URGENT! DTI Woes...

[Joshmerd]

Hi. I have a problem. My wife and I are trying to buy a townhome. We have already put down a $2000 earnest deposit, and are going to pick colors this week. My problem is that I have been denied by Ameriquest (they add all my student loans into my current DTI, even though they are DEFFERED!). I didn't worry about that denial.

We have been talking to another mortgage company who understands our defferment, and did not add in those payments to our DTI. They temporarily denied us b/c we are BARELY over their DTI limit. They said my credit was fine (mid 630), but I make 30K/yr and have 2 car payments ($279, $289) and a rent payment of $765. While I do not know if they counted the rent payment in our DTI, they said I should do something with one of those car payments and I would be approved. The funny thing is that I already have the car listed for sale and was planning on selling it BEFORE I applied for a mortgage. Our income would be more, but I am not putting my wife onto the mortgage due to some past credit issues.

The problem is this: We apparently have about 10 days to show a pre-approval to the builder. I don't know how long it will take to sell the car, but when I do our DTI will be drastically reduced (I will pay cash for a beat up truck)

Are there any lenders who will 1) not include my student loans in DTI, and 2) not take that car payment into account. Please help! I am running out of time!

[David]

I'm sure you will have an answer shortly.
One idea for selling your car would be CarMax. They will make an offer for you right on the spot, but I think you should find out a little more first.

[Haplo]

Josh,

Here's the deal. Your student loans likely need to be counted because even if they are deferred now, it is still a debt that you'll have to pay. If they are going to be deferred for longer than the next 12 months then that is when you may be able to have that removed from your ratios. If someone is telling you that they can do it w/o that being considered and your deferment is <12 months then there's a possibility they are doing the ol' "I can do that!" before they know what they can really do.

Your car payment is a seperate issue. If you're going to have your car sold and the debt paid off before you close, then sure it can be removed. You will have to show proof of the debt being paid off however before the loan will be approved finally, however you could likely get a pre-approval with the knowledge that you would have to prove the debt being paid off.

At $30k/yr youre monthly income is $2500. What is the ratio they are using? What is your term? Fixed / ARM? Rate? How much is the house you're trying to buy and how much are the taxes and insurance? What state are you in?

These are all important questions for anyone here on these forums to know in order to help provide you with better information. What kind of credit issues does your wife have? Surprisingly enough many people think that they have bad credit only to find out that it's not as bad as it seems (and of course, the reverse is quite often true as well.)

[Joshmerd]

Thanks for the quick response. My student loans are deffered until at least 2008. That is why my current lender is not counting them. The company is called Concorde Acceptance Corporation. Andreas, the loan officer, says that they have to include both cars, even though I am selling one of them. However, he also said that their company doesn't do "pre-approvals" and that they do "true approvals". I do not know the rate/term they are using.

The purchase price of the home is $129000. Those two car payments add up to $568. He also gave another number they are factoring in of $1126.14. I do not know what that is, but I assumed it was something to do with the mortgage payment, etc. All together my DTI was 67%.

I do not know the taxes info, but the home is in Summerville, SC (Dorchester county). The bit of good news about the car being sold is that we don't close for another 5-6 months (new construction). I hope I can get that pre-approval!

-Josh

[chow]

(they add all my student loans into my current DTI, even though they are DEFFERED!)

the student loans have to have a deferral base of more than 12 months, and to exclude them more than 24 months. 36 months...not an issue.

What a good LO will find on a 2/28 or 3/27 arm is:

What will be paid off in how many months, your reserves. You qulify on the second bump of the loan rate. So-you might may make it over the first jump, but, where is the second jump at?


That is where the UW looks at it.

Andreas, the loan officer, says that they have to include both cars, even though I am selling one of them. However, he also said that their company doesn't do "pre-approvals" and that they do "true approvals". I do not know the rate/term they are using.

How could LO do a pre approval based on a secured car loan, and you haven't sold it yet?

Yes, Untill you provide evidence that car is sold, it will ba counted in the DTI.

_________________
Kathy Grider

[Joshmerd]

...would it be a good idea to consider another co-signer on my mortgage? My grandfather will probably do it for me. If I do this, and if it is possible in the first place, what are the pros/cons of having someone else co-sign with you (someone other than your spouse).

Thanks again.

- Josh

[dsickler]

it really depends on the lender. Most lenders will include the co-borrowers credit score, but some won't. Most importantly, usually when you add a co-signer, it's adds their income and their debt to the equation. even though your wife has past credit problems, it may be a good idea to add her anyways. If you don't mind me asking, what are the past credit issues? Lates? Collections? BK? Foreclosures? Do you know what her credit score is? What will your DTI be with her on the loan? Adding her may not be such a bad idea depending on these factors.

David

[Joshmerd]

I have considered adding her on, but her income is very low b/c she is a full-time student and only works very little (~$400/month). She mostly has past due medical bills, and a couple of CO's and lates but no foreclosures/BK. I think her score is around 570/580.

The reason I thought of my grandfather, other than the obvious, is that his credit is good and earns about what I do each year in retirement. So, I think I may give him a call tomorrow and see what he thinks.

If you have any suggestions on lenders, let me know! Thanks!

- Josh

[Joshmerd]

Here is an update on my situation. I was just approved with Salem Mortgage for the following:

80/20

1st - 103,900 @ 7.25 Interest only 3 ARM $627.73
2nd - 26,000 @ 10.125 Fixed $230.57

$2300 due at close

I did find out some good news: according to these guys, my middle is 636, not 622 as I had thought.

Let me know if you guys know of any other good companies out there who are willing to actually do some work (unlike some companies I have talked to) and find what is suitable for me! Thanks to all for your information!

- Josh

_________________
"I have not failed. I've just found 10,000 ways that won't work." - Thomas Edison

"Computers will never replace good old-fashioned human stupidity." -- Anonymous

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[chow]

"I have not failed. I've just found 10,000 ways that won't work."

- Thomas Edison

and then there is mine:

_________________
Kathy Grider

[Haplo]

Depending on the county you could look at an FHA with a non-occupying co-borrower to support your income.

30 years @ 6% and pretty close to 100% financing (100% if you get a Down payment assistance) and it's a bit more flexible in certain areas, less in others.

_________________
Travis J. Halwachs
Renovation Specialist
217-553-6494

[chow]

Here is a safe rule of mortgages and credit cards.



Never spend more than 30% of your gross income-

or for the gross overload readers-

just look at the net...25% on a mortgage payment. That would include taxes and insurance. what is 25% of your weekly income? You can afford that for a TOTAL payment on a house.

What you may not understand is that some people don't figure a increase in taxes, or homeowners insurance. Then if you're young- You go into this- on a ARM. (Adjustable Rate Mortgage) That's okay, I explore that option on a few things-every day.

Never will I type a more honest message. NEVER EVER GO BEYOND YOUR 30% AFTER TAX.

You'all think this is a good thing? I happen to know most of you are male-or higher brain, thinkers.


I have a problem. It is called rehabbing the the users of credit, while I assist in the court in : liquidation of liars.


So Kevin,... do we have a 1K bet placed yet?

I hear a calling for SeaFood and U no me-


I need ribs, and a slab: of dead yard rodent.

_________________
Kathy Grider

[chow]

wrfong thread!

_________________
Kathy Grider

[Joshmerd]

I don't think the money will be an issue. My wife graduates in April, and is taking a job making ~45K. Plus, she does private voice lessons on the side which is another $800/mo.

_________________
"I have not failed. I've just found 10,000 ways that won't work." - Thomas Edison

"Computers will never replace good old-fashioned human stupidity." -- Anonymous

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[chow]