Financing in 30340>Question Details

christophera…, Home Buyer in Snellville, GA

Is it possible to get a mortgage before I start working if I have student loans?

Asked by christopheraflowers, Snellville, GA Tue Jan 8, 2013

I received a MAcc degree from UGA. I have a signed offer from a large accounting firm in Atlanta. I have around 20k in debt and just got my first credit card two months ago. I want to have a house by October. I will have little for a down payment. Is this possible?

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Marc D'Angelo - Lender’s answer
Unless you can have a family member cosign for you you will not be able to purchase before starting work. That was the bad news. The good news is that with the signed offer letter and 30 days worth of paystubs you would qualify for a mortgage as long as it was in the chosen degree field you went to UGA for. In addition if your starting salry is with in income limits we maybe able to provide you with down payment assistance up to $5000.
0 votes Thank Flag Link Wed Jan 23, 2013
Sounds like you are positioning yourself for a successful home purchase. And now is the right time for you to start asking these questions. Congratulations! I would suggest applying for a mortgage today. What this will do is give your lender an opportunity to see your actual credit and earnings so he or she can consult you during the preparation months before you start looking. Its best to have this conversation with a lender about 6 months before you want to buy so you have time to do whatever the lender advises so you can get the best interest rate and lowest down payment options. Also, you don't want to even look at homes before you get a prequalification from a lender. Reason being most of us get attached to homes that we can't afford and it sets false expectations for the buyer and makes the process more difficult and unrealistic for the buyer, the Realtor, and the lender. I have a very competitive lender that I refer my clients to in the early stages. His name is David Williams and his email is david.williams@fcmhomeloans.com. Please tell him that Ricky Rucker referred you. He's very knowledgeable, professional, and patient with his clients and I enjoy working with him. My email is RuckerRealtyTeam@gmail.com if you have other questions.


Ricky Rucker, MBA, Realtor
Coldwell Banker Midtown
678-744-9655 direct
404-382-6006 fax
http://www.coldwellbankeratlanta.com/real_estate_agent/2213/…
http://youtu.be/LCw3U7q9TWc
http://www.linkedin.com/in/ruckerrealtyteam


Like Rucker Realty Team on Facebook or Tweet @RuckerRealtyTea for info, food, and fun to Love Live & Live Well!
0 votes Thank Flag Link Wed Jan 16, 2013
At this point your financial profile has not established a history. Lenders look for 12-24 month trade lines when considering a mortrgage application. Generally, they look for two years of work experience, although they do consider job changes in the same field. Obtaining a mortgage at this time you will proably pay a premium and have a much higher interst rate, I think it would benefit you to wait.
0 votes Thank Flag Link Wed Jan 9, 2013
Based on the information that you have posted, you are probably a little premature in jumping into home ownership. With only one credit card that is two months old, you will likely not have an established credit history. I am assuming the 20K in debt is student loans. You typically need to have at least 2-3 trade lines with a 12-24 month history.

The minimum down payment will be determined by the loan program, the type of occupancy, and your qualifications as a borrower.

Only two 100% Financing programs are currently available. One of which is the VA loan program. VA financing is only available for eligible veterans. The second 100% option is USDA financing. USDA loans do have geographic restrictions to rural areas though.

For FHA and FHA 203K mortgages, the minimum down payment is 3.5%. That down payment can be from the borrower’s own funds or a gift from a family member.

Conventional mortgages typically require at least 5% down for a primary residence. Any conventional mortgage with less than a 20% down payment will require monthly mortgage insurance. Fannie Mae offers special HomePath Financing for eligible HomePath properties. It is only 3% down for primary residence.

All loan programs today require a verified continuous 24 month employment history in the same line of work, but not necessarily with the same employer. There are only a very few of exceptions to that rule. Those exceptions are as follows:

1. If you are a recent college graduate, you can use your time spent in college to make up part up the 24 month history. A copy of your college transcripts will be required.
2. If, within the last 24 months, you have had a 6+ month gap in employment, then you must be employed at least 6 months since that gap ended.
3. For someone with a longer break in history, the same 6 month rule is followed.

For someone who is salaried or hourly, you generally must be employed at least 30 days with the current or new employer. This is due to the fact that a pay stub reflecting at least 30 days of YTD income is going to be required prior to closing.

If you are paid by anything other than a W-2 (i.e. a 1099, self employed, etc), then you must have 24 months of receipt of that type of income. Some exceptions are possible if your current employer switched your compensation from W-2 to 1099 or commission.

Closing on a mortgage prior to starting a new job is only considered on a case by case basis for certain fields. Generally, a non-revocable employer agreement confirming your new salary, position, and start date will be required. Since you would be brand new to the workforce, this would not be an option for you at this time.

Working with a knowledgeable and seasoned loan officer is critical in today's market. Getting Pre-Qualified is the only way for you to find out your options. To get Pre-Qualified for your purchase, you can submit your request online at http://www.rodneymason.com.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
0 votes Thank Flag Link Wed Jan 9, 2013
Christopher,

Yes, you might find someone to give you a loan with no credit or work history, but you will pay a premium for it in higher interest rates. Depending on the lender, they may want up to 2 years credit and work history behind you before you get the best terms. If you are worried that you may miss buying at a historical low point in the market, don't. Will the market improve in the next 2 years, probably, will it take off with double digit increases, I would love to see some reason to believe that. Sure you may pay a little more a year or two from now, but the better interest rate you get may very well offset any modest increase we see in the market price. Take your time now to build a credit history and save for a down payment.

The best advice I can give is to think of real estate as a long term investment. Buy for the mid to long-term: FIVE years or more.

Best,

Dave Herren
Best Atlanta Properties
404-425-4945
0 votes Thank Flag Link Wed Jan 9, 2013
Down Payments are not an issue as FHA allows you to have that Gifted to you.
We can normally start the purchase process as soon as you start your job (this is with offer letters only)and complete/close it just before you get your full 1months worth of pay stubs.
Your real issues will be with credit, you need 3 credit lines, one with over a 1,000 high credit limit open for more than a year. how long have the student loans been open are they still differed? if not do you have any utilities bills in your name and can prove 12 months cancelled checks on.
there is also a matter of payment shock - not always used much any more but without any rental history it may be difficult for the lender to believe you can suddenly take on a large 30 year payment with no other payment history to base a decision on.

Give me a call all we can really do is sit down and analyze your potential and shop your information out to a few open minded banks.

I hope this helps,

Rob Robbins
Senior Mortgage Consultant
Cornerstone Mortgage Group
6151 Powers Ferry Road NW
Suite 610 Atlanta GA 30339
Office 678-578-7613
Cell 404-932-5353
rrobbins@cmghl.com
0 votes Thank Flag Link Tue Jan 8, 2013
I'm not a Mortgage Broker nor Real estate Broker. However, some of the best advice I've been given growing up in "Business" is that *EVERYTHING* in life is Negotiable.

With that said, you need to determine what your drivers are.
Why do you want to own/vs. Rent?


With rental , again, I'd ask what is your drivers. I'm gonna make an assumption you are on the left side of "younger" (ie. late 20's/early 30's especially now days there's no rush to jump into a home.



The Fed (near term) is not going to jump rates (to points outside your range).

Purchasing a home tends to be a frustrating/"stressful" processit's no worse than a stressful day at work, but it is stretched out for 1-2 months. That (if I were your friend/brother/father) would be the biggest thing I'd stress, wait a year make sure you enjoy your job, it's a "FIt" so you're not 9-months in updating your resume *grin*

Worry about Your new Job EXCELLING at that. give yourself a solid year to acclimate to workdo some tire kicking of your own (searching the web)Personally, in addition to Truilia.com, Realtor.com is good as well.



There's a *LOT* to consider with a Home Purchase. (Remember, when you own it you don't call a landlord to fix*YOU* fix out of your pocket.. In addition to if you plan on Marriage one day are you purchasing in a decent school district/a home a "woman" would enjoy,etc.etc.

Just one example. Peer of mine (did the same thing) Wife was transferred to Atlanta. He found a job. They sat for a year to find something. *ONE MONTH* after purchasing, up shows a $10,000 water bill (obviously wrong)come to find out a pipe busted in the back yard. (I don't know the Legalities thought for sure prior owner would need to pay he said "No I guess they purchased "as Is"



The bad part of renting, is every time you renew they jack up the price/hold you prisoner (thus tend to move a lot)I own, but out of Sq.FT comparison was looking at she started at high $800's (For a 633 sq.ft apartment) before she moved..they were up to $1100 (INSANE).





Listen to your Gut for a "Normal" American, a Home is the Largest Investment they'll ever make. Buy smart (not with emotion).

And if you just *HAVE TO* purchase (or Lease Purchase Option) a home. Make sure whoever you work with has ability to report to credit bureau your credit standing (future credit needs). Personally, I think "most people" in this world are reasonable. The good with Lease Purchase/Rental of a Home/things go wrong (lost job/etc).



Finally as student loans go(unless Private) they are income based and you can (many times) ask for Forbearance if you are having trouble. As long as you pay the Minimum student loan should be least of your worries (FYI the new law is once you hit the 20-year mark) whatever balance you have (if any) is forgiven. Always get an "Income Contingent" payment. (check with FASA they'll know).

Penny Pinchers


By the way, you might have the "Penny Pinchers" tell you "Job Loss Insurance" is awaste of MoneyTHANKFULLY I never listened to family when they tried to get me to save money (a whopping total of $100-ish a yearto drop my Comprehensive on my 14-year old car. I said "NO WAY" even if it's $1500 I'm still not in negative. When I hit diminishing returns I'll cancel.

Totaled my car 1-week before Christmas Getting a $4000 check. to put to a new one.


As a side bar, there are Insurance companies (name brand) that offer "Job Loss" insurance. It's very cheap (like $5/$8 month) annualizedt. .

With your debt and the words "Little" for down payment, it *MIGHT* be something to look into. Again, though it's more "Marketing gimic" than a true safety net.

(some companies offer 50% after your unemployment benefits/some offer "Free Job Loss Insurance" as part of a policy and some offer up to $1800 month (in no more than 6-months in a 24-month period).

Least for me, it's peace of mind and a *LONG TIME*-before you hit diminishing returns.


ALL THAT TO SUM UP*grin*
1-Don't be in a rush

2-"Tire Kick" (search web--see what's in your range over the years)

2a--As my Realtor said (pulled out of a bidding war)--Says invariably---the place you *DO* get, typically ends up better (mine did).

3-Investigate Job Loss Ins. Being a Acct. Have no doubt you'll figure out if it make sense in your situation.

4-STICK TO YOUR BUDGET!!! Figure one out and *STICK TO IT*---one of biggest mistakes--people tend to purchase outside their comfort zone.
4a--for first time buyer always best to buy below what you can afford--save the difference, have a larger down payment.

BEST OF LUCK!
0 votes Thank Flag Link Tue Jan 8, 2013
Thanks so much for taking the time to respond! It was very helpful! I probably should have mentioned that If everything works out I will be married by October. It's kind of scary to marry before I start work but with where we will be in life it makes the most sense. Fortunately, job security won't be an issue because UGA's accounting program is top notch and firms practically drool over you. 99 percent of the students that graduate from my program have jobs well before they graduate, most at Big 4 firms. I think I will heed your advice to wait about a year, which will give time to save some money and build credit, especially if my wife is working full-time as well. My only issue was with how much more expensive per month renting an apartment is in a suburb of Atlanta than paying a mortgage, not to mention that I won't be building equity. Given the time I will have to build my credit and become less risky in appearance to lenders, I may benefit more in the long-run from the lower rate.
Flag Tue Jan 8, 2013
I would recommend renting for two years to get your credit established, save for a down payment and closing costs etc.

Get Your Finances in Order: To-Do List
Develop a household budget. Instead of creating a budget of what you’d like to spend, use receipts to create a budget that reflects your actual spending habits over the last several months. This approach will factor in unexpected expenses, such as car repairs, as well as predictable costs such as rent, utility bills, and groceries.

Reduce your debt. Lenders generally look for a total debt load of no more than 36 percent of income. This figure includes your mortgage, which typically ranges between 25 and 28 percent of your net household income. So you need to get monthly payments on the rest of your installment debt — car loans, student loans, and revolving balances on credit cards — down to between 8 and 10 percent of your net monthly income.

Look for ways to save. You probably know how much you spend on rent and utilities, but little expenses add up, too. Try writing down everything you spend for one month. You’ll probably spot some great ways to save, whether it’s cutting out that morning trip to Starbucks or eating dinner at home more often.

Increase your income. Now’s the time to ask for a raise! If that’s not an option, you may want to consider taking on a second job to get your income at a level high enough to qualify for the home you want.

Save for a down payment. Designate a certain amount of money each month to put away in your savings account. Although it’s possible to get a mortgage with only 5 percent down, or even less, you can usually get a better rate if you put down a larger percentage of the total purchase. Aim for a 20 percent down payment.

Keep your job. While you don’t need to be in the same job forever to qualify for a home loan, having a job for less than two years may mean you have to pay a higher interest rate.

Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills, too. Pay off the entire balance promptly.
0 votes Thank Flag Link Tue Jan 8, 2013
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