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Asked by Robert, Miami, FL Sun Oct 7, 2007

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Answers

9
Luke Hagenba…, Agent, Newport Beach, CA
Wed Apr 2, 2008
I agree with Jim on one point: that Robert's income is too low to afford a home purchased anywhere close to where he lives (Newport Beach, CA).
Assuming you pay nothing down, can get a 6.5% interest rate (highly unlikely with the type of loan you will need), and not factoring in property taxes, HOA dues, or insurance, you would be able to afford a $139,226 property. That is also assuming you have no other monthly obligations of any kind (no car payment, no credit card debt, no cell phone, etc.) and the bank is willing to give you a 33% front end ratio (meaning, you are allowed to count all of your non-reported income and they let you spend up to 1/3 of it on your mortgage payment).

All that said Robert, begin putting away the amount of money you would spend on your mortgage every month so you can learn to live off of a budget that includes a mortgage. You will also begin saving money for your down payment while you look for a job that pays more money. When your income sustains it, you can buy a home. Contrary to other advice, real estate will not drop an additional 40% (the biggest real estate declines in history have not dropped that much in total, and we're at 15-20% already), and real estate is not a "sucker's game", it is a proven vehicle for great wealth building. Keep your head up. 7 years ago I was in your exact same financial situation, so I went out of state (to Oregon) and purchase an modest 3 bedroom home for $110,000, that is today worth $225,000 and cash flows positively for me every month.
1 vote
Jim Gleason, Home Buyer, Solana Beach, CA
Thu Mar 6, 2008
If you make $40k per year, you have no business buying a home. You can't afford it. Rent until home prices decline another 40% and your income rises to $75k minimum.

Don't be in such a hurry to buy real estate. Real estate is a sucker's game that most people are only now beginning to realize.

Enjoy the freedom and lower cost of renting and watch all of the carnage from the sidelines.
1 vote
Sandra Carli…, Agent, Newport Beach, CA
Mon Mar 3, 2008
Nate Lindsey is the best lender I've ever run across. I use him for all of my own home loans and have my family and friends use him. He will be honest with you about what you can or can't do. His phone number is (714) 394-0506 and his email is nathaniel.j.lindsey@bankersfundingcompany.com.
Web Reference:  http://www.ocbeachblog.com
0 votes
Ute Ferdig, Agent, Newcastle, CA
Mon Oct 8, 2007
You may be able to get a loan, but my question to you is, will you start reporting your tips as income after you get the house or condo? I am assuming you plan on writing off the interest, private mortgage insurance and property taxes. I think the IRS might just wonder how you can afford the mortgage and property tax payments on your $12,000 income. Believe me, you wouldn't be the first person who gets caught that way.
Web Reference:  http://www.go2kw.com
0 votes
David Feldst…, Agent, Forest HIlls, NY
Sun Oct 7, 2007
The best bet would be to go for a no document or no income check type of loan... Check out my site I have a link to a great mortgage broker.
Web Reference:  http://www.avidrealtor.com
0 votes
Rita Bradley, , Orange County, VT
Sun Oct 7, 2007
Seek out a mortgage broker who can shop the lenders and get you into a loan that works for you. I can recommend someone if you email me.
0 votes
Angela Faulk…, , Lakeland, FL
Sun Oct 7, 2007
P.S. Stated income means simply that you state what your income is and the lender doesnt verify it......this is an option typically only offered to people with a higher credit score....Im also a Mortgage Broker...
0 votes
Angela Faulk…, , Lakeland, FL
Sun Oct 7, 2007
Look for a company that has a score-driven approval process like Countrywide Mortgage's "Fast and Easy" Program. If you do not have such a mortgage banker in your area, most any Mortgage Broker can offer you a "stated income" type of loan. You may pay about 1/8th of 1% more in your interest rate for going "stated income" and maybe another 1/2 of 1% for going with 100% financing, but with your credit score, there should be a way to get you financed....even for 100%.

One thing you might consider is that if you go with 100% financing, you will most likely be required to pay mortgage insurance...this is not to be confused with homeowner's insurance....mortgage insurance is a fee you pay in addition to principal, interest, taxes and insurance on a monthly basis until you owe less than 80% of the homes value. Mortgage Insurance can be costly but there are alternatives.....with your credit score, you may be able to qualify for what is called an 80/20 loan. What this means is that you actually obtain 2 loans....one for 80% of the homes value and one for 20% of the homes value which will combine to make your total monthly payment. The nice thing about going this route is that :
A. You have no required mortgage insurance because you do not owe more than 80% of the value to any one loan
B. the two payments can often times still be less combined than what you would pay with one loan that requires mortgage insurance.

It is not as easy as it used to be to obtain an 80/20 loan with "stated income" but there are still lenders out there that offer it. Just make sure the Mortgage Broker you use calculates the payment both ways for you (using one 100% loan and then again using the 80/20 loan), and see which one works best for you!

Good luck, Angela
0 votes
ian cockburn, Agent, New Orleans, LA
Sun Oct 7, 2007
It will be hard to get financing with a no doc loan. Try Wells Fargo...the had some programs for folks like you
Web Reference:  http://www.iansellsnola.com
0 votes
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