Qualifying for a mortgage---help!

So, does anyone know just what they check when you get qualified for a mortgage?

DH and I both work on the books, and for several years have been working with a debt consolidation company. As of two months ago, we can finally take a deep breath and proudly say that we have zero credit card debt, and only two student loans to pay off. Our credit score is actually surprisingly good as a result. On the flip side, we have been absolutely choking financially, and between NYC rent, tuition for b'li ayn hara not a few kids, and the __huge__ payments to the debt consolidation company, there is never anything left. We are forever behind in paying utilities, especially our cell phone bill. None of these utilities have reported us to credit agencies, otherwise our credit wouldn't be so good.

So, we want to move to an OOT community and buy a house with mortgage payments that will be considerably lower than our rent, to give us some breathing room. The mortgage company is thrilled to work with us based on our credit score and W2s for last few years. So, now I am eating myself up, wondering if this can possibly have any hope of going through? Does anyone know how nit-picky mortgage prequalification gets? If my utility companies have never reported me, will they dig deeper to see my payment history? And if so, will they take into consideration that the whole point of this is to have lower house payments so I can better afford to stay on top of the utilities?

Thanks in advance for any insight.

Gold Member Joined: Nov 16 2010 Posts: 1439

If you want u can pm me. My relative is a mortgage broker and could help u out.

Executive Member Joined: Apr 01 2009 Posts: 464

They generally do not look at your utility payments. They are most interested in your debt to income ratio. They don't know about your tuition, your phone payments etc. The only issue I would see would be your student loans (don't know your income or how much in student loans so can't tell you if it'll be a problem). The thing with moving OOT is that they need to see that you have income. If you have to give up your current jobs to move then they can't count that as income unless you have a new job in the new place. What they can do is consider it a second home purchase with the assumption that you're staying with your current income and also your current rental. When they do that they will include your rent amount in your income to debt ratio. Just make sure that YOU know that you can afford to have a house because they don't look at your tuition, utilites... so you need to be realistic and know what you can really afford.

Silver Member Joined: Sep 01 2010 Posts: 639

I work in a mtg company pls pm me.

As somebody said they are interested in your debt to income ration and it has tightened up considerably. We actually prequalified but then were turned down because our debt ratio was high - and we did have a good credit score. They'll look at your debt consolidation payments and your student loans.

Executive Member Joined: Jan 22 2012 Posts: 323

It also helps to put down a large down payment which is about 30% or more of the purchase price. The bank will also ascertain that you have enough money for closing costs as well as 3 months reserve P & I (principle & interest), that is the monthly mortgage amount. They also want to see 3 months real estate taxes on hand. Closings costs (points/origination fees included) are typically 4% to 6% of the mortgage amount.

If you close towards the end of the month, ie: August 27th, your first mortgage payment will not be due until October 1st.

If you close before Dec. 31, 2012, you will get a write off when you file taxes in 2013.

I would opt for a 30 year fixed rate as opposed to a 15 year mortgage as your monthly payment will be lower than a 15 year loan. That said, if you prepay or amortize your loan during the 30 years, you will be ahead of the game with no penalties. Bear in mind that on a 30 year loan, you will be paying mostly interest for the first 11 to 15 years of the loan, so prepaying or adding a 13th payment towards the principle every year will be your best bet, Good luck. Cool

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I'd still price a 15 year because of today's extremely low 15 year rates, and 30 year rates are at higher interest percentages the difference might not be as extreme as it once was.