Howdy! SO and I are trying to increase our home buying power and were entertaining ideas to decrease our debt to income ratio so we can qualify for bigger homeproperty financing. We've got about $140k positive equity in our current home (value ~$300k, ~$160k remaining note). My personal FICO is ~770 and SO is about the same.
Target new homeproperty budget $450k to $500k (max)
Current Monthly mortgage $1,300
Vehicle#1 monthly $800, remaining note ~$10k
Vehicle#2 monthly $600, remaining note ~$14k
If we took a home equity line of credit for the payoff of the two vehicles, we would need about $25k which would be repaid after we sell our home (minus interest only payments due in the mean time) $140k – $25k ($115k remaining)
I'm figuring high on closing costs ~$20K, leaving ~$95k for a down payment on the new homeproperty.
I used an online mortgage calculator to get this estimated total monthly payment including home insuranceproperty tax = $1,950
$450k home value
$95k down payment
$355k loan amount 3.8% interest rate 30yr conventional
With all of that said, we would ultimately be taking our monthly vehicle payments and rolling that into a larger monthly mortgage payment. Has anyone done something similar or is there a better option to increase our buying power? I'm worried that if we attempt to buy a home that is more than a lender would allow because of our current monthly debt to income ratio, on paper we wouldn't be able to afford the new home or be granted the financing.