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Regular Contributor
Posts: 181
Registered: ‎04-21-2010
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Questions: 401K Loan/ DTI/ Affortability

Hi Everyone,

 

I am new to the mortgage boards, but spent a few years on the credit boards... Smiley Happy

 

I have a $30,000 401K loan I took out a couple of months ago to pay off most of my debt; roughly $250 is being pulled out of every paycheck to payback the loan. In general, will this $500/month expense count in my DTI?

 

My wife and I are thinking about seeing a loan offer by the end of this year and I also have a few questions regarding the pre-qual/ approval process...

 

Together, our income is $125,000 per year (excluding bonuses). She has no debt, except for a $360 monthly car payment, and scores in the 780s. I have some debt, a student loan of about $25,000 (deferred until 5/2014), a $4000 credit card balance (which will be paid off by the end of this year), a $580 monthly car payment, a $12,000 personal loan (which we are working on paying off right now -- monthly payment is $380) and my 401K loan. My scores, right now, are around the 730 range.

 

We're hoping to qualify for a $500-520K home loan with a $20K down payment for property values at $520-$540K, that would mean a monthly mortgage payment of roughtly $2900 per month (PITI). Is this possible?

Current Scores (as of 04/22/13): EQ FICO=795; TU FICO =766; EX =763

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Regular Contributor
Posts: 181
Registered: ‎04-21-2010
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Re: Questions: 401K Loan/ DTI/ Affortability

ok, I think I answered my own question regarding a 401K loan counting towards my DTI. In general, a 401K loan will not count in a DTI calculation when applying for an FHA loan; not sure about a conventional loan.

 

Still curious if we would qualify for a $500+ loan with our income and debt... BTW, we're in California, Ventura County.

 

Current Scores (as of 04/22/13): EQ FICO=795; TU FICO =766; EX =763

BankAmericard Cash Rewards ($20,000) | Amex Platinum (NPSL) | Amex Clear ($20,000) | Amex Blue Cash ($2,500) | Chase Freedom ($11,000) | PenFed Platinum Cash Rewards ($5,000) | Barclaycard Apple ($5,000) | Discover More ($6,500) | BankAmericard Cash Rewards [Authorized User] ($15,000)
Valued Contributor
Posts: 1,115
Registered: ‎10-31-2011
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Re: Questions: 401K Loan/ DTI/ Affordability

401k loan is a loan you are taking out against yourself so the generally dot count it against your DTI 

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Posts: 13,892
Registered: ‎04-15-2011
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Re: Questions: 401K Loan/ DTI/ Affordability


beb86 wrote:

401k loan is a loan you are taking out against yourself so the generally dot count it against your DTI 


+1

 

As far as the other question, make sure you factor in taxes, HOA fees, insurance, etc. when trying to figure out the affordability.

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Registered: ‎09-16-2011
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Re: Questions: 401K Loan/ DTI/ Affordability

My husband and I make combined 180k per year...  with that being said, we don't live in Cali, and we were able to buy a large house that is very comfortable for us for around 160k and we got a 20 yr mortgage.  We wouldn't have ever gone that high on DTI, or on monthly housing payment but that's easy for us to say since we live in Oklahoma and cheaper houses are readily available. The question of affordability is really something that only you can answer considering what's right for your family.

 

Keep in mind that if an installment loan has less than 10 payments remaining, it won't count in your DTI.  also, 401k loans won't count in your DTI. If the cars are fairly new, with a longer term remaining, you may be able to refinance them at a better rate. I don't know what rate you're paying but if you're paying more than 4% then you'd save a substantial amount of cash by refinancing cars.

 

Your income will be averaged over 2 years, and it will include bonus income...  so for example... My bonus for 2010 was 14k, my bonus for 2011 was 16k...  Average bonus income of 15k was added into my income calculations. That may help you out.   What time of the year does your bonus pay out, and how much is the bonus usually?

 

If the bonus is substaintial, then it can really make the difference in the amount that you are approved for.

 


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Posts: 7,225
Registered: ‎09-16-2011
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Re: Questions: 401K Loan/ DTI/ Affortability


Iincognito wrote:

Hi Everyone,

 

I am new to the mortgage boards, but spent a few years on the credit boards... Smiley Happy

 

I have a $30,000 401K loan I took out a couple of months ago to pay off most of my debt; roughly $250 is being pulled out of every paycheck to payback the loan. In general, will this $500/month expense count in my DTI?

 

My wife and I are thinking about seeing a loan offer by the end of this year and I also have a few questions regarding the pre-qual/ approval process...

 

Together, our income is $125,000 per year (excluding bonuses). She has no debt, except for a $360 monthly car payment, and scores in the 780s. I have some debt, a student loan of about $25,000 (deferred until 5/2014), a $4000 credit card balance (which will be paid off by the end of this year), a $580 monthly car payment, a $12,000 personal loan (which we are working on paying off right now -- monthly payment is $380) and my 401K loan. My scores, right now, are around the 730 range.

 

We're hoping to qualify for a $500-520K home loan with a $20K down payment for property values at $520-$540K, that would mean a monthly mortgage payment of roughtly $2900 per month (PITI). Is this possible?


You may look at the FHA limits for your county...  Ventura county has an FHA limit of 729k.   I would look at an FHA mortgage with a 3% down payment... use any extra cash to pay off or down the installment loans. Your sellers credit can be up to 6% towards closing costs, so keep that in mind when you make offers... If you want to chat with an FHA lender... I can give you mine that I used for my FHA streamline refinance.  She was very helpful about outlining requirements and giving information... And she WONT pull credit until you tell her.  She also will reply within 30 minutes if she's in the office...  The only time she took more than 12 hours to respond was when she was home sick... but she emailed me back the following morning.   I started chatting with her in May, she didn't pull my credit til july 30...  and she only pulled it once.  I closed on my streamline refi on 10/22/12.

 

If you want her name and contact info, feel free to PM me.


Starting Score: 08/29/2011 TU 671 EQ 674
Current Score: TU 754 EQ 694 EX 697
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