07-26-2012 11:36 AM
07-26-2012 06:42 PM
I think it's going to depend on more than DTI. And it will vary from lender to lender. I've only been through this once, so no expert. I just bought a house while still carrying my condo and had to have both figured in to my DTI. I had the condo listed, but it wasn't sold yet and I didn't want to have to put in a conditional offer on a new home, so I was looking to get approved while carrying the condo. With both mortgages my DTI was 28/35. We found several lenders that said yes, but there were some lenders that still wouldn't do it because we didn't have a lot of equity in the condo. Didn't you post that you were underwater on the town home? That might be an obstacle.
07-26-2012 07:19 PM
07-27-2012 06:58 AM
07-27-2012 07:05 AM
Yeah we are underwater by $20000. I'm aggressively paying down our debt and then will tackle the mortgage to get it down to market value. Town homes are just not selling but renting has not been an issue. I can work only so many extra shifts and have limited child care. I have been paying all extra money towards our 5 year personal loan to pay it off in 18 mo. That would help dti. But I don't think our home values are going back any time soon. It's been hard deciding then to tackle mortgage or put that money in savings and keep the townhouse as an investment property until values improve. I really want a house with a yard that my young kids can enjoy. What's the point once their preteens lol
The underwriters put you though an extra tough time when you are buying another house and your current residence is underwater.
They do it because of the "buy and bail" potential. In other words, it has happened over the past several years that the homeowner bought something else, rented out the previous property and then did a short sale on the previous property. It happens a lot.
So the underwriter will put you through an extra tough process because they want to make sure (in their limited capacity) that you aren't going to dump the current property in which you currently reside in a short sale later. Some of the underwriters will require equity in your current property. That is the issue you face. Since you know it early on, you might want to make sure there is at least some equity if possible for you. I know its challenging in this market.
07-27-2012 01:03 PM