Getting a home loan

[theringworm]

Advertisement - Members don't see this ad

Okay, I have read a lot of threads about filing for a home loan now while you and your spouse are currently working that way they base the loan on your current income. However, here is a scenario that I am most likely to encounter. What do you do? My wife and I currently live in "City A" and have found a home to buy in "City B" where one of us is going to go to med school. Since we are applying for a loan now, we don't have to worry about not having a big income later on if we were to file for a loan once in school. The lender is clueless of our future plans and we think we have them fooled. Then crap hits the fan. The lender wants to know why I am buying a home in "City B" when I currently am renting an aptand working in "City A". The lender starts asking questions and is hesitant in giving us a loan because things sound fishy.

Okay guys, how do I get around this. I know that filing know will show we have substantial income to secure a loan, but living in one city and trying to buy a home in another might not go over to well with the lender. Please help me out. Thanks

 

[Mutterkuchen]

There's no getting around this. You or your spouse need a job in the city that you are buying a house. Otherwise you need to get a no-doc loan or a co-signer.

 

[theringworm]

What are the specifics on a no-doc loan? Is there somewhere I can go to findout more about this? Thanks

 

[tonoplast]

I am in the same situation, moving from NY to TX for med school. I wanted to buy a condo to establish TX residency for tuition purposes after my first year. I got a no-doc loan from Countrywide Home Loans. I just had to fill out a one-page application and give them a copy of my acceptance letter in lieu of a letter from my employer. The interest rate was slightly higher, but it was worth it not to have to send in W-2s, bank statements, etc. My loan officer got around the question of why would I want to buy a place in Houston when I'm currently employed in NY by classifying my purchase as a rental, instead of a primary residence. But since I don't already own a home, I can still claim it as my primary residence once I move.

 

[Mutterkuchen]

This is Countrywide. http://my.countrywide.com/

When I applied for a no-doc loan through them, the rate was quite a bit higher, despite really a really great FICO score. Others have had a different experience, and their rate was only slightly higher. I guess it depends on your situation.

No-doc loans, as tonoplast says, are loans that are not based on past or future income. The are loans that are solely based on your FICO score. In exchange for this, you have to put a higher down payment (10% in my case) and pay a higher interest rate and a somewhat higher PMI.

I would have used this option, but my wife got a job in my new city in the nick of time.

A cosigner is a cheaper option, but we did not have someone to do this for us.

 

[DoctorWannaBe]

Originally posted by JBJ
A cosigner is a cheaper option, but we did not have someone to do this for us.

What kind of loans allow a cosigner? Is there a disadvantage (i.e. higher interest rates) to getting a cosigner besides the increased liability on the cosigner's records?

 

[Amy B]

We just got a loan based soley on my husband's income. It was kinda of irritating to be told.... "You don't bring anything to the table except your student loans. So we need to leave you off the loan papers."

Grrrr, I contribute nothing except my debt. What a blow to my ego. Ok, buddy, just wait till I am a doctor and bring my salary then.

 

[Mutterkuchen]

Originally posted by DoctorWannaBe
What kind of loans allow a cosigner? Is there a disadvantage (i.e. higher interest rates) to getting a cosigner besides the increased liability on the cosigner's records?

As far as I know, there is no disadvantage to having a cosigner, assuming that the cosigner has great credit. Your interest rates will be the same as anyone who has good credit and an income. Basically, the cosigner commits to paying the loan payments, if you cannot. So there really is no more risk to the bank, therefore the rates are the same.

The disadvantage is what you mentioned regarding the increased liability on the cosigner. Your cosigner is ultimately responsible for the loan, so his/her credit can be ruined if you don't make the payments (and don't tell your cosigner).

Cosigners can be used for all kinds of loans: mortgages, car loans, education loans, etc.

 

[ophtho1122]

If anyone is in the market for a home mortgage. I've found a great mortgage company that will beat most any bank rates and will work with medical students and future residents to obtain any type mortgage. They can do mortgages for Alabama and Florida.

Houchins Mortgage Co., Inc.
Gardendale, AL

Ask for Chris Pickens, his phone # is 205-608-2970

 

[Xmulder]

What advice can someone give for someone who is not married but would like to purchase a home?

I will be starting med school in another state but have been working since college for many years. I would like to buy a house in this new state. what kind of down payment and monthly payments am I looking at? Is it possible to get a home loan though I will obviously leave my job to return to school? I currently have perfect credit.

Thanks!

 

[funkless]

I would be very, very careful about jumping into home ownership in your situation, Xmulder.

I'm starting med school this fall, and my wife and I are closing on our house in two weeks. However, we have mitigating circumstances in that 1) my wife is a veterinarian (can make the house note by herself), 2) we have very little existing debt, and 3) we live in a very inexpensive area.

There are lots of things to consider before you choose:

1. Am I going to be able to maintain this house during med school and residency? (Leaky faucets, unkempt lawn, etc.)

2. Am I going to be "house poor" and not afford to eat?

3. Am I going to be able to re-sell this house in 4 years, if needed?

As far as the expense is concerned, your house note will be determined by how much the house costs and how much you can put down on it. Don't forget to budget 1% a year for maintenance. (And $ for appliances and at least a few beanbags and blankets.) Look up median home prices in your area, then plug in the numbers at this website: www.fool.com/calcs/calculators.htm?source=LN

www.fool.com has a great homebuying resource center.

Peace, and good luck. Email me if you have any questions.

--Funkless
[email protected]

 

[Amy B]

Originally posted by Xmulder
What advice can someone give for someone who is not married but would like to purchase a home?

I will be starting med school in another state but have been working since college for many years. I would like to buy a house in this new state. what kind of down payment and monthly payments am I looking at? Is it possible to get a home loan though I will obviously leave my job to return to school? I currently have perfect credit.

Thanks!

You can not get a loan based on getting money from another loan to pay it off. The lender would give it to you based on your salary and job now. Since you are moving out of town, it would be VERY hard to explain that you have your job in town A, but you are going to buy a house in town B. You would have to live in the town where you work, or be close enough to comute before they would give you a loan. It is a plus that your credit is great, but without a job, the chances are pretty slim.

Now, perhaps there are lenders that do the student doctor loans as mentioned on SDN, but I haven't heard about them except here on SDN. You should start calling lenders and see what you can find out.

Homeownership does bring things to the table that can at times be hard to deal with, such as repairs, taxes, higher insurance, and not to mention problems when trying to sell later. Think about it before you decided totally.

Oh, a side note, you can get what is called an 80/20 mortgage. You need no money down and you will not have to pay PMI. It is 100% financing. You are basically getting 2 mortgages, a 1st and a 2nd. You will pay ever so slightly higher interest on the 2nd, but it will only have 20% of the total price, so that isn't bad. That is what we just got. The 1st was 5 % interest and the 2nd is 6% interest. But my husband is the only money maker in our family so the loan was based on is job.

Good luck.