You may also want to consider a debt negotiation program.

Kathy:

Two data points are needed to answer your question:
what rate on your car loan? what rate on your student loans?

If the rates on these loans are higher than the RE loan, then pay them off and increase your RE loan amount.

Even if these loans have higher rates than the RE loan, it still might make sense to pay at least the car loan off since it is probably amortized over 5 years so it has a very high payment relative to a RE loan payment. If this is the case, you will be able to improve your cash flow by lowering your monthly payments by paying the car loan. Also paying car loan off will increase yuor RE borrowing capacity.

It looks like you have 60k to work with? If so:
Sales price: 500,000
60k down Loan amount: 440,000
Total payment: 3858
Plus car 450
total 4307

Same sales price, 5% down.
mortgage $4212.00
no car payment.

It looks like you might better off paying the car off and putting 5% down. Don't do anything until you submit an app to a lender and they have a chance to review everything. The loan should be paid off through the title company, a few days before you close. Let me know if I can assist you in anyway. My office is located in Sacramento.

Matt
916-294-6984
mcbrown@dhimortgage.com

Kathy,

These numbers are just from my estimation, but I would say that if you put 5% down on purchase price of 470k you would get total monthly payments of around 3600 (assuming 30 year fixed). Doing this you would be able to pay off the car and eliminate that payment. After negotiating, 470k is a realistic price for a good home in these areas.

Hi Kathy; I wish you great success on your way to great wealth from buying instead of renting. I am in Sunnyvale, check me out here on Trulia.com. And Go to http://www.caminomortgage.com and play with the online pre qualifing calculator. Its under loan center, plug in your numbers and it will tell you what you will qualify for. I am on that site also. I believe the larger down payment is better but there are other things that will effect this. Yes 3% loan programs from the FHA Gov. loans do work in any town. If you do not put down 20% you maybe stuck with PMI, Private Mortgage Insurance. You will also have this with the FHA loan. Costly! So you may just wait to raise a larger down payment or seriously (I know you'll hate this) consider a lower price home. The whole idea of getting started in owning instead of renting. I have worked with many families after going through the pre qualification time have had to come back to reality and get a lower payment. Don't mean to burst a bubble but credit is still hard to get with a small down payment. It is not impossible because you have great creadit scores and good incomes. I am just concerned with the 8-9% down payment on a conventional type loan. The FHA will always work. If I can be of any help to you in qualifing and finding the right home please let me know. ultimaterequest@sbcglobal.net
David
Good luck

Our car payment is $450, student loans $250. We are budgeting $3300-$3600 per month for the payment all inclusive.

What are the monthly payments on your car and student loan? What are you budgeting your new mortgage payment with taxes and insurnace?

Hi Kathy,

10% down is going to give you more negotiating power. A lot of your competition in Daly City/Pacifica will be doing 3% down government loans and you will have a significant advantage by putting more money down because the lower down pament % loans are more risky and take longer to approve.

Also, it depends on what type of interest rate you are paying on your car and student loans. I would at minimum put 5% down, but if you can do that while also paying off your car payment then it's probably a good way to go.

Honestly with your credit score you are an extremely qualified buyer to get in the market right now. Within the next few months you should see a lot more foreclosures coming on to the market and realistically you should be able to get a nice house in the 450-470k range.

If you have any questions about the market or your financing situation please feel free to contact me at peter_brunton@yahoo.com. I'm working with a buyer in a very similar situation as yourself and I have a very solid grasp on current market conditions.

Kathy:

This is a great questions for a great loan officer. I have one in Northern California is you would like a referral. I highly recommend hanging on to your cash unless you have to pay off the car, and only the lender who will be doing your loan will know if that is necessary. Hope you find a great home and Dare to Dream.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes Realty