Can't get approved for home loan, now what?

Ok, here is the situation...

I am gettting married in September and my apartment lease runs out at the end of July, so my wife to be and I are moving in together. However, we both currently live and work in different cities. So, we need a place in-between to live. She has pets, so an apartment is out of the question.

I went to a real estate place and got "pre-qualified" for $75,000. However, they needed some more documents (W-2's, pay stubs). I submitted those and my fiancee submitted her information. We found a great house for $95,000. Now, it turns out we are both rejected for a loan because our "debt to income" ratio is too high. We both owe more than we make. My credit score is in the mid 700's, while hers' is in the mid 600's.

Whats our chance of going somewhere else to get approved and purchase our dream home?

Update:

As far as a payment goes, we can afford a payment. My rent is $575 a month and my fiancee currently lives with her parents and pays about $200 a month. The payment we were esitmated to get with the house we wanted was around $675.

15 Answers

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  • 1 decade ago
    Favorite Answer

    Basically you are living way outside your means. You are squandering money and at the rate you are in debt, the financial issues will do serious damage to your relationship.

    1. rent a small apartment. Don't commit to a mortgage. If you can get a "lease-purchase" property that's good.

    2. sell off anything you can that will get rid of debt by transferring to a qualified buyer or using the cash to pay off a debt. Start with the smallest first and knock them out 1 at a time as fast as you can.

    3. get a second job if you have to and go into "extreme savings" mode. Make a team effort on this. It will strengthen your relationship instead of causing stress.

    And, by the way .. there are gadgillions of free things you can do together... get food at the supermarket, go on hikes and picnics at state parks, etc. Go to Mapquest.com and look up all the local stuff in your area. You will be amazed that spending quality time together doesn't have to cost a ton of money.

    Learn these lessons now and youtwo can build a long, happy, quality life together. Best of luck

    CEO@theconsumersforum.com

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  • 1 decade ago

    What you need to do is find an agent that will work within your means and has access to loan agents. Tell exactly how much you can pay and don't go over that. The reason you were turned down is you went above your preapproved limit. You must stay in your limit. The market is desperate so you will find something. If it is not your dream, think of it as a starter home and then sell later. You can do this, I did it, after being turned down numerous times.

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  • Todd C
    Lv 4
    1 decade ago

    It is possible but you have to ask yourself can you afford to buy a house. Also reduce your debt to income ratio all those credit cards that have 10,000 balances should be lowered to a reasonable limit ask your credit card company. Also debt consolidation loans might help. Stop immediately living out side your means use credit cards in emergencies only buy what you can afford or you will always worry about getting a loan. If your state allows it get the loan in your name cause you have the higher score.

    Have you thought about closing cost emergencies like blown water heater or worse.

    Get out of debt save your money for down payment and rent for awhile

    Source(s): Experience
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  • 1 decade ago

    If your debt ratio is that high, are you sure you can handle the payment? Lenders are more than willing to give you enough rope to hang yourself... (Sounds like you have it covered from your edit.)

    Check with your Realtor, ask about FHA and Fanny Mae. If they really want to work with you, your Realtor will put in touch with someone who can help you out.

    You can also try a mortgage broker. This person will lend the money then sell your mortgage immediately. They have a little more stretching room with their requirements. There are also brokers who work with several lenders to make the best fit. You might also look into lendingtree.com .

    Keep in mind every time you apply for credit anywhere for any reason, it dings your credit. The cell phone companies do it when you get a contract with them, any time you apply for a credit card or a mortgage.

    Good luck!

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  • googie
    Lv 7
    1 decade ago

    Getting a loan elsewhere ? Chances are slim to none. By your own admission, you are in debt up to the eyeballs and you owe too much for the salaries you make. This indicates poor money management . Credit score means little. Debt is the deciding factor. So instead of saddling yourself with large mortgage payments figure out a plan of austerity, start whittling down your present debt, put a few dollars aside each week so that when your debt is reasonable to income, you will have some money to put toward a house.

    Source(s): This won't be easy because there are always wants. For once you will have to ignore the temptation. Been here and done that !!.
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  • 1 decade ago

    If you have a car sell it to a relative with a different last name, but keep the car(s). Have a relative "gift" you some money and pay off your CC or your car and keep all transaction logs for loan verification. Do not pull to many credit checks. Ask the seller of the home to pay your downpayment. Work somewhere part time or pull overtime hours and have your immediate supervisor write a letter of intent to have you do long term overtime.

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  • Dee
    Lv 4
    1 decade ago

    You should try to apply on your own, without her, as her score is low. I would try that, if you haven't already. her score is pretty low, and so she will be turned down. once you get married both scores will be combined and yours may go down some. best thing to do is get both scores up the best you can. pay down your debt before you buy a house, as you may need money down and closing costs can be expensive. if you can't get approved yourself, just rent until your scores are up and debt is down. this market will still be going down,and maybe in a year you will be in a better situation. good luck.

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  • Anonymous
    1 decade ago

    we are buying a house now and our loan officer told us that our debt ratio can't not be no more than 48% of our income. my best guess is for you all to pay down your debts or you will not be approved for any kind of loan.

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  • 1 decade ago

    You got a job? Does your work have a credit union? If so,. talk to them. Do you have a rich uncle or a fairy godmother who can loan (or gift) you the down payment? How do your combined rent payments compare to a projected mortgage payment? Any chance you can lay off some of her debt and bring her score up?

    Unfortunately, with the economy so sick, the banks have tightened up credit rules. Inflation is rampant, and you guys are gonna be stretched pretty thin. One of you may have to try to find another job. She may have to give up her pets.

    Source(s): Grandpa
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  • The cheaper the home, the more willing people are to aprove you. We had real bad credit, bankrupt twice in a row, divorce, back tax bills and 2 cars repoed. our score was between 2-300. we got aproved for a nice 16,000 double wide with a land-home package deal. Our monthly payment went up, but we still got aproved....now if we were to look at a 30,000 home....there would have been no way lol.

    Source(s): owner for 1 1/2 years. turned down for 6 years.
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