First time Homebuyer

[Omar Rachid]

Good morning, and thanks to anyone with the patience to read and respond to my questions! I'm looking to purchase a home in Seattle and am wondering if I purchase a property, how likely or what are the possibilities to fold the cost to renovate or work on the home, and fold that amount into a mortgage? There are many homes that need a lot of fixing, and wondering if the money I need to put in can be added to the mortgage or will I need a separate line of credit?

Additionally, a mortgage broker I worked with previously suggested that before applying for a mortgage that I try to not have any other outstanding loans since the loan to debt ratio would hurt my chances of being approved for a larger amount, is there any accuracy to this? I wonder because I have student loans to take and I may be getting a car note, but wondering if that is the wisest thing to do considering that I will be applying for a mortgage within the next 3-6 months.

Thank you to the BP Community!

[Nicholas L.]

@Omar Rachid

wondering if the money I need to put in can be added to the mortgage or will I need a separate line of credit?

• Call banks.  Look into a 203K loan.  But... you need reserves no matter what.  So if you're looking to finance absolutely everything - down payment, loan, rehab, etc. - you may want to save up a little more first.

Additionally, a mortgage broker I worked with previously suggested that before applying for a mortgage that I try to not have any other outstanding loans since the loan to debt ratio would hurt my chances of being approved for a larger amount, is there any accuracy to this? I wonder because I have student loans to take and I may be getting a car note, but wondering if that is the wisest thing to do considering that I will be applying for a mortgage within the next 3-6 months.

• All debt contributes to your DTI ratio.  So if you take out a new loan, it adds the the debt side.  You can ask for your broker to factor in debt you don't have yet and tell you what the impact will be.