Buying a House and Getting a Mortgage

[MC4]

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For those of you that bought a house while in school, how did you get a mortgage without an income? The brokers I talk to all want to see that I will have a steady income that meets their debt ratios while in school. Thanks.

 

[dolor de muela]

For those of you that bought a house while in school, how did you get a mortgage without an income? The brokers I talk to all want to see that I will have a steady income that meets their debt ratios while in school. Thanks.

Tell them you want a stated income- no/low- documentation loan from the very start. If you find yourself a cool lender you can be honest and explain you’re a student and that you’d rather buy than throw you’re money away renting. I highly suggest you get yourself an interest only loan with the payment fixed for five or seven years. This way you can have the lowest monthly payment possible while in school and still have the security of a fixed payment. You will worry about refinancing once you graduate and your income has increased. I suggest you don’t get into a loan that has a super low monthly payment option that can negatively amortize. In this case you’ll probably only make the minimum payment and your principle balance will increase every month. In four years you will not have built equity, in fact you may owe more than your home is worth. Lastly, you are on the right track. I would definitely buy a house while in school if you can swing it. I bought my first house three months before I started dental school. At the end of my second year I sold it and made 125,000. I used this money to buy a bigger house and I’m happy to report I’ve already built equity there as well. Good luck. 🙂

 

[MC4]

Tell them you want a stated income- no/low- documentation loan from the very start. If you find yourself a cool lender you can be honest and explain you’re a student and that you’d rather buy than throw you’re money away renting. I highly suggest you get yourself an interest only loan with the payment fixed for five or seven years. This way you can have the lowest monthly payment possible while in school and still have the security of a fixed payment. You will worry about refinancing once you graduate and your income has increased. I suggest you don’t get into a loan that has a super low monthly payment option that can negatively amortize. In this case you’ll probably only make the minimum payment and your principle balance will increase every month. In four years you will not have built equity, in fact you may owe more than your home is worth. Lastly, you are on the right track. I would definitely buy a house while in school if you can swing it. I bought my first house three months before I started dental school. At the end of my second year I sold it and made 125,000. I used this money to buy a bigger house and I’m happy to report I’ve already built equity there as well. Good luck. 🙂

Can you explain "stated income- no/low- documentation loan" a little more? I have never heard this phrase before. Thanks.

 

[WhoooaaaBUNDY]

I have a contract on a house, and talked to about 6 brokers before I found the right guy (local). However, all of them knew I was going to be a student, and didn't care. They just want to get you approved, if you lose your income the next day it doesn't matter to anyone as long as the payment is made. Talk to another broker.

I went with an FHA loan, instead of interest only. The rate was so much better that for just a few bux more I'm paying a fair amount or principal instead of basically renting from the bank. Another option to consider, but at some point doing yourself financial favors isn't worth any more money per month. Don't let the closing costs/down payment scare you off ... there are a lot of methods around a lot of it if you get the right broker in your corner.

 

[divertete]

I also went the FHA route, and scored a great interest rate and low down payment. I was fortunate to have my parents co-sign for me, and was still able to secure FHA status. My broker was great, and had worked with many students in situations similar to mine. I'd provide more details if I knew them, but I don't so good luck! 👍

 

[dolor de muela]

Can you explain "stated income- no/low- documentation loan" a little more? I have never heard this phrase before. Thanks.

Stated income simply means that the bank assumes you make the amount of money you “state”. In other words they don’t ask for income verification. The no documentation/ low documentation portion means they won’t ask for employment verification or ask for you previous taxes. With that said they will ask for a credit report, and probably three months of bank statements to prove you can cover your loan closing costs. If you don’t have enough money in your account you may need a family member/friend to co-sign. I agree with WHOaaBundy, if you look around you should find several brokers that will work hard for you and find a bank that will finance you. They often get paid on commission so they are eager to get you a loan. Just make sure you understand the terms to ensure you are comfortable with your loan. It seems daunting, but a good loan broker should be willing to explain all your options and recommend what is probably best for you. At the end you’ll need to decide what you can live with for at least while you’re in dental school. One last thing, if you don’t like your initial loan you can always refinance later (assuming you don’t have a prepayment penalty, be sure to understand what this is). Refinancing is much easier as lenders don’t really worry about your qualifications as much. All they care is that you already own the home. However with refinancing you’ll have to pay new closing costs, so just understand your first loan well and you shouldn’t need this option. 🙂