Apply for first mortgage

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I posted a similar post in April of last year.  I think I followed the best advice from that post.  I have updated my stats.
I want to buy a home this summer.  It will be my first house. 

  • Have a 750 fico score down from 800.   I was at 17k in credit debt in Jan of 2017. 
  • 10.3k in student loans currently 5.1%  Monthly payment is $130.  (Payment may change in April from IBR)
  • 3.1k in credit card debt.  Borrowed at 0% fee, zero percent until Aug 2017.  Will be paid off in March
  • 65k income
  • Car payment $217 a month.  6.3k left at 1.99%. CU offered a refi at 2.24 for 60 months.
  • Should have 20k for down payment (10k is from Restricted stock units RSU that vest in May)

 

  1. Should I apply for an FHA loan or regular?
  2. Should I refi my car to bring the payment down from $217 to $105?  Will it be an issue when I apply for a mortgage 2 months from now?
  3. Can I do this with 20k down payment?
  4.  What am I missing?

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How expensive of a house are you looking to buy?

You have a student loan, car loan, and credit card debt. $10k on actual savings. And you want to buy a house?

wilked said:   You have a student loan, car loan, and credit card debt. $10k on actual savings. And you want to buy a house?
  What he said

So you have $30k in debt and a car loan...

And you dont have any downpayment ready - do you have any cash reserves of any kind?

Regardless of the house cost, to me it wouldn't be a good eligibility to buy...

But, but... it's a buyer's market...

mikejensen said:   But, but... it's a buyer's market...
  In my area it's a sellers market.

op 17k in credit card debt is a ton for your income.  How did you rack up that much debt?  I would work on the cause of that prior to buying.

Yet people still argue housing bubble 2.0 isnt on the way.

How much are you looking to spend on a house?

wilked said:   You have a student loan, car loan, and credit card debt. $10k on actual savings. And you want to buy a house?
  Did you miss the part where it will be paid back in less than 2 months?!

Tiggerlgh said:   
mikejensen said:   But, but... it's a buyer's market...
  In my area it's a sellers market.

op 17k in credit card debt is a ton for your income.  How did you rack up that much debt?  I would work on the cause of that prior to buying.

  "WAS"  paid off 14k the last week of Jan. 

DigiornosHunter said:   So you have $30k in debt and a car loan...

And you dont have any downpayment ready - do you have any cash reserves of any kind?

Regardless of the house cost, to me it wouldn't be a good eligibility to buy...

  Where do you get 30K?!

I should open a school on reading comprehension.

SharpeRatio said:   I should open a school on reading comprehension.
  I missed it on 1st read since your two related sentences were on 2 separate line and separated by something else entirely. 

​A better move would be to apologize for your lack of skill in writing communication then thank the hive for the advices given.  Also, it helps to link to your last thread:

https://www.fatwallet.com/forums/finance/1493281

SharpeRatio said:   I should open a school on reading comprehension.
  
How about opening a school on answering questions the first (or second) time they're asked...?  How much are you looking to spend?  That is fundamental to answering question #s 1, 3, and 4.  For those keeping score, that's the third time it's been asked, and it might be the last because a lot of people don't appreciate this kind of snark from someone asking for advice.

Question #2...All the monthly payment savings come from recasting the remaining loan into a new 60-month term.  If you have to do that to afford to do what you want to do, you can't afford to do what you want to do.

taylor0987 said:   How much are you looking to spend on a house?
  ...
I saw in your old thread that you were previously used something to say you could afford $260k. I think that's way too much. Give us an idea so we can give a better answer.

SharpeRatio said:   Should have 20k for down payment (10k is from Restricted stock units RSU that vest in May)
You can afford a $100K house. Enjoy.
  

jd2010 said:   Yet people still argue housing bubble 2.0 isnt on the way.
  
The difference now is that people are buying overprice home with large down payments or all cash offers, at least in Socal.

Me personally, I'd get the student loans paid off first. A car loan at 1.99% isn't something to hurry up and pay off, but the 5.1% interest rate that can't be discharged in BK matters more.

Suggested course of action:

1.) Do not refinance car loan. Just pay it off as scheduled.
2.) Pay off student debt before buying home.
3.) Come up with 20% down and do a conforming mortgage. 25% down if you are buying a condo. (The last 5% of financing on a condo works out to 8-9% interest)
4.) If your city/neighborhood offers it, look into a mortgage credit certificate for a tax credit equal to 20% of your interest.
5.) You will need another 2-3% of the home's purchase price for closing costs. Most lenders also want to see two months of expenses in savings. Personally I recommend 8.

I estimate that you really want to save another $30K at a minimum before buying this home.

IlliniProgrammer said:   1.) Do not refinance car loan. Just pay it off as scheduled.
2.) Pay off student debt before buying home.

  If he is paying 5.1% on student loan and can refi car loan to 2.24%, maybe he should do the car loan refi and aggressively payoff the student loan and then the car loan. This is assuming there are no significant refi costs and ignoring possible tax deduction for student loan rates.

ETA: Generally agree with your suggestion to pay off loans, accumulate a good savings to cover 20% downpayment (and some more) before buying a house.



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