To end off this year, we’ve compiled a short list of a few questions we’ve recently received from clients.
QUESTION: Can I be a first-time homebuyer even though I had a house and a 2nd home?
The answer is YES! This question was asked by a client who went through a divorce and sold their primary and 2nd home to move in with their elderly parent. Any person who has not owned a principal residence in three years qualifies as a first-time home buyer under FHA guidelines.
QUESTION: What is a boomerang buyer?
A boomerang buyer is someone who lost their home to a foreclosure and is ready to get back into the housing market. Just like the first-time home buyer who owned a home before/after a foreclosure, the buyer needs to wait three years. The start of the three years is usually from the date that your prior home was sold in the foreclosure proceeding.
QUESTION: Do I need a high credit score to get a mortgage with little down payment?
The best advice we can give is to speak with a mortgage professional. Ever situation is unique and what you view as “bad” may be fixable. A mortgage professional can help you distinguish what needs to be worked on and what can be left “as is”. You might be surprised at how soon you can get into the home of your dreams!
QUESTION: What are debt-to-income ratios?
A debt income ratio (Also called DTI) is the percentage of a buyer’s monthly gross income that goes toward paying their monthly bills as well as the new proposed mortgage payment. Below are the general factors looked at to help come up with your unique ratio.
- Current monthly minimum credit card payments
- Your monthly auto payments
- Any personal loan payments you pay monthly.
- Student loan payments
- monthly child support and/or alimony payments
- All other monthly payment which is not listed on your credit report
Exceptions to this list apply. For example, if you have a car loan or other payment with 10 or fewer payments remaining, that payment does not have to be included in your debt-to-income calculation. Student loans for which payments are deferred at least 12 months into the future can be omitted as well.
These numbers are added up and divided into your gross monthly income equal the top number or your front-end ratio.
To get your back-end debt or bottom number, add your mortgage payment to whatever other monthly payments you make for your housing payment. This can include your real estate tax and homeowners’ insurance bill, and monthly assessments to an association among other items in your PITI (principal, interest, taxes and insurance)
Your top number should be 31% or Lower and your bottom number should be 43% and lower. If they are a little higher, we can in some cases get an exception to help you qualify.
This is just a small sample of mortgage questions we have been asked recently. We’d love to hear from you! Email us your questions or call one of mortgage professionals today.