Mortgage Process

Next monthly statement/cycle . Cc will report to credit bureau each monthly statement. If your credit card statement closes on Dec 3rd - by Dec 5th your credit report should show the zero balance.

Tip for you determine whether you accumulated any interest before payoff or foreign transaction fee as it will not show 0 on next statement and result in a small minimum balance. If you are unsure call cc or overpay them a few $ before statement close day. I believe your goal is to show you can manage mortage payment and remove minimum monthly payment to credit card or other debt.

Sounds like you shouldn't buy yet.

Sorry.

Quote from vaultaddict : Sounds like you shouldn't buy yet. Sorry.

There's a difference to what I can afford on paper and what I can actually afford, it's just a matter of timing as the incentive program is limited access and time.

Quote from nrdk00 : So, I'm in process of building a new home and finalizing a mortgage. Due to a great program in the area I'm building, I'll be receiving a 25% final sale price credit from the local government in the form of a 5 year forgivable lein. I've talked with a bank and have in place a way to avoid the FHA insurance using the 25% as the down payment on a low APR (2.5%~ depending on the time of final application) on a 15 year mortgage, which I can just barely afford according to my debt to income gross monthly income. Unfortunately, only the 15 year would qualify for not requiring the FHA insurance. In order to qualify, I basically need to (and have done as of today) wipe out all my credit card balances and have the lowest payments possible on my student loans. The question I have to bring to the community, how long will it take for the balance on my cards to show up as $0 on my full credit report (and thus show the mortgage company that I have $0 in recurring monthly credit expenses). And, as always, any other advice for a first time home buyer would be helpful.

Usually takes several days for the payment to show and get recorded. Are you paying online or by check? As soon as it posts and you can see it online that's all you need for the underwriter. They will need to contact the actual credit card company and get verification.

For Chase they don't update the internal balances until end of month. I found this out the hard way. I did a balance transfer from my Chase credit card to Wells Fargo account and although the transfer happened a couple weeks before, it still did not show on Chase's side.

So they had me send a snapshot of my online balance. They also had to pester Chase to update my account quicker so they could verify that my debt to income ratio was good enough to qualify for the loan.

Sounds like you are getting a great deal with 25% off the purchase price. Wow! And with only a 2.5% apr which is insanely low, the monthly payments could be quite manageable. I am concerned about the student loans though. You don't want to get in a situation where you're in over your head and can't make payment. It would negatively affect your credidt score for a long time.

And even if you can make payment, if this is indeed a home, and not a condo, there's still potential you could be in over your head. When buying a home it's not about just being able to make payment. You will want to take vacation every once in a while and spend nice things for yourself and others. You can't just be a slave and work all the time and be a spend thrift. You won't be happy. There needs to be some cushion there and don't forget about retirement savings as well.

Homes are expensive. If you have yard it needs to be taken care of. There's always some things that pop up like a leaky faucet or shingles coming loose or some weird thing happening. I contemplated getting a house but I'm glad I didn't get one because in truth I could not afford it, even though I could afford the monthly payment. Don't listen to your agents who will tell you that a house is the best option (they just want the commission). Use your own judgment.

If you are using a buyer's agent, don't be afraid to use services like Redfin who offer a rebate check after purchase. I received around $350 rebate check from my agent. Redfin agents do not charge the full 3% commission, they usually take about 2.5% but it depends on the purchase price. My rebate was small because my condo was only $105k.

Quote from stevenq : Usually takes several days for the payment to show and get recorded. Are you paying online or by check? As soon as it posts and you can see it online that's all you need for the underwriter. They will need to contact the actual credit card company and get verification. For Chase they don't update the internal balances until end of month. I found this out the hard way. I did a balance transfer from my Chase credit card to Wells Fargo account and although the transfer happened a couple weeks before, it still did not show on Chase's side. So they had me send a snapshot of my online balance. They also had to pester Chase to update my account quicker so they could verify that my debt to income ratio was good enough to qualify for the loan. Sounds like you are getting a great deal with 25% off the purchase price. Wow! And with only a 2.5% apr which is insanely low, the monthly payments could be quite manageable. I am concerned about the student loans though. You don't want to get in a situation where you're in over your head and can't make payment. It would negatively affect your credidt score for a long time. And even if you can make payment, if this is indeed a home, and not a condo, there's still potential you could be in over your head. When buying a home it's not about just being able to make payment. You will want to take vacation every once in a while and spend nice things for yourself and others. You can't just be a slave and work all the time and be a spend thrift. You won't be happy. There needs to be some cushion there and don't forget about retirement savings as well. Homes are expensive. If you have yard it needs to be taken care of. There's always some things that pop up like a leaky faucet or shingles coming loose or some weird thing happening. I contemplated getting a house but I'm glad I didn't get one because in truth I could not afford it, even though I could afford the monthly payment. Don't listen to your agents who will tell you that a house is the best option (they just want the commission). Use your own judgment. If you are using a buyer's agent, don't be afraid to use services like Redfin who offer a rebate check after purchase. I received around $350 rebate check from my agent. Redfin agents do not charge the full 3% commission, they usually take about 2.5% but it depends on the purchase price. My rebate was small because my condo was only $105k.

Thank you very much for the helpful reply. I've paid online, and have until mid January for the balances to show 0, but I am trying to be as thorough as possible with everything. I've managed my own calculations and the mortgage consultants as well to ensure that, as long as I have everything showing correctly on the credit report, my debt to income ratio will be under the 43% GMI threshold to qualify.

I know I'm going in a bit deep for my young age, and my current pay rate, but I do have a great support network with family in the immediate area to help cover expense (not on mortgage). This offer is too good to pass up on, but the timing could admittedly be better.

As well, this will be brand new construction, so any issues I have within the first year will be taken care of according to the home warranty, which degrades over a 10 year period. I've already started saving up for the random occurring expense though.

Quote from nrdk00 : So, I'm in process of building a new home and finalizing a mortgage. Due to a great program in the area I'm building, I'll be receiving a 25% final sale price credit from the local government in the form of a 5 year forgivable lein. I've talked with a bank and have in place a way to avoid the FHA insurance using the 25% as the down payment on a low APR (2.5%~ depending on the time of final application) on a 15 year mortgage, which I can just barely afford according to my debt to income gross monthly income. Unfortunately, only the 15 year would qualify for not requiring the FHA insurance. In order to qualify, I basically need to (and have done as of today) wipe out all my credit card balances and have the lowest payments possible on my student loans. The question I have to bring to the community, how long will it take for the balance on my cards to show up as $0 on my full credit report (and thus show the mortgage company that I have $0 in recurring monthly credit expenses). And, as always, any other advice for a first time home buyer would be helpful.

Credit balances are updated once a month with the bureaus and are sometimes a month behind. Meaning if you pulled credit today, it might show what you had for a balance in October.

You'll need to wait a full 30-45 days. Paying off revolving debt to qualify is sometimes tricky. What stops you from closing on the loan and then go and rack up more debt? You'll want to make sure all balances are zero before pulling credit.

Ratios on a FHA loan are a little more lenient. 43% shouldn't be a problem and you can probably go higher if you have good credit.

Question, why not just go conventional and not worry about the upfront mortgage insurance?

Quote from nrdk00 : There's a difference to what I can afford on paper and what I can actually afford.

Theres a reason its figured out on paper. Because it works. Obviously your new to this and have no idea how much life costs.

I agree with the others. You aren't financially ready quite yet.

Thanks for the replies, both positive and negative. It's useful to get a total picture of outside opinions.

Yes, I am quite new to this and thus why I am using all of my resources (including the help of SDers) to take a more detailed view on this. However, I am not new to budgeting myself, as I update a weekly personal budget plan and goals for the last few years, thus why I am confident in what I can and can't afford. Admittedly, as I've said, it is not the best case scenario, but when an opportunity to have 47% equity within a 5 year period comes along, I do not take it lightly and will do everything I can to take advantage of it.


Thanks again for all the help.

I just closed on my home in September. I was also working in a bank at the time as a sales officer (investments, loans, etc.).

I am with you on paper vs reality. I gross somewhere around $80,000 - but I graduated from school not long ago and don't have a history to prove it. I only had a partial year to show of true employment and my business wasn't properly documented at the time. Everything is kosher with tax laws now - but it was a pain to work with the banks through not being able to show what I was actually making.

I think the incentives you have to buy make it absolutely worth it. I was in a similar place and am now a homeowner at 23 years old. I have been here going on three months and already have 25-30% equity. I agree with the other posts that owning a home isn't cheap - there are many additional costs that you will need to be prepared for - so hopefully you have the income to meet those rising costs (as they will hit you very quickly!)

Have you worked with the banks to see if you can provide "Paid In Full" letters that the credit card companies can generate for you? This would immediately show the zero balance and not require an additional credit pull from the lender.

Quote from Formless : I just closed on my home in September. I was also working in a bank at the time as a sales officer (investments, loans, etc.). I am with you on paper vs reality. I gross somewhere around $80,000 - but I graduated from school not long ago and don't have a history to prove it. I only had a partial year to show of true employment and my business wasn't properly documented at the time. Everything is kosher with tax laws now - but it was a pain to work with the banks through not being able to show what I was actually making. I think the incentives you have to buy make it absolutely worth it. I was in a similar place and am now a homeowner at 23 years old. I have been here going on three months and already have 25-30% equity. I agree with the other posts that owning a home isn't cheap - there are many additional costs that you will need to be prepared for - so hopefully you have the income to meet those rising costs (as they will hit you very quickly!) Have you worked with the banks to see if you can provide "Paid In Full" letters that the credit card companies can generate for you? This would immediately show the zero balance and not require an additional credit pull from the lender.

Thanks for the reply, sounds like you're actually in almost an identical situation, as I'm 23 years old as well


I have not and was unaware of a 'Paid in Full' letter, but that would be great for a backup plan in case they are slow on updating with the credit bureaus. The bank will already have to pull an additional credit report, as I had previously filed for pre-approval a few months ago to get the ball rolling on the build, but I like having things situated so there would be no more wait.


On a different note, any heads up to watch for in owning a newly built home or those mysterious additional costs to be aware of?

Quote from nrdk00 : Thanks for the reply, sounds like you're actually in almost an identical situation, as I'm 23 years old as well I have not and was unaware of a 'Paid in Full' letter, but that would be great for a backup plan in case they are slow on updating with the credit bureaus. The bank will already have to pull an additional credit report, as I had previously filed for pre-approval a few months ago to get the ball rolling on the build, but I like having things situated so there would be no more wait. On a different note, any heads up to watch for in owning a newly built home or those mysterious additional costs to be aware of?

Pick the appliances yourself. If you do not you will get the crappiest ones they make and will have to replace them in a few years time.

Also what kind of warranty covers house settling that they offer? You will start to see signs within the first 5 years usually.

Again with the flooring, if its carpet u pick it, otherwise it will likely be very cheap quality and wear very fast and need replacing sooner than it should.

The property is designed to be turn key, I went ahead and made all the selections myself and chose quality material.

As well, I work for an appliance company and get a great deal (about 60% off) so I've already gone ahead and ordered a very nice set.

The HOW will cover Concrete (when not considered a Major Structural Defect which is for 10 years) for one year, including both Moderate and Excessive settling.