Qualifying for a Mortgage You Can Afford

by Jennifer from Massachusetts and more...

Ask Kate about qualifying for a mortgage and house you can afford: Listen to Jennifer's questions! We went through a foreclosure in 2008 with Chase and were part of the settlement group. Can we now qualify for a new mortgage? Can we get the foreclosure taken off our credit report since we were illegally foreclosed on?

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Another homeowner writes...We have the chance for a one time buy-down of the loan after we sell our home and land. Everything looks okay but not spectacular on paper. I am not sure if we can really afford this.

Qualifying for a Mortgage after Foreclosure

By Jennifer in Massachusetts
Qualifying for a Mortgage You Can Afford

Hi Kate,

We went through a foreclosure in 2008 with Chase and were part of the settlement group.

My question is, can we now qualify for a new mortgage?

We have been renting for the past 5 years. We have had to move 4 times making it very hard on my family. Rentals in our town are hard to come by and are usually only short term.

Can we get the foreclosure taken off our credit report since we were illegally foreclosed on?

***zz-portrait-left.shtml*** Ask Kate answers: Qualifying for a Mortgage after Foreclosure

Hi Jennifer,

Incredible question! I for one have never considered this scenario as it relates to the National Mortgage Settlement.

With 5 years since the foreclosure under your belt, I'd think FHA financing could be an excellent loan program for you to look into.

But here's the deal with foreclosures. On their own, they take longer to come off a credit report than bankruptcies. Of course, the more time that passes, the less negative affect they'll have on credit scores.

Regardless, I like your idea. What if you put together a letter describing in what way the lender illegally foreclosed on your home, the events leading up to the foreclosure, and what your family has gone through since.

Then point-blank request the credit bureaus to remove the erroneous record.

I'd take copies of the same convincing letter to send to every politician that represents you. Ask for their help and don't take no for an answer.

Best wishes,

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How Much House Can I Afford - Mortgage Affordability Calculator

Hi Kate, We are attempting to buy another home. We have land that we own that we may never sell because land is just not selling.

Calculate Payment for New Home Purchase
But if we did magically sell it, we would get about $50,000. We owe $40,000 on the home. Together, we might be able to get $90,000 out of it.

We are not going through prime lending as my husband's credit score is not great, 670. Mine is about the same.

The home we are buying is $110,000. We have $8000 down and the payments will be about $1070 per month with insurance, flood insurance, and property taxes.

We have the chance for a one time buy-down of the loan after we sell our home and land to put 60 of 70 thousand down and re-adjust the payments.

Does this sound standard and is there a calculator where I can put in my bills and income and figure out if we can really do this?

Everything looks okay but not spectacular on paper. I am not sure if we can really afford this.

***zz-portrait-left.shtml*** Ask Kate answers: How Much House Can I Afford - Mortgage Affordability Calculator

I originated many of these loans that allowed a one-time-only lump sum pay-down, followed by a re-amortization of the monthly payment.

But the bank I worked for wouldn't put the terms in writing, in those days. However, we had such a solid reputation, people trusted us.

My, how the lending industry as gone down the tubes the last few years! (And by the way, I recommend getting all terms in writing... always... without exception!)

Anyway, you're in luck! Super Kate, my alter ego has a mortgage payment calculator that you can use to to help determine if this loan will be affordable once you pay down the balance.

Just input your original mortgage amount, interest rate, and length of the term. Then plop down a lump sum principal payment equal to what you'll net from selling the land. This will help you figure out approximately how much your payment will drop.

In case you aren't sure how to work it, I wrote a tutorial for Super Kate's calculator. Take it out for a spin and play around with it!

But when you're done, promise me something. Be very sure that you can afford the mortgage payment on this home because affordability is the very backbone of your homeownership.

Home Affordability Calculator - Yay or Nay

Oh, one more thing. You asked about a calculator where you can input your bills and income, then get the yay or nay on affordability. In my opinion, there is no such animal!

As I've said before, no one can tell you what you can afford. Not your mother, not your friend, not even your certified public accountant. Certainly not your lender! To top that off, certainly not a home affordability calculator!

Go to Determining If You Can Afford Your Proposed Mortgage Payment to find out why I say to avoid the pitfall of depending on anyone other than yourself for home affordability answers!

Best wishes,

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