly or is it like credit, it takes years to fix the problem areas?
debt to income is the money you owe vs money you make. basically, to lower it they have to pay off more debt (i'm thinking it's the deferred student loans that is keeping it high) or get a salary raise.
We're trying to buy a house right now too, so I know what's going down with the 8,000. You just have to close by Nov. 30th of this year. Here's the website with all the info about it. Also, you can get the money now instead of on next yrs tax return if you file an amendment. We got an awesome interest rate from countrywide, so if you want me to give you our lender's contact let me know.
