Kinda convoluted situation

[laurenleigh]

Ok, I want to buy a house next year. I am getting married in November and I want to start the process in maybe March of next year.

 

Our income will be about $80,000/yr

 

I'm estimating my middle score to be at least 680 (according to MyFico score simulator )

I have only one car payment.

Student loans are in deferment until 2010.

I have no other credit obligations (no CC debt or anything)

One paid C/O from 3 years ago ($116), a couple of lates on one closed Best Buy account from 3 years ago. Everything has been current and all good since then.

 

His scores are horrible (not even 500s), nothing positive at all.

 

 

Because of his low scores I do not want his credit considered for the loan, only his income.

 

The decent houses around here are about $300,000-$325,000

 

I would like 100% financing.

 

I want to go with an interest only loan and here's why:

I am currently in school; once I graduate my income will go up significantly

DF's income will also go up significantly when he is eligible for promotion at his job in 2 years

We will be making well over $100,000 once I get out of school and he moves up at his job

We will be able to afford the interest only payment until our income increases

 

Now here's where it get convoluted:

I work for my dad in the computer repair/set-up/consulting business. He has what he pays me on his computer in his accounting software but he never gives me actual pay stubs because...well...I guess I never really thought I needed them, he's my dad after all (family business and all that). I guess he could make some up and print them out for me but I don't have W-2’s either. Again, I guess he could print some up for me.

I have not paid as much tax as I should because I don't claim all that I make. I know it's bad but I've been financing my education with the tax money I've saved. For this reason, I cannot have the lender submit form 4506-T because the numbers will not add up.

My bank statements don't reflect steady deposits so they wouldn’t be very helpful in proving employment/income.

My dad has no problem signing anything saying I work for him and how much he pays me but since he is my dad, would we have some kind of conflict of interest or something?

DF has pay stubs but since he will not be on the loan he can't submit those right?

 

I will probably have to go stated or no doc so I can add his income to the loan.

 

Is there such thing as an Interest Only, Stated/No Doc, 100% financing, No 4506-T required loan for a person with 680 scores?

And what kind of interest rate am I looking at?

 

Brokers are welcome to chime in!

 

I'm in the DC area if that helps.

 

TIA!

[happyfamily]

JMO, but I think you should get your dad to start paying you on the books if you want to use your whole income. If you start that now, you will have a year's worth of provable income when you are ready to buy.

 

You can't just print out a w-2... but he could make some kind of statement about how much you make, and I wouldn't be worried as much about the conflict in interest as I would be having your dad sign something that could get you two in trouble.

 

Wait on mortgage pro's for information about types of loans, etc.

[guyguy4]

JMO, but I think you should get your dad to start paying you on the books if you want to use your whole income. If you start that now, you will have a year's worth of provable income when you are ready to buy.

 

You can't just print out a w-2... but he could make some kind of statement about how much you make, and I wouldn't be worried as much about the conflict in interest as I would be having your dad sign something that could get you two in trouble.

 

Wait on mortgage pro's for information about types of loans, etc.

 

 

That's a tough one. lol Employed by a family member situations get looked at under a microscope. Most lenders will want W2s, plus 2 years tax returns, plus VOE of employment from company accountant, plus a computer generated pay stub, plus a signed 4506T.

 

In lieu of tax returns, a letter from the accountant confirming that the customer has less than 25% ownership of the business is sometimes acceptable.

 

So yeah, a stated income product might be in your best interest. I don't know of anyone that offers 100% stated income, I/O loans....let alone for people with scores under 700. Maybe someone else will chime in with some good news.

 

Your best bet might be a stated 3/1 ARM with 100% financing?

Edited February 21, 2006 by guyguy4

[laurenleigh]

JMO, but I think you should get your dad to start paying you on the books if you want to use your whole income. If you start that now, you will have a year's worth of provable income when you are ready to buy.

 

You can't just print out a w-2... but he could make some kind of statement about how much you make, and I wouldn't be worried as much about the conflict in interest as I would be having your dad sign something that could get you two in trouble.

 

Wait on mortgage pro's for information about types of loans, etc.

 

 

That's a tough one. lol Employed by a family member situations get looked at under a microscope. Most lenders will want W2s, plus 2 years tax returns, plus VOE of employment from company accountant, plus a computer generated pay stub, plus a signed 4506T.

 

In lieu of tax returns, a letter from the accountant confirming that the customer has less than 25% ownership of the business is sometimes acceptable.

 

So yeah, a stated income product might be in your best interest. I don't know of anyone that offers 100% stated income, I/O loans....let alone for people with scores under 700. Maybe someone else will chime in with some good news.

 

Your best bet might be a stated 3/1 ARM with 100% financing?

 

Yeah it's a sticky situation. Thanks for the advice so far.

BTW: What is a 3/1 ARM?

Edited February 21, 2006 by laurenleigh

[laurenleigh]

Never mind about the 3/1 ARM, I did some searching and found my answer.

Now my question is, what is the difference between 100% and 80/20? I thought they were the same but in some threads they are talked about as if they are different. Is one easier to qualify for than the other?

[happyfamily]

Never mind about the 3/1 ARM, I did some searching and found my answer.

Now my question is, what is the difference between 100% and 80/20? I thought they were the same but in some threads they are talked about as if they are different. Is one easier to qualify for than the other?

 

An 80/20 is a way to get 100% financing through 2 loans- one for 80% of the purchase price, and one for 20% of the purchase price. It is a first and second mortgage. It can be difficult for someone with poor credit to receive 100% financing, but not as difficult to receive an 80/20 product. The first and second mortgages can be either adjustable or fixed, with an adjustable mortgage giving a lower rate initially, but having the potential to increase.

[guyguy4]

An 80/20 is usually cheaper than a 100% mortgage with PMI and there are also some tax benefits to it since the 2nd mortgage will be comprised of mainly interest payments whereas PMI usually isn't tax deductible.

 

HOwever in a robust housing market sometimes a 100% with PMI is a better option since you can re-appraise your home after 2 years and get rid of your PMI. Plus if you have poor or even average credit they will usually jerk you on the interest rate for your 2nd mortgage.

 

I'd do some comparative shopping and find out what's best for you.

[fla-tan]

Ok, I want to buy a house next year. I am getting married in November and I want to start the process in maybe March of next year. Congratulations on the pending nuptuals.

 

Our income will be about $80,000/yr What is the breakdown on the income?

 

I'm estimating my middle score to be at least 680 (according to MyFico score simulator )

I have only one car payment.

Student loans are in deferment until 2010.

I have no other credit obligations (no CC debt or anything)

One paid C/O from 3 years ago ($116), a couple of lates on one closed Best Buy account from 3 years ago. Everything has been current and all good since then.

 

His scores are horrible (not even 500s), nothing positive at all.

 

 

Because of his low scores I do not want his credit considered for the loan, only his income.

 

The decent houses around here are about $300,000-$325,000

 

I would like 100% financing.

 

I want to go with an interest only loan and here's why:

I am currently in school; once I graduate my income will go up significantly There probably is not that much difference in the montly payment between an amortizing mortgage and the corresponding IO mortgage. However, there are most likely going to be products that will fit your requirements.

DF's income will also go up significantly when he is eligible for promotion at his job in 2 years

We will be making well over $100,000 once I get out of school and he moves up at his job

We will be able to afford the interest only payment until our income increases

 

Now here's where it get convoluted:

I work for my dad in the computer repair/set-up/consulting business. He has what he pays me on his computer in his accounting software but he never gives me actual pay stubs because...well...I guess I never really thought I needed them, he's my dad after all (family business and all that). I guess he could make some up and print them out for me but I don't have W-2’s either. Again, I guess he could print some up for me. If your dad and your surnames are the same, it will probably cause issues.

I have not paid as much tax as I should because I don't claim all that I make. I know it's bad but I've been financing my education with the tax money I've saved. For this reason, I cannot have the lender submit form 4506-T because the numbers will not add up. Then either a stated income or no ratio mortgage will probably be your best option. However, there will still be the issue of the employment situation.

My bank statements don't reflect steady deposits so they wouldn’t be very helpful in proving employment/income.

My dad has no problem signing anything saying I work for him and how much he pays me but since he is my dad, would we have some kind of conflict of interest or something?

DF has pay stubs but since he will not be on the loan he can't submit those right? This is correct.

 

I will probably have to go stated or no doc so I can add his income to the loan.

 

Is there such thing as an Interest Only, Stated/No Doc, 100% financing, No 4506-T required loan for a person with 680 scores? There are loans that would fit your requirements. However, a combo 80/20 mortgage would have a lower blended rate with no mortgage insurance.

And what kind of interest rate am I looking at?

 

Brokers are welcome to chime in!

 

I'm in the DC area if that helps. Doesn't matter, the answers would be the same no matter where you are located. However, I can say...........Go Redskins.

 

TIA!

 

 

fla-tan

[laurenleigh]

Congratulations on the pending nuptuals. Thanks!

 

What is the breakdown on the income? Actually I was wrong about that. I make about $60,000 he makes about $30,000

 

There probably is not that much difference in the montly payment between an amortizing mortgage and the corresponding IO mortgage. However, there are most likely going to be products that will fit your requirements. Maybe I'm slow but I don't understand how an IO payment will not be much smaller than an amortizing mortgage payment. I thought that was the point?

 

If your dad and your surnames are the same, it will probably cause issues. Yep, same last name. Even after I get married, my name will be hyphenated. And we don't have a common name like Jones or Smith so I can see how this would raise eyebrows.

 

Then either a stated income or no ratio mortgage will probably be your best option. However, there will still be the issue of the employment situation. What would the issue be? I have business cards with my name and the name of the company. Also, my dad is planning on incorporating in the near future, would this help the situation any?

 

There are loans that would fit your requirements. However, a combo 80/20 mortgage would have a lower blended rate with no mortgage insurance. That's good to hear. I was leaning towards an 80/20 so I'm glad you confimed my thoughts.

 

 

Go Redskins. HELL YEAH!!!

[fla-tan]

Congratulations on the pending nuptuals. Thanks!

 

What is the breakdown on the income? Actually I was wrong about that. I make about $60,000 he makes about $30,000

 

There probably is not that much difference in the montly payment between an amortizing mortgage and the corresponding IO mortgage. However, there are most likely going to be products that will fit your requirements. Maybe I'm slow but I don't understand how an IO payment will not be much smaller than an amortizing mortgage payment. I thought that was the point? Let me give you an example. Let us say that the interest rate for an amortizing $200K mortgage is 7%. This will give you payments of about $1330/mo. With many lenders, the same mortgage as an IO mortgage the rate would be 7.5%. This would give you a payment of about $1250/mo. The difference is less than $100/mo.

 

If your dad and your surnames are the same, it will probably cause issues. Yep, same last name. Even after I get married, my name will be hyphenated. And we don't have a common name like Jones or Smith so I can see how this would raise eyebrows.

 

Then either a stated income or no ratio mortgage will probably be your best option. However, there will still be the issue of the employment situation. What would the issue be? I have business cards with my name and the name of the company. Also, my dad is planning on incorporating in the near future, would this help the situation any?

 

There are loans that would fit your requirements. However, a combo 80/20 mortgage would have a lower blended rate with no mortgage insurance. That's good to hear. I was leaning towards an 80/20 so I'm glad you confimed my thoughts. An 80/20 mortgage will almost always have a lower blended rate than a single 100% mortgage. In addition, if you are going either conforming or Alt-A, if you go with a single 100% mortgage there will be mortgage insurance.

 

 

Go Redskins. HELL YEAH!!! Hail to the Redskins

 

fla-tan

[laurenleigh]

Congratulations on the pending nuptuals. Thanks!

 

What is the breakdown on the income? Actually I was wrong about that. I make about $60,000 he makes about $30,000

 

There probably is not that much difference in the montly payment between an amortizing mortgage and the corresponding IO mortgage. However, there are most likely going to be products that will fit your requirements. Maybe I'm slow but I don't understand how an IO payment will not be much smaller than an amortizing mortgage payment. I thought that was the point? Let me give you an example. Let us say that the interest rate for an amortizing $200K mortgage is 7%. This will give you payments of about $1330/mo. With many lenders, the same mortgage as an IO mortgage the rate would be 7.5%. This would give you a payment of about $1250/mo. The difference is less than $100/mo.

 

If your dad and your surnames are the same, it will probably cause issues. Yep, same last name. Even after I get married, my name will be hyphenated. And we don't have a common name like Jones or Smith so I can see how this would raise eyebrows.

 

Then either a stated income or no ratio mortgage will probably be your best option. However, there will still be the issue of the employment situation. What would the issue be? I have business cards with my name and the name of the company. Also, my dad is planning on incorporating in the near future, would this help the situation any?

 

There are loans that would fit your requirements. However, a combo 80/20 mortgage would have a lower blended rate with no mortgage insurance. That's good to hear. I was leaning towards an 80/20 so I'm glad you confimed my thoughts. An 80/20 mortgage will almost always have a lower blended rate than a single 100% mortgage. In addition, if you are going either conforming or Alt-A, if you go with a single 100% mortgage there will be mortgage insurance.

 

 

Go Redskins. HELL YEAH!!! Hail to the Redskins

 

fla-tan

 

Well Thank You very much. I have some looking around to do but you have been more than helpful.

[taco_truck]

is your 'fake' income enough to qualify? what income do you have on the books?

 

Your dad must file 941 and pay payroll tax. Is he paying you cash? How are you working that out.

[laurenleigh]

is your 'fake' income enough to qualify? what income do you have on the books?

 

Your dad must file 941 and pay payroll tax. Is he paying you cash? How are you working that out.

 

What do you mean "fake" income? Yes, he pays me cash and when I file my tax returns I don't put all that I make. Again, I know that's bad but I have been using the extra money to go to school. I only claim about $40,000 of the $60,000 I make on my tax returns. I don't think the $40,000 will qualify for a house around here even with my DF's $30,000. Houses are just way too expensive.