First time home buyer

8 Replies

Looking for advice on mortgage types that can be manually underwritten. My girlfriend and I are looking to buy our first home possibly in the Bozeman MT. area. We have atleast 10 grand to put down and would be happy in anything liveable with a yard. While we have "ghost" credit we have been renting for three years paying far more than we would be with a mortgage, we have no debt, bachelors degree and own a newer SUV worth around 22,000. Wondering if any loan would make sense or if the advice would be to continue renting. Frankly we are fed up with riding the rental market and paying other people's mortgages.

Bozeman is full of millionaires and housing market is so over inflated their.

I would check out other area's .

In Colorado Denver is twice as expensive as Colorado Springs, and the Springs is twice as expensive

as Pueblo Colorado.  So to afford housing so many people will commute 45-60 minuets to afford it.

The SUV loan is going to really hurt your ability to qualify for a loan .  

Wish I had better news for you.

Maybe some great Real Estate agent will give you a tour of some of the options for you their.

Good luck Eli.

Hi Eli, you need to just get a pre-approval from a mortgage lender to know what price range you can shop in.  It is good that you only have one debt.  What is most important, is your overall creditworthiness.  The mortgage lender will look at your credit history, your current debts, and income.  The amount of your pre-approval will be based on your "debt to income ratio" (how much is going out each month vs. how much income you have each month). Knowledge is power so get the pre-approval so that you know what your options are as far as how much mortgage you can afford.

@David Avery the SUV is paid off! Sorry if that was confusing, I mentioned it because I've heard some banks will consider your assets when lending. Appreciate the info! We are not at all set on Bozeman but I know that the houses there are likely appreciating faster than other areas in the state and would like to make a good investment as well as have a place to live for the next few years.

@Elmer Foster our post tax income is around 4500 a month conservatively and we have 0 debt. The SUV is paid off, no student loans, no other financing, sorry I didn't make that more clear. What I'm worried about is that with 0 credit history between us we may be able to qualify for a manually underwritten loan but be given a terrible rate. Just wondering if there is any way to avoid that/ ideal lenders for my situation. Also wondering if it would be smarter to rent for a year and build credit before buying. Thank you for the information!

Originally posted by @Eli Mohrland :

@Elmer Foster our post tax income is around 4500 a month conservatively and we have 0 debt. The SUV is paid off, no student loans, no other financing, sorry I didn't make that more clear. What I'm worried about is that with 0 credit history between us we may be able to qualify for a manually underwritten loan but be given a terrible rate. Just wondering if there is any way to avoid that/ ideal lenders for my situation. Also wondering if it would be smarter to rent for a year and build credit before buying. Thank you for the information!

Hi Eli, So when you say Bozeman, do you just mean the city limits, or are you looking in all of the Gallatin Valley? There are places for sale which may work for you at your income level. With $10k down, you will have to pay PMI. Unless you are a Vet? If that is the case then you can do 0% down with no PMI. Otherwise, the PMI on an FHA loan will run between $200-$300/mth and really mess up your qualifications. You want to be less than 45% of your income going to debt payments, including your mortgage. So it is a good thing that you don't have any car payments, but you'd still be pushing the limit with the cost of housing here.

Another bit of bad news is that FHA is starting to limit their loans, and rates are rising slowly. They will rise a bunch, then drop a little, then rise again, then drop a little again, for a continued and sustained rise in rates over historic lows. So if you can get locked in on one of these dips, that would be best, and for that, you want a local lender you can work with to call and who will look out for you.

So my best advice is to find a multifamily, with a unit you can rent out, and count 75% of that income to your debt obligations. I saw one for sale at $540k, maybe pick it up for $520k, which could rent out a unit at about $1000/mth. Then if you get some leases signed on 2-3 other bedrooms in the main house at $400 each, you've got $1800-$2200 in rental income to work with, that would help make these payments. If you'd like to talk with me more about the numbers feel free to email me. This is also in a "perfect scenario" meaning the home will appraise, and pass inspections, and get through underwriting. I have not been in it, and I should also say, it is not in Bozeman, but in Belgrade. But it does have a nice yard, and Belgrade is on the up in terms of value, much like Bozeman.

So it's not totally hopeless, and if you are patient, things may pop up. But keep in mind there are literally hundreds of people like you guys out there right now. Feel free to DM me for any info, I can't advertise services in the forum, but this is about the only property which seems to work, which is currently on the MLS now.

I don't think an automobile is much of an asset these days unfortunately. Most banks seem them as a depreciable asset, and a liability, as their insurance payments are high in terms of the value.

Good luck!

 

I am not a mortgage lender, but my experience tells me that you would be better with building a credit history.  It would help if you spoke with a lender to get additional guidance. You can actually build credit with a credit card you use for everyday purchases then pay the full balance every month.  You don't have to carry a balance month to month.

Originally posted by @Eli Mohrland :

@Michael Rutkowski wow, thank you so much for taking the time to write this up for me. Tons of new info, I really appreciate it.

Of course! It's my pleasure. This method is how I got started in Bozeman years ago. It was hard to qualify back then too. Housing was also tight, and wages never seemed to keep pace with rents. I have lived in my fair share of college flophouses around this town. Need to start somewhere!