First of all, I’ve been reading everyone’s post for some time and have gotten alot of useful info and I wanted you guys to know I greatly appreciate it.
Here is my question. My fiance and I are currently in the market for a SFH. We have about $110k to put down for financing. The houses we are looking into are about $350k. So, we are talking about a mortgage in the area of $240k. My Fico is about 660, and hers is about 740. I currently make about $6k a month and she makes about $2900. I have absolutely no debt. She has about $35K in student loans and no credit card debt (thanks to me, she had $10 about 4 months ago). I am an independent contractor and last year reported I made $22k on my 1099 and my fiance (or finance as I call her), made about $35k. I have bank statements to prove how much I make.
Ok, now that you have that info, here are my questions. Should we put the complete $110K down on the home or put down only $80K and invest the rest? Also, what rates would we qualify for? Who’s name should be first on the mortgage, the one with the lower score but better DTI, or the one with the higher score and worse DTI? This will be my first home buying experience. Any info you could contribute would be greatly aprreciated. Thanks!!!
Robert
I think putting down the minimum is the best. That way there’s more to invest. That assumes you can afford the payments when you do that. Buying a house with someone when you aren’ t married is complex. A land trust might be a good idea for that.
Robert
You should put down as little as possible and use the rest for investing. There is a good book regarding this subject called “Missed Fortune” by Douglas Andrew. The author goes into great detail on this exact subject. If you are going to use bank statements to qualify you may have to go with a non-prime lender. With the size of the down payment you are talking about you can probably go conventional stated and have a much better interest rate. Also, buying a house with someone you are not married to is not difficult at all. It is the same as buying with your spouse. Hope this helps.
I would not do more than 20% down as by definition your rate of return will be the interest rate of the loan (about 6.5%-7% these days). At an 80% LTV, you get the best rates. Sure, you can do less down, but you will pay a higher rate. There are pluses and minuses to that. Also, it a personal comfort level issue as well.
actually your rate of return is your interest rate adjusted by your tax bracket. you are writing off all the interest as well as the taxes.