DTI QUESTIONS AND HOW TO PURCHASE HOME FROM FAMILY MEMBER WITH GIFT EQUITY....

[liandur]

My Fico's all range from 700-750. I have no negatives-lates, collections, etc. Have been with same employer for 4 yrs/16 yrs in field. I work in a restaurant-tipped employment. 2012 income around 20K, 2013 around 29K. I pay child support for my 17 yr old $122 a month. I am a student but have no student loans or other loans to figure in. Property taxes on home around $2600 yearly. Insurance will be right around $70 monthly.

I have several credit cards that have 0 balances but report minimum payment on myfico reports---will those have to be factored into DTI? or just those with balances?

 My daughter owns the house I am wanting to purchase. There is no mortgage loan on it. She owns it outright. Our counties website (greene county ohio) has it valued at $106K. I doubt that it would actually appraise at that because our county seems to overvalue things! LOL but....

My daughter is willing to sell it to me for 70K. I live here now and have for the last 4 months. I am told I can use Gift of Equity as downpayment.

What all will I need to make this happen? reserves, downpayment, closing costs?

And how does this work using gift of equity? I am told I need a purchase contract first? Should contract price be set at the 70K or closer to what it should appraise for like maybe 90K? And then a letter gifting the equity?

One loan officer I spoke with told me that I need nothing to make a purchase using gift equity--that everything including downpayment, closing costs,etc can all be rolled into the gifted equity. Just Sounded way too good to be true!

I just want to be prepared when I start the process sometime in the first few months of the new year. Thank you!

[liandur]

My Fico's all range from 700-750. I have no negatives-lates, collections, etc. Have been with same employer for 4 yrs/16 yrs in field. I work in a restaurant-tipped employment. 2012 income around 20K, 2013 around 29K. I pay child support for my 17 yr old $122 a month. I am a student but have no student loans or other loans to figure in. Property taxes on home around $2600 yearly. Insurance will be right around $70 monthly.

I have several credit cards that have 0 balances but report minimum payment on myfico reports---will those have to be factored into DTI? or just those with balances?

 My daughter owns the house I am wanting to purchase. There is no mortgage loan on it. She owns it outright. Our counties website (greene county ohio) has it valued at $106K. I doubt that it would actually appraise at that because our county seems to overvalue things! LOL but....

My daughter is willing to sell it to me for 70K. I live here now and have for the last 4 months. I am told I can use Gift of Equity as downpayment.

What all will I need to make this happen? reserves, downpayment, closing costs?

And how does this work using gift of equity? I am told I need a purchase contract first? Should contract price be set at the 70K or closer to what it should appraise for like maybe 90K? And then a letter gifting the equity?

One loan officer I spoke with told me that I need nothing to make a purchase using gift equity--that everything including downpayment, closing costs,etc can all be rolled into the gifted equity. Just Sounded way too good to be true!

I just want to be prepared when I start the process sometime in the first few months of the new year. Thank you!

[themizlyne]

It looks like you'll be limited to roughly $500 per month principle and interest. I took the average of your two years income and multiplied by the new dti max of 38% and subtracted child support, taxes, and insurance. Credit card minimum payments shouldn't count against dti if they have zero balance.

[liandur]

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@themizlyne wrote:
It looks like you'll be limited to roughly $500 per month principle and interest. I took the average of your two years income and multiplied by the new dti max of 38% and subtracted child support, taxes, and insurance. Credit card minimum payments shouldn't count against dti if they have zero balance.

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New DTI max? overall DTI? with PTI included? When does this change? And how are you calculating this?

[themizlyne]

Overall dti max effective 1/1/14.

((((20, 000 + 29, 000) ÷ 2) ÷12) * .38) - ((2600 ÷ 12) + 70 + 122) = maximum principle and interest.

It's possible that your lo may use just your latest w2 and then your max payment would be higher. Also if you have to pay pmi then your max payment would need to be reduced by that amount.

[tooleman694]

Wait what? maximum DTI is 38? this is news to me, I thought the QM was lowering them to 43.

[liandur]

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@tooleman694 wrote:

Wait what? maximum DTI is 38? this is news to me, I thought the QM was lowering them to 43.

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SAME HERE! I've been searching and everything I can find says max 43% as of 1-1-14

[liandur]

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@themizlyne wrote:
Overall dti max effective 1/1/14.

((((20, 000 + 29, 000) ÷ 2) ÷12) * .38) - ((2600 ÷ 12) + 70 + 122) = maximum principle and interest.

It's possible that your lo may use just your latest w2 and then your max payment would be higher. Also if you have to pay pmi then your max payment would need to be reduced by that amount.

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Where are you finding this 38%? Everything I can find on the new laws says 43%

[themizlyne]

I got it from this article http://homes.yahoo.com/news/the-impact-of-dodd-frank-191118507.html

[tooleman694]

It might depend on the bank, but im sure you will be able to find someone that will do 43.

[StartingOver10]

tooleman694 wrote:

It might depend on the bank, but im sure you will be able to find someone that will do 43.

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^^^yes, all day long.

I have never heard the max DTI at 38% before - that has to be a specific lender overlay (that the writer of the article didn't even bother to check out before putting in her article)