Mortgage Question - Jackson,NJ

Kind of shocked that you came on here and are admitting you don't pay taxes - expecially when the economy is what it is right now. Pretty unfair for the rest of us who are paying tens of thousands of dollars in taxes. Pay your taxes and then buy a house. If you can't do both, you can't afford a house.

You don't want to be approved for more. If you are, you will find yourself in a house you can't afford. They calculate what you are approved for VERY carefully now. You want to stay in what you were approved for right now, trust me. The cost of the house, is not the only cost. You factor in maintenance (which can get VERY costly), bills go up, taxes go up, and all the other home costs that go up...there is a reason you are only approved for so much.

P.S.
Then stop illegally getting paid under the table. You can claim in on your taxes, and your financial portfolio will be accurate. That's the only real solution. (And the most moral one, to be blunt.) ALSO, sure I've told a lie. Who hasn't. There is a BIG leap from telling a lie, and lying on taxes...which is also a crime. It IS your choice. You can still claim money, regardless of what she does. You CHOOSE not.

Seriously? Of course they are basing it just off his......he is the only one who is reporting earning money!! Report your income like you are supposed to and this wouldn't be an issue.
Update: OK, you are just making yourself look silly now.....comparing tax fraud to a speeding ticket? I know my response is pretty blunt and to the point, but do you seriously not see how you are coming across by ADMITTING to not paying taxes, then complaining that your actions are not allowing you to get what you want??

I'll give you the benefit of the doubt that maybe you are a little naive on such matters......so here is my advice.....report your income. It doesn't matter what you friend asked you to do.....you are knowingly not reporting your income and that makes you as culpable as your employer.

Ultimately it's your decision and I'm not trying to play "morality police", but don't come on here and complain that you can't do what you want because you aren't following the rules......makes you look childish!

Hmmm, as a household that is paying Uncle Sam nearly 35% of our income, I'm pretty biased--claim your income! If you are living in the United States of America and are benefiting from all the wonders of our great nation, you need to be paying your "fair share" for the priviledge of living here.

Add me to the chorus of "lying and speeding tickets are not on par with tax evasion."

Hey now! I'm not perfect! I sped and got a ticket. I've lied (nothing CRIMINAL) and got caught and paid the consequences. You should hope both you AND your friend never get caught. It's pretty ballsy to admit that your under the table income will allow a higher mortage, savings AND other extras (that makes it sound like a substantial amount of money every month) while not paying taxes (state, federal, SSI witholdings, ect...and how exactly is that NOT your choice or decision by the way?) knowing that so many on this board struggle to make ends meet while HAVING to pay those things. It breeds resentment (I'm a little miffed to be honest). Have you missed all the 'people not paying their fair share' posts? Did you REALLY think people wouldn't have something to say about it? Please don't act so shocked.

That said, to answer your question, taxes for 2011 are coming up. You can claim what you made and have your income count on your tax return to show the bank in 6 months when you go to buy the house. Aside from that, you're SOL. Hubby's income only, credit scores, credit to income ratio (you would have to close accounts down which can be tricky for your credit score) and actual debt to income ratio are what it's all about.

And where did your incriminating SWH go?

Please pay your taxes.

A mortgage is contingent on the income you report. If you're unable to report your income it cannot be considered. If you pay taxes on your income then you can list it as income with the mortgage company.

I suggest you talk with the company with whom you applied for a mortgage and told you that you could afford a mortgage of $X. They will tell you the basis for their decision and how you can improve the basis to qualify for a higher amount.

Do keep in mind that one of the reasons we as a country are in fiscal difficulty is because of all the sub prime mortgages that were approved. Those mortgages allowed people to purchase more expensive homes than they would ordinarily qualify for. You do not want to be one of those people who over time discovers that they cannot pay the mortgage.

When you plan a budget for buying a home you must include money for upkeep and repairs. Depending on the age of the home you buy that can be considerable. You will have expenses as a homeowner that you do not have as a renter and many of those expenses are not obvious.

When considering the amount that you pay for housing, you need to not only include the mortgage payment but also the cost of insurance, taxes, upkeep and repair. The figure I remember hearing is 30% or 1/3 of your income after state and federal taxes.

After you SWH: Since your income is "under the table" it cannot be considered when determining the amount you can afford for a mortgage. If it were to be considered, the IRS would get involved and you'd owe back and current and future taxes on that income. You just cannot have "it" both ways. It sounds like your income is considerable if you think it would help you get a higher mortgage. My value system would not allow me to not pay taxes on it. Sounds like you don't realize you are breaking the law.

Hmmm. Please don't blame the other person. It's your decision based on your values as to whether or not you pay taxes. My comment is based on your wish to have it both ways. One to not pay taxes and two to still be able to claim your income. I might decide to not report income but I would recognize that it's not income that would count towards anything. I would recognize the consequences of my choices.

I suggest that, depending on the amount of your income, you are doing what helps the other person at the expense of what would help you. You can now file an amended tax return and claim your income if it's sufficient enough to increase your loan amount. The only person who can tell you if that's the case is the mortgage company.

what you are wanting is to be able to be approved for a higher amount, but that cannot happen if you are cash-paid AND show no income to add to your husband's.

By contrast, sometimes I am cash-paid (with my daycare)....BUT I always report ALL of my income....whether it's cash or checks.

The lending institutions follow a formula which you are negating by not reporting your cash income. In other words, you are shortchanging yourself + running the risk of being caught by the IRS.....which could totally screw up all of your future plans.

My recommendation: start reporting your cash income, pay the required taxes, & then the banks will be willing to increase your loan. :)

Don't mention the money you make under the table because they will report you to the IRS. Not to say they will do anything but you will be reported.

Anyway the only way you can increase what you are approved for is to claim your income. Paying off debt generally doesn't do much because you still have access to the credit.

Just thought I would add after seeing you what happened, no one can make you commit tax evasion which is what you are doing. You can report the income, your friend has no say in it. Your what happened makes you look stupid and immature.

If you get paid in cash and file income taxes on it, then you should be able to use last year's tax return to prove your income and be approved for more.

Lenders look at a lot of factors - debt to income ratio is one. Paying off debt could, in theory, up the amount you're approved for. However, it's not a guarantee.

Without your income counted, I wouldn't bet on being approved for more.

Whatever you do, buy a smaller house then what they will give you. Plan on putting aside at least $200 a month for home maintenance and up keep expenses. Within 3 months of moving into our home, we had a 2k plumbing bill. With houses, there is always something.......

I am sorry - you come on here and state you don't pay taxes and expect people to be happy?! Start claiming your income and paying your taxes. If you can't do that - then you can't afford a home.

Mortgage loans are done at the income provided at pre-approval. So if you only give your husband's income - then that's what they will figure the loan amount on.

Most companies figure between 25% and 33% debt-to-income ratio.

Start putting away a mortgage payment now. Do it for 6 months. That will be your down payment. If you can't afford to do that - then you can't afford a home.

If you have your debts paid off when you are ready to purchase, you MIGHT be approved for more of a loan. IF you claim your income and start paying taxes on it - then you might get even more...

If your husband gets a better paying job or changes career fields - with the way that mortgage companies are handling loans now? You might have to wait 1 full year to show that he has job stability. This will also give you time to get caught up on your back taxes for income and hopefully saving more money for your down payment.

You are legally required to report income if it is $600.00 a year or more cash or not, doesn't matter!!!! That would ACTUALLY help you as well, the more money you make, the more you get approved for! Sure, taxes would be different for you, but you are obligated to report as well as you wanna put down EVERY PENNY on your tax return if you are trying to get a loan. Do a new return NOW, and show them that one. Also, NEVER assume you won't be audited. Always do your taxes as if you were to be audited.

AND/OR: Pay off your debts, if possible- it won't affect your credit score right away, but lenders will see that you no longer have that debt, and they will certainly consider that to your advantage! OR, Try other lenders or get another co-signer (hard to find anyone that would do it, I would think, though...)

Keep in mind, of course- what you get approved for is what you usually can afford. No one wants to give someone a loan that they will not be able to be paid back in full when they see how much you make on paper...

Another option: look for foreclosures or slight fixer-upper houses. You can get a bigger house for cheaper that way- also, a better location for cheaper. And if you DO have extra money, use that to fix it up with and make your own.

PS: didn't read your SWH that everyone's talking about- just responding based on what I'd say regardless of influence.

It's based on the income you provided when you applied.
I don't know about New Jersey, but when I bought my first home as a single person, I got a mortgage for HALF of what I was approved for. Had I taken out the full amount, I would have been eating cat food. When we got married, we applied the same logic. We borrowed half of what they *would* give us. We've never had a problem. Our house is now paid off.
Yes your debt-to-income ratio is considered.
Best case scenario--buy a home when you have zero debt and can put 20% down.
Generally speaking about 25% of your NET income (income after taxes) should go to a mortgage to be comfortable.
Good luck!

Lenders don't operate like they did in 2006, 2007. Things are VERY different now in the lending world. All debt counts. Income that is legally reported to the IRS also counts. Your income is not legally reported, so of course it cannot be considered in this process. And you really don't want to get caught up in a huge mortgage anyway. Someone already mentioned below that a huge contributor to our country's financial crisis is that people have been over-lended to and can't afford their debt.

Aside from the tax question/problem. Find a house where the payments are similar to your rent. You should be able to pay your mortgage payment and the utilities with ease if you cannot than you should not buy a larger home. You do not have to buy the biggest house first. What people did in the past was to get a house that was comfortable and then as they moved up the ladder they bought a bigger home after they sold the smaller one and then so on. Nowdays everybody wants the big one to start - ain't gonna happen in the present climate.

You made a statement that bothers me about "assuming my husbands income remains as is." Is there a change coming that might have it reduced? If that is so, then you do not need to be buying anything.

Owning a home is a big step in your life and it is a big investment. Look at all the angles before you jump into it.

I know how expensive Jersey is and that is why I don't live there any more - born there, lived there until I got married 40 years ago. A nice place to be from. I remember my dream house with the red door that was $160,000 at the time brand new that was 2 story, 4 bedroom 2 1/2 bath, 2 car garage, 2 family areas, dining room separate kitchen, laundry room, and basement that is about $750,000 or more now. The property taxes would have eaten us alive not to mention the upkeep being in the burbs of Somerset County. I have family that have left the state to buy a home in another state for a fraction of the cost.

The other S.

PS In the long run, you won't be getting back any social security or anything else if you don't report your taxes because there won't be a file showing what you have made. End of my soapbox.

If your money is being put towards savings then my advice is to put more money down & still just finance what you've already been approved for. For example: You're approved for $200K which I know well doesn't go far in NJ. The home you want is $250K. You haggle them down to $230K & put down the $30K so that you finance what you were approved for. Make sense?

You want your house to be less than 1/4 (I believe) of your total income per month (no more). After gas, groceries, bills, extra spending, savings etc - how much is left over? That is how much you want to spend on a mortgage. Is that close to what you are approved for?

It will be only contingent on your husband's income if you cannot show you are paid money. You are paid cash - but do you claim it at tax time? If so it should show up when applying for a loan.

You need to eliminate as much debt as possible because that will look great and you may be able to afford more based on that.

Remember - a bigger house means larger utility bills. Same with an older (versus newer and not so drafty) home. Just a few things to think about!

They are very strict now in determining how much you can have. The salary is the biggest determinant. It must pay the mortgage and all other debts you may have (car payments, loans, etc...). Beyond that, your credit score is important for the interest rate, but not so much how much $ they will give you. If you eliminate debt, you will be approved for more because all the debt will no longer be in the equation. Good luck!

When you applied for the loan, what income did you list? That's what the loan is based upon. If you increase your income, then there is a possibility that you can be approved for a higher loan.

Unless you have a large amount of debt (which I doubt since you were able to qualify) paying off the debt probably won't make much of a difference in the amount that you qualify for.

Things may have changed in recent years, but 15 to 20 years ago if you bought a home for what you qualified for, you would have had a very difficult time making those monthly payments for the first few years.

If you eliminate debt it might help you get approved for more. We've been turned down for debt to income ratio before.

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