Loan currently in UW...questions about income and debt

[gogotexan]

Hello all,

I put a contract on a new house 2 weeks ago.  There were a couple of surprises along the way. 

1.  I wasn't aware that when building a house builders require a deposit on upgrades. My upgrades required a $9K deposit.  I didn't have that much available in savings, so I wrote a check from my line of credit (LOC), with the intention to pay it off at the end of the year (and well before closing) when I get my bonus from my employer.  After asking my salesperson if it was okay that I use my LOC as a source of funds for the deposit on ugrades, she said she's seen people do it before, but wasn't sure if the lender would allow me to use the funds as a credit at closing.  So, I called the lender, who said so long as its paid off before closing it shouldn't be a problem.  The next day I get a call from my loan officer (LO) saying that the underwriter (UW) will not guarantee that they will allow this.  So, naturally, I made changes to the contract (took out a bunch of upgrades) and left a smaller check from my regular checking account on deposit with the builder - which the UW has confirmed will be credited at closing. 

2.  Now I'm trying to figure out if my overtime (OT) will be counted for overall income.  I get consistent overtime which adds about $10K extra income to my overall salary.  Additionally, I get a year end bonus which can be anywhere from $2K - $5K.  I've only been on my job 1 year and 4 mo.  My employer submitted the Verification of Employment which validates my salary, OT and bonus information.  However, I've been reading that it needs to be 2 years of OT to qualify.  When I asked my LO, she said they weren't counting the OT beause I don't need it based on my debt-to-income (DTI).  Which brings me to point 3 below.

3.  Currently my front-end DTI is 11%, but with the new mortgage it will change to 26% if OT is allowed and approximately 30.99% if the OT is not allowed.  While my back-end or overall DTI will be 36% if the OT is allowed and 43% if the OT is not allowed. 

4.  When I app'd my monthly debt load was $584.  However, I had made some charges on a couple of credit cards that hadn't reported yet, that will raise that to about $640 by the time the UW does its last credit check before closing.  I did not and will not apply for new credit, I'm speaking of using credit cards that I already had which simply hadn't reported the updated balances at time of app.

Mid score was 692 with 23% credit utilization at time of app. 

Any loan officers or other mortgage professionals here know if I should be worried?

[DallasLoanGuy]

you should tell the loan officer about the monthly debt payments increasing to be safe....

they can re-run the numbers thru automated underwriting and send over to u/w

[DallasLoanGuy]

you are very likely ok...... 

[MrChairman]

I've never heard of the requirement to put a down payment for upgrades. We added about 30k in upgrades but only had to put down the standard 3-5% of the total purchase price.

[StartingOver10]

Actually in our area most of builders require that you pay a large down payment for the upgrade at the time you order it.

[my_2_girls]

I've added about $7,000 in upgrades to the house I'm building but this will all be covered in the price of my loan - and is still under the appraised value. I paid $5,000 earnest on a $360,000 house - since my loan is for that exact amount (which includes all the upgrades)  will my earnest money just be credited to my closing costs?

[StartingOver10]

Normally the loan requires that you have some sort of down payment unless you are on a special program or you are getting a VA loan.

Have you verified with your LO that the loan is 100% LTV with no required down payment from you? Most lenders will loan you X% of the purchase price or the appraised value, whichever is lower. For example if you are approved for a 95% LTV then your down payment would be 5% of the purchase price unless the appraisal came in low. Since your appraised value is higher than the purchase price, that is not a factor. If you have paid more to the builder than what is needed at closing, then it is typical to apply the excess earnest money toward your closing costs to reduce the amount you need to bring to closing.

Refer to your GFE and speak to your LO for specifics. The lender has specific down payment requirements for each type of loan. What type of loan are you getting? FHA or VA or Conventional or USDA?

[my_2_girls]

Yes we are VA - my husband is 30% disabled so no origination fee either.  She has verified 100% LTV

[gogotexan]

Thanks for the info.  Sorry for the late reply, but I haven't been on myfico in a few days.  I didn't want to mention anything to my loan officer at this juncture.  The loan is still in processing, should be going to U/W today or tomorrow.  I will have the balances paid down in a couple of months, so I'm not going to worry about it.  I don't want to say anything right now because that may slow or blow the deal. 

[gogotexan]

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@DallasLoanGuy wrote:

you should tell the loan officer about the monthly debt payments increasing to be safe....

they can re-run the numbers thru automated underwriting and send over to u/w

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Thanks for the info.  Sorry for the late reply, but I haven't been on myfico in a few days.  I didn't want to mention anything to my loan officer at this juncture.  The loan is still in processing, should be going to U/W today or tomorrow.  I will have the balances paid down in a couple of months, so I'm not going to worry about it.  I don't want to say anything right now because that may slow or blow the deal.