So, as you might gather from the title…I'm hopelessly lost. I'll give an overview of my situation and my questions will be in parenthesis.
Our landlord has given my mother, father, sister, myself just under 90 days to move from our residence of 12 years. We saw this coming and have been planning to buy a home for a few months, but don't have nearly the deposit we had hoped to have saved up as we expected to have another year, not 3 months.
We're located in the South Bay Area of Southern California. Most of the homes we are interested in range from 440-500k. We can make due with 400-420k homes but it's difficult to find anything below that price point which would be liveable.
Right now I have 25k saved up for a deposit and my parents/sister can contribute about an additional 6k. That's 31k set aside for a down payment. If we are lucky we might be able to get another 5k together within a month or two. So, my minimum deposit is about 31k and my MAXIMUM, best case scenario deposit is 36k.
Credit Karma is giving me a credit score of about 750, but when I went through a pre-qualification from with Better they returned a 719 credit score.
I am an hourly employee that makes about 57k a year. I make a little overtime but not very much. I have about 7k in my 401k. I haven't been able to confirm how much, if any, of this can be withdrawn. I have been at this position for about a year and a half. Before that I was a paid intern with the same company for a half year. (1. Do the two together qualify as 2 years work experience??)
I have a 500 car payment requirement, but have been paying 1000 a month to get it paid off sooner. I'm fine moving that back to 500 a month if necessary. The loan was for slightly over 31k to purchase the car, but has been paid down about 4k since it was taken out a few months ago. (2. Would paying less be better or worse?)
I have about 4k in credit card availability with a 2 year credit history. I have never carried a balance. I tend to spend $300 monthly in credit card payments. Payments have been on time every time. I pay off some of my balance before the statement generates so my utilization is always 5-9%.
I don't currently have any other bills, debts or payments.
The only mortgage option available to my father would be an ITIN loan, which are known for their poor rates and minimum 20% down payment requirements. This doesn't feel like an option. (3. If he applied for an ITIN loan I am assuming I could not apply with him as a co-applicant? Or could I?) As of his last tax form he makes approximately 44k a year as a self employed individual.
As such, we are looking into an FHA loan secured by me or a loan with private mortgage insurance. Ideally we would want a fixed rate, 30 year loan as we are unlikely to move from the residence anytime in the next few decades.
From what I understand, FHA and PMI loans are okay with only having 3.5% down. With 30k we have approximately 6% of a down payment for a 500k house. Or, if we were to settle for say a house worth 450k – our 30k translates to 6.5%. (4. Would having more than the 3.5% down for either scenario help me be approved for an FHA or insured loan?? Or is it no different than only having 3.5% since it's not 10% or 20%??)
Although the loan would be in my name, my parents and sister would also be occupying the residence. My father would be assisting me with the mortgage payments, regardless of whether we go with an ITIN loan in his name or our joint names (if possible) OR go for the FHA/PMI loan in my name only. Realistically, he would be paying at least half the mortgage payments but because of his citizenship status he is not eligible to co-apply with me for an FHA or conventional loan. He does, however, have alternate credit history in the form of his regular payment of taxes, business (with EIN), and our landlord's willingness to provide a letter affirming that he has paid our rent of 1.5k a month on time every time for the last 12 years. (5. This is irrelevant for an FHA loan but I am wondering if a manual underwriter wouldn't be able to consider this in their evaluation for a PMI or ITIN loan.)
How is it looking? Am I shooting for the stars hoping for a 450-500k house? Capital one and SOFI pre-qualified (not pre-approved) me for a 300k and 280k loan respectively but this would not be able to buy us any sort of house to fit four people near our workplaces. I believe these were conventional loan approvals for fixed rate 30 year.
Better mortgage declined me for any pre-approval, citing "Your monthly debt payments must change from $3,444 to $2,000." (6. I'm not sure what this means??? My monthly debts payments are about 1.3k ???)
I'm planning on speaking with a few brokers in person, applying for loans online (quicken seems like a great option if I could qualify), and visiting Bank of America, Citi and Chase to see if their loan officers can do anything for us.
(7. Anything else I need to know??)
As you might be able to tell, this is all really jarring. We've gone from thinking we had a year to get things together to having only 3 months to get a mortgage, find and secure a house, close and move.
Please no hateful comments regarding the ITIN. My father is in perfectly good standing with the law, pays taxes and is simply not eligible to adjust his status. I'm beyond proud of him for achieving what he has within those limitations.
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