domingo3
Hi. I'm wondering if someone might be able to give me an idea if I could get a home loan in my situation or give me advice on what I might do to improve my mortgage application.
Here's my situation.
We're currently renting, but may be on the market to buy a home next year.
I have excellent credit (score around 800), my wife's credit is not so good. We have about $100k in taxable investments/savings and ~$200k in retirement accounts.
My income is about $8500 a month. That calculates to be a 0.28 front end ratio of $2380 and a 0.36 back end ratio of $3060.
The front end ratio is fine, as we're looking at houses in the range of $350-400k. For example, let's say that the home loan, taxes, insurance, is $2380 a month.
I'm not positive about how the back end ratio is calculated, or if there would be special considerations for our situation.
Here is that part. We have a car payment of $700 per month that will be paid off in two years. Zero credit card debt, student loans, etc.
I own two homes. One of them my dad lives in and pays the $500 morgage payment. The other one is a rental property. The mortage payment (+taxes and insurance) is $1200, and I get $1100 a month after management fees. I didn't include that in my income listed above.
Of course the car payment should be included in my back end ratio. That would make it ($2380+700)/$8500 = 36.2%
If I add in the other homes, it comes out to ($2380+700+500+1200)/(8500+1100) = 49.8%
Which way is the ratio calculated? Should I take money out of savings and pay off the car loan before applying for a home loan, or save that money for down payment? Is there a way to make my rental home a business entity, so it's not included on my debt/income in this way? Should I make my dad sign a lease to show to the bank and/or pay taxes on the "income" from him paying the morgage payment?
I hope all this made sense. Thanks for reading.
Here's my situation.
We're currently renting, but may be on the market to buy a home next year.
I have excellent credit (score around 800), my wife's credit is not so good. We have about $100k in taxable investments/savings and ~$200k in retirement accounts.
My income is about $8500 a month. That calculates to be a 0.28 front end ratio of $2380 and a 0.36 back end ratio of $3060.
The front end ratio is fine, as we're looking at houses in the range of $350-400k. For example, let's say that the home loan, taxes, insurance, is $2380 a month.
I'm not positive about how the back end ratio is calculated, or if there would be special considerations for our situation.
Here is that part. We have a car payment of $700 per month that will be paid off in two years. Zero credit card debt, student loans, etc.
I own two homes. One of them my dad lives in and pays the $500 morgage payment. The other one is a rental property. The mortage payment (+taxes and insurance) is $1200, and I get $1100 a month after management fees. I didn't include that in my income listed above.
Of course the car payment should be included in my back end ratio. That would make it ($2380+700)/$8500 = 36.2%
If I add in the other homes, it comes out to ($2380+700+500+1200)/(8500+1100) = 49.8%
Which way is the ratio calculated? Should I take money out of savings and pay off the car loan before applying for a home loan, or save that money for down payment? Is there a way to make my rental home a business entity, so it's not included on my debt/income in this way? Should I make my dad sign a lease to show to the bank and/or pay taxes on the "income" from him paying the morgage payment?
I hope all this made sense. Thanks for reading.