Mortgage Questions

[tnis0612]

I have a few questions that I was wondering if anyone could answer.

First off myself and a friend of mine are trying to buy a house. We have the exact house and are ready to make an offer on it aside from the mortgage side of it. We are 23 and 24 years old and I just graduated from college and am looking for a full time job but currently am working in the meantime making $8 an hour working 40 hours a week and have been for the past 2 months. My friend is working on getting a full time job as well, but in the next week or two is probably going to take a job making about the same as me. We realize this doesnt at all qualify us for much of a loan at all. My mom has also agreed to co-sign. She makes $24k a year, has very good credit history, almost no expenses because she lives with her husband (my stepfather).

The home we want to buy is $140k. We have about $10k in cash available right now and are trying to figure out what our options are. What do we need to do to be able to make an offer on this house as soon as possible? Is it possible to make an offer on the house before we have all of the mortgage stuff taken care of? We have found a great deal, done our research, and want to get this property before anyone else does. On Monday I may have an offer for a job making $24k a year with a strong likelyhood of moving up to $38k in a month or so but I dont know how long that will take and time is a factor. Is there anything we can do temporarily so that we can get the house. I plan on living at my parents house and my friend is going to live in the house. Paying the mortgage even with the jobs we have now isnt going to be a problem, the problem is getting the mortgage.

Is it possible to change one of the co-owners in a few months or so after we have established jobs if we were to get someoen else to somewhat "fill in" until then. If so what are the costs with that?

Thanks a lot.

[avonreal]

your situation doesn't look too good but with your mum added to the equation, i think you stand a chance. The best to do is to speak to an agent; they might be able to arrange something for you.

[BuyHawkeye]

You need a few things. Credit, income, and a work history. I am guessing that all three need to be improved before you become a successful homeowner. Give it time and don't rush into it. Consider renting for now and spend the next year or two building up those three things I mentioned. Of course, this is based off of your post and more info is needed to be sure. Do yourself a favor and get in touch with a mortgage broker in your area and get pre-qualified for a loan.

Best of luck!

[NealRM]

This reply may not sit well with some agents, but here it is.

Don't buy a house yet. Get your finances in order, wait until your job is paying above min wage, and then look at a starter home. Loan company are not current eager to take a risk on anyone, so let the current crises play out. If you are in a better position next year, then go for it.

[BuyHawkeye]

This reply may not sit well with some agents, but here it is.

Don't buy a house yet. Get your finances in order, wait until your job is paying above min wage, and then look at a starter home. Loan company are not current eager to take a risk on anyone, so let the current crises play out. If you are in a better position next year, then go for it.

Nahh, I'm an agent and I think I just beat you to the punch. We don't want to spend our time showing properties to clients that aren't qualified. It isn't good for us, but more importantly, it isn't good for the client.

[jworld]

This looks like a foreclosure waiting to happen or even a BK filing down the line. First thing I see wrong is the minimum wage pay with no job history. Most lenders require a two year history. The other problem is a $140,000 home, your monthly income can,t cover the PITI = Principal Interest Taxes Insurance and you may also have to pay mortgage insurance on top of that My suggestion is hold up on the house for now and save up more money and get your credit straight you need about 3 good active tradelines on your credit. Based on this senario you qualify for a 45,000 to 50,000 dollar house. Once you get your raise and have more money saved up and get your credit scores up as high as possible than at that point get pre-qualified, there will allways be great deals out there.


John Broussard
Exhibit Financial Group
Office 800-832-0278

[lovelytulips]

I would under NO circumstances have any one else cosign for me, let alone a parent making $24000 a year. If for some reason your income does not increase and this house becomes too much for you, it won't just be a disaster for your life - it will also be a disaster for your parent. Do NOT ask for this, do NOT allow it.

You have plenty of time to realize your dreams and the only thing needed now is a little patience. Patience will pay off for you in a big way down the road.

I do not know the market you are in, but if you are in one like a majority across the nation, as prices plummet, buying opportunities will just increase. You will get more bang for your buck if you wait until you are financially ready. Financially ready as defined by YOU meeting the lenders requirements. The lender requirements primarily are designed to protect the lender, but they also protect you. It keeps you from buying too much house for your income.

In the meantime, live on paper as if you have this mortgage. Set up a budget that you strictly adhere to living as if you have this mortgage, including taxes and insurance and most likely private mortgage insurance (PMI). Then in about 6 months, pretend the furnace goes out - how will you repair/replace that?

I also wouldn't take all my savings and put down on a house, so this means you need more savings. If you don't, you will end up putting home repairs and groceries on a credit card when the mortgage consumes your life.

Please consider our advice and do not comingle your finances with a parent. If something happened and you could not afford your mortgage and could not sell the home, the bank would go after your mother. You are considering almost tripling the price of a home versus what you qualify for. Read a few news stories of people who overextended themselves on their mortgages, believing that their income would improve over time.

With determination, I believe you can improve your income and meet your goals within a reasonably short period of time. Good luck!

[webmaster]

This is excellent advice! Don't be in to much of a hurry - you never know what your market will do.

I would under NO circumstances have any one else cosign for me, let alone a parent making $24000 a year. If for some reason your income does not increase and this house becomes too much for you, it won't just be a disaster for your life - it will also be a disaster for your parent. Do NOT ask for this, do NOT allow it.

You have plenty of time to realize your dreams and the only thing needed now is a little patience. Patience will pay off for you in a big way down the road.

I do not know the market you are in, but if you are in one like a majority across the nation, as prices plummet, buying opportunities will just increase. You will get more bang for your buck if you wait until you are financially ready. Financially ready as defined by YOU meeting the lenders requirements. The lender requirements primarily are designed to protect the lender, but they also protect you. It keeps you from buying too much house for your income.

In the meantime, live on paper as if you have this mortgage. Set up a budget that you strictly adhere to living as if you have this mortgage, including taxes and insurance and most likely private mortgage insurance (PMI). Then in about 6 months, pretend the furnace goes out - how will you repair/replace that?

I also wouldn't take all my savings and put down on a house, so this means you need more savings. If you don't, you will end up putting home repairs and groceries on a credit card when the mortgage consumes your life.

Please consider our advice and do not comingle your finances with a parent. If something happened and you could not afford your mortgage and could not sell the home, the bank would go after your mother. You are considering almost tripling the price of a home versus what you qualify for. Read a few news stories of people who overextended themselves on their mortgages, believing that their income would improve over time.

With determination, I believe you can improve your income and meet your goals within a reasonably short period of time. Good luck!

[Mooersrealty]

What the heck...wander right into the real estate world of ownership anyway you can my man. Multi family that is teetering at the bank threshold...look into those, uses parent as a shadow or co borrower....live in one unit...put the rest to work...or look into owner taking back second mortgage for 80% LTV with local bank that does not sell mortgage. Had a buyer that just went thru divorce that was short on cash, credit needed a dent puller but seller wanted to bail out. First mortgage holders accepted the 80% route with seller waiting the same 15 term for the pay back on the 2nd mortgage drip. Same interest rate and all happen with bank knowing the junior mortgage situation. Good luck! Local banks look at the entire character of the loan and do not want the property back.

[tnis0612]

I appreciate all of your comments but I think I may not have been as clear as I could have been with my questions. I appreciate the advice and trying to help me not make a mistake but I assure you paying the mortgage is not a problem. I just finished my bachelor's degree in Finance and am starting an MBA program in the spring. My current job is just until I find the right fit elsewhere. I have been offered two jobs already in the 30k range but turned them down. I am very confident that the expenses will not at all be a factor. My friend and would-be co-owner I referred to makes enough money now being self employeed fixing computer and writing software to handle his half. However, he doesnt report his income so in a loan situation that income is not considered. So for future referrence anyone that has any suggestions please either take my word for it, or assume the expenses (mortgage, taxes, insurance) will not be an issue. Thanks