Mortgage Loans

[CreditBob]

I wanted to write this topic because as a stock holder in the mortgage industry tighter restrictions are being recommended before you can get a loan for a house or condominium. There is no way that lenders are going to allow brokers and consumers to make the same mistakes again.

Because revolving accounts have a large impact on the score you can not have high balances. It has been suggested that your balances be no higher than $ 200-500. If you have one credit card with a line of credit of $ 500.00 the balance would actually have to be a lot lower such as around $ 50.

Even though student loans are deferred and delayed in payment you are still technically in debt. This affects your debt to ratio. So a lot of the balance would have to be paid down. By how much for now is up to each lender. That can change into one industry standard.

Stated income is and will not be accepted. Approved documentation such as tax returns, paycheck stubs, bank account statements, etc. Is what is needed.

If you are self employed or in other words you own your own business you must have a paper trail of information for each month. Make sure that you keep your business accounts separate from your personal accounts. Whatever you send into the state or Internal revenue Service for licensing & taxes, that you keep copies of everything.

Your debt to ratio of income that includes both your mortgage and other bills should not exceed 41%. So take your gross monthly income and items it by 41%. Here is an example:

$ 3,000 gross X 41%= $ 1,230

So that would includes your mortgage payment along with your food & utilities. Be aware that all utilities, food, satellite, car fuel, car insurance, etc is involved. Anything that comes out of your pocket for expenses. To offset the AMOUNT you can put down a higher down payment.

Also keep in mind that your asscoiation fees for a condominium is includeed as well.

Message Edited by CreditBob on 10-19-2008 05:12 PM

Message Edited by CreditBob on 10-19-2008 05:14 PM

[Anonymous]

When figuring your debt to income there is a front ratio and a back ratio, which I think is 31/43

31% is the max your PITI payment can be and

43% is the max of your PITI payment + Monthly revolving debt Minimums and Monthly installment amounts due.

When applying for mortgages they don't consider food, gas, electric bills etc. 

[Anonymous]

CreditBob I think is trying to say that they will start doing this.

They will not.  It would be a paperwork/underwriting nightmare, it would be VERY hard to document, and would probably be a serious violation of privacy.

Also, student loans will still be factored on a DTI/payment basis, not the balance.  they will get tighter on allowing the loans not to be counted towards DTI.

Also, Most conventional loans programs already prefer 35% DTI or so.  FHA, VA, and subprime are the ones that have no problem going over that threshold.

Basically, the fundamentals of conventional financing are not going to change much.

2 years solid employment

solid income with reasonable DTI (total under 40%)

Decent FICO (650+)

10-20% down (20% unless higher FICO due to PMI issues)

24 months clean credit history with all info documented (income too)

If you have these you will always be able to get a house.

What is going to change is brokers/lenders making up numbers, getting fake appraisals, qualifying on teaser payments, etc to get loan done. 

[Anonymous]

I am sorry but this doesnt make since to me. How can any Mortgage Co  ask for some of the items you listed? Wouldnt they be different more or less depending on where you live now and where you plan to move? Utilities would be different,car insurance and gas for the vehicles would vary depending where you move and where you lived prior. So how can you honestly asnwer these questions? Not to mention the grocery bill,  so I could say I spend 100.00 a month how do I prove it and how would they prove if I was telling the truth or not?? I am not trying to be rude just totally dont understand how mortgage co could honestly expect us to reveal all the little things in our daily lives. Anyone whom was just approved want to tell us if they had to go through this type of loan process?? Mortgage guys is this for real???

WHEW I must type slow....lol......thanks for clearing this up I was ready to cancel our appointment with the Mortgage Co. That would have been a big pain in the you know what!!!..lol..

Message Edited by lil-ol-me on 10-19-2008 05:36 PM

[DallasLoanGuy]

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@Anonymous wrote:

I am sorry but this doesnt make since to me. How can any Mortgage Co  ask for some of the items you listed? 

Message Edited by lil-ol-me on 10-19-2008 05:36 PM

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they arent now.... and i doubt that they will 

[Anonymous]

Glad to hear a professional chime in and agree.