In over our head? - Posted by Tony

Posted by Tony on July 16, 2003 at 01:23:16:

Than-x a lot James, that did help. Ill explain it to my wife. Im sure it will help relieve a little anxiety. All this RE talk I?ve been doing over the past couple 3 months has really got her worried. But now more than ever. See before it was, oh he?s got him a little hobby he?s out driven around in neighborhoods looking at houses, calling people on the phone, isn?t that cute. But now it?s turned into a whole different scenario. $15,00.00 just came into the picture. Now red alert sirens are firing off left and right w/ her. And I can tell she?s starting to get real nervous. And there?s proubly good reason to be. And I can understand it. But I?ve made a decision to either do it or quit talking about it. And this to me isn?t a hobby; it?s real life stuff. These desions that I?m making right now will alter my entire future. Its not like I?m planning a trip out on the boat next week to catch some reds. That?s a hobby.
I?ve been planning to go into RE for sum time now. Its taken me awhile not because of procrastination but because I didn?t want to go into it w/ a low credit rating and little cash. I don?t care what I?ve heard or read from all those experts about none of my own money needed or any credit. I know that I?ll need something to fall back on if I get into trouble. So it?s taken me couple of years but I?ve applied some credit building techniques that have did wonders for our credit score. The only debts we have are our vehicles. All my credit cards are paid off every month and all the secured loans I took out have been paid back. So were right under 700 w/ our score the way its been going up here recently it should be at or over 700 by February (we plan to buy our first home in that month). So all the ingredients are as good as I?m going to get em for someone that?s as green to this business as the money I want to make.
Sorry about dragging this on, its just I don?t have a chance to talk to many investors except for my land lord which he?s sort of secretive about his RE dealings. But my wife and me are joining a local real RE investment club called jax REA. Our first meeting is next month. So hopefully that will help get us going and get to know other investors. Nice talking w/ ya!


In over our head? - Posted by Tony

Posted by Tony on July 15, 2003 at 21:43:31:

I am new in real estate investing and have not bought my first home, yet. I have made plenty of offers but thus far with no success. Most of my offers have been sandwich lease options with little money out of pocket, if any at all. So to open up more opportunities for me, I have decided to take out a signature loan from my credit union to use for rehabing and down payment money. This is freaking my wife out because she thinks that we would be taking on too much debt and might not be able to get our own mortgage. I want to start my investment career as soon as possible but do not want to spoil our chances to purchase our own home. Do you think a $15,000.00 signature loan would be considered to much debt with a $40,000.00 a year income? I don’t think it is but my wife is very worried about it. I would appreciate some advice. Thanks!

Re: In over our head? - Posted by James (FL)

Posted by James (FL) on July 15, 2003 at 22:45:40:


Nice to talk to you.

The amount of the debt means nothing. What is your monthly payment on the debt. Add up every monthly payment that reports on your credit report. Divide that amount by your total gross monthly income ex: $40K/12 = 3333. Generally speaking, companies will allow up to a 45% Debt to income ratio. If your income is $3333/mo then your max payments can be 1450/mo. 3333 * .45 = 1450. take 1450 and subtrtact your current debts (700) and you get $750. This is the amount your mortgage could not exceed each month including your taxes and insurance. Assuming a 95% loan, and an interest rate around 6%, you can expect a loan for roughly $100K and still includ takes and insurance.
This does not say what it will do to your credit score though. If your credit is great, then it won’t do much at all. If it is shaky now, it may drop your score dramatically, negating your chances of getting a good loan. However, if you make enough cash, and can put down 20% or so, even with shaky credit you can get a decent loan (7.5% or so)with 20% down.
Hope this helps.