Turned Down Even With A 700+ Credit Score & $40,000/yr Income
Dear Group,
Recently I spoke with a mortgage broker, and he claimed that with a $40,000/year income and $40,000 investment capital a person could not qualify for a $250,000 home. Much less for a $450,000 home in New York City.
For those of you that are mortgage experts is just a lazy broker that does not want to work, or is this realistically a possible scenario.
Please note that the person with the $40,000 income has a 700+ credit score and very low debt ratio.
Wanted to get your thoughts.
-Angel
find another broker that guy is off his rocker! he can do a No Doc loan with that credit score and the bank doesn't need to know anything about his income, debt ratio, none of that. The LTV will be lower 80-90% but he can most definetly get a loan.
In NYC the difference between $250K & $450K is that one is a co-op and the other (more expensive) could be a condo, and therefore could be rented out if you ever wanted to. Maintenance is usually higher ($800+) on a co-op with a % of it being tax deductable. But you are very restricted and everything you do must be approved by a board of shareholders. I'd go with the condo, however...
I'll assume that you're interested in the $450K home, based on your post.
First, your $40,000 down payment is not quite 10% of the purchase price, so you'll either get PMI insurance (until you pay down the balance another $50,000) or get a 2nd mortgage for the remaining 10%. Either way, your monthly payment on a $410,000 mortgage would be around $2460/mo. for principal and interest only. Take your taxes, insurance and maintenance and divide that up by 12 as well and add it to the $2460/mo. Since you gross around $3400/mo. I would dare say you probably would not qualify for this size mortgage - nor would you want to (I'd think).
The $250,000 home - If you saved another $10K, you'd have your 20% down payment and you wouldn't need to worry about PMI or a 2nd mortgage. Your P&I on a $200K mortgage would only be $1200/mo.
Both of these monthly payments are based on a 6% interest rate @ 30 years. I'm a P/T mortgage broker, licensed in almost every state except New York - I'm across the Hudson from you though.
Good Luck!
Ginger
Get a new mortgage broker. He doesn't know what he's doing. Today, a person with 700+ fico is "King". Go for stated income, nina (no income no asset program) even 100% financed if you'd like. Or, interest only program. A home for 250,000 @6.5% is roughly less than 2K monthly mortgage...a 450K is roughly 3,200 including taxes and interest. With a 40K down...that's no problem at all. Not much paperwork involved. If you're in california or nevada e-mail me. I can help.
We have a 100% no doc loan, send me a private message if interested.
If you insist the house can be yours and your credit rating is excellent. But if you want some really good advice, dont do it.
In the business in which you desire to
become active, you learn very quickly not to become house poor.
The best rule to follow if you intend to really swing, is to hold your house payments and costs down to 25% of your yearly income. At that figure you have it made.
Build your capital up to the point that when a note pops at discount you can write a check. If a builder goes top heavy and wishes to dump the model house of the tract, you can buy it and fast. Wonderful feeling. I hate to tell you how long it took me to figure that out.
I had a little British Vampire two seater jet. Converted it from a night fighter into a civilian high speed goodie. I had a flame out one lovely day over Van Nuys, and I could not get her to air start. Shortly after I had the pleasure of dead sticking it in. I looked at what it was costing me. Yip! so I stopped. You have to take the rattles and dollies out of your crib. I can't tell you what a wonderful feeling it is to attend a foreclosure sale and not borrow a dime to bid on a real goodie.
Do hope this has an effect on you.
Easy looking back. Lucius
i'm guessing there's a prob with debt coverage ratio, with only 40k income in nyc (one of the most expensive places in the world to live), i think i'd agree with lufos above and find an investment that is more suitable for your finances.