DTI ?

[Anonymous]

We have received an approval for a mortgage on a 2nd home.  On our current primary home we did a loan modification 4 years ago and next year the loan resorts back to a 20 year amoritization note.  Our payments will obviously go up next year - Our DTI at this point is very low 20% Front end and 31% back end.  Next year our housing debt will go up but we will never see that loan as we will refinance or paydown the balance.  The underwiter asked for a copy of our loan modification - any idea how she will view the pending increase it is right at 12 months away.  My salary willincrease and we have a large cash award that vests next year as well.  Any chnace the underwriter would want to bring in the potential debt but not consider income increases?  I think we are ok either way as we are under 25% and 38% but it our only contingency was her review of the loan mod.  

For the next three years we have already awarded cash payments and stock - both of these can be shown in writing.  I think the guidelines for stock vesting is tougher but how about straight cash awards?

[Anonymous]

Anybody have an idea how the underwriter will handle an Interest Only loan where the payment will go up for DTI?  What is the window they look at ? 1 year, 2 years?

Would they consider salary increases?

[DallasLoanGuy]

pretty sure they will use the higher pmt......

and they do not consider possible future raises, ect. 

[Anonymous]

Thanks.  Wonder if they will consider awarded cash payments that vest.  Part of my compensation package has a cash payment (not performance or tied to stock price),  The cash is a set amount and vests and is immediately available and shows on my w-2 as income the year it vests -  

[Life_take2]

After nearly 18 years in the mortgage industry, I can share with you some general underwriting guidelines I have learned. I say 'general' because, while there are exceptions, the most commonly held view of  bonus or cash distributions are that they can be considered as income IF:

1.) Borrower has a documented 2 year history of receiving (and paying tax on) such income 

2.) Borrower has documentation that such income is 'likely and reasonable' to continue in the future.

Condition #1  might be the tipping point. UWs are can be unwilling to use future distributions as income without any historical support.  That is not to say they will won't consider it, but without a history of receipt , the overall documentation and strength of the file as a whole will have more of a bearing as to whether or not accepted.

I don't know if this helps but I thought I would share