January 17, 2020 at 6:46 pm #64819TattedQueen87Member
UPDATE: Intake was easy-peasy and my action plan actually looks a WHOLE lot easier than I anticipated. I was so stressed out about what was going to go down…
Here’s a picture of my personal financials: One-adult household, Income $50k per year, no car loan, 4 credit cards w/ no lates, $40k student loan in IBR, current rent is $1245 and 31% on my monthly income is $1291. Old bankruptcy from 2014. Never owned a home.
My action plan consists of:
– saving my shock payment ($39) plus $200 every month (so at least $239 a month) for the next 3 months;
– save my MRF (easy peasy because my tax refund will be enough to cover that);
– get my student loan re-certified (I had a change in income recently, so my IBR is going from $0 to $11 (well, that’s the estimated payment per the loan servicer);
– upload some old bankruptcy paperwork
– landlord and employers need to do verifications;
– pay one $179 collection
My counselor says that I should easily be qualified in 3-6 months.
The only thing that I’m worried about is the amount I was qualified for: $184k… It’s going to e difficult to find something in the Austin area for that amount but I’m hoping that I can come up with some money to but towards either principal or interest buydown. If that doesn’t work I may need to see about increasing my income by finding a new job.
I learned the following:
Collections/Charge-offs: Whether or not you need to pay them is NOT based on when it hit your credit report, it is based on the last activity. In my case I had several medical collections from over two years ago that were sold to a collection agency about 6 months ago and therefore they look like recent collections. My counselor said not to worry about paying those, I just need to prove that they are from old dates of service (24+ months ago). Whew! That takes a load off of my shoulders.January 17, 2020 at 7:07 pm #64820
Just remember mrf cannot be averaged by over saving. It’s a minimum each month. Just like your cell phone data probably resets every month so does your payment shock. A $1000 tax return does not equal 4 months of payment shock. It equals 1 month of $800 over your payment shock. Next month and every month until you close you need to demonstrate 239 more than the previous month.
Also remember a new higher paying job is fine. But a new second income needs the 2 year history. They don’t want you quitting your 2nd job when you close.
Also use 184 as a guideline mostly because interest rate and taxes change considerably which can get you 150 or 240. Keep it up though! You’re on the right track!January 17, 2020 at 7:16 pm #64821BakerTheBakerMember
Great news! Use the NACA purchase calculator based on your approved payment and adjust for the actual taxes and buydown you have available. The amount is just a guideline, it’s the monthly payment that’s in stone.January 20, 2020 at 9:39 am #64858Peapod0609Member
Just to clarify @Nelsont I am sure you mean Payment Shock can not be averaged every month, not MRF as you said. Your MRF is different than Payment Shock as as long as it is not from a borrowed source like a loan, it doesn’t really matter how it is there, as long as it is there.
And what @BakerTheBaker said is absolutely correct, you need to focus on the monthly PITI and not so much the purchase price.January 20, 2020 at 9:54 am #64861Peapod0609Member
Although I plugged some numbers into a mortgage calculator on Redfin and it does seem that $184,000 is pretty close to what you will likely be able to afford.
Based on the 2019 FFIEC Median Income for Austin, TX and the income you stated, you should easily qualify for the reduced BOA interest rate, which you automatically get for being at 80% or less of the median income in that MSA. So that will help.
You can also ask the seller to contribute to your interest rate buydown instead of lowering the purchase price during negotiations. This will make the monthly payment cheaper that way.January 20, 2020 at 10:11 am #64863
Sorry! I did mean payment shock! Good catch!March 23, 2020 at 7:26 pm #66476
Hey guys! Question? If I already had a decent amount that I had been saving can that be used as payment shock? That amount already saved could then be used towards my MRF and I continue to save for the payment shock until closing? Or will I have have to use the lump sum already saved as MRF and then wait 3 months to show I can save the quoted payment shock amount?March 23, 2020 at 7:54 pm #66477
As long as you can demonstrate the savings occurred over a 3 month span with each month your sum total of all your accounts/total assets/net worth increased by that amount then yes. Payment shock cannot be averaged via extra savings one month or a lump sum. It’s proof that every month regardless of spending habits you are still saving. Lump sums and extra savings beyond payment shock can certainly be used for mrf though.
Your payment shock also never stops. You need to meet a quota to become qualified. Once you are qualified if you stop your payment shock even the day before closing you can lose your qualification status or even be denied the loan.March 23, 2020 at 8:10 pm #66478
Ok thanks! I didn’t really have a set amount that I would save would just put something to the side! Just trying to minimizing any time that would impede qualification! At this point MRF would be met but if it can’t be used as a form of payment shock with now my set shock amount then I suppose I have a couple more months possible of showing payment shock with continued payments through closing! This pandemic has me in limbo since my counselor said she updated my action plan and I have no idea what those updates are! Thanks NelsontMarch 23, 2020 at 8:33 pm #66480
Well your payment shock is a formula. It’s pretty easy to figure it out yourself. Your MC will tell you the exact amount if you don’t know already. Just be aware saving a little bit while always a good idea doesn’t necessarily meet the requirements for payment shock.March 23, 2020 at 8:41 pm #66481
Understood! The saving here and there with no set amount was prior to starting the NACA process for my savings which I hope to use to show as savings and for MRF! I have my actual shock amount now but I’m still early in the process and I’m trying to save more just in case my desired amount has to be increased just a bit!July 27, 2020 at 2:00 am #70828suzukiloveeParticipant
How long ago was you bankruptcy where they asked you for these papers to be uploaded
What papers exactly?
And for the Charge-offs what do you mean by last reported? So if it was from 2016 but still reporting as a (CO) for charge off on credit report then it has to be paid or and Letter of Explanation needs to be done?
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