loan approval and equity

[natasjlp]

alright - I will definitely start on that path, thanks.

Could you expand on how adding someone to the mortgage works? there is aprox 286k left on the mortgage, does that figure into it? How much does my income/debt ratio count and how much do the units income count? Do I only need to qualify for half of the remaining mortgage like 143k?

I think I will add the additional units regardless (who wouldn't want the extra income?) and will definitely speak with someone about what we need to do about making them legitimate. 

[ShanetheMortgageMan]

Welcome.  When you add someone to qualify for a mortgage all individuals debts, credit, income, etc. is taken into consideration to qualify all together - no individual has to qualify on their own, and no one person qualifies for a portion of the mortgage, everyone qualifies for it all.

[Anonymous]

HI SHANE, DO I QUALIFY FOR FHA AND LOAN APPROVAL?

PRE-APPROVED GMAC

SCORES 567, 607, 614

INCOME $ 120,000 ANNUAL (LAST 3 YEARS)

RESERVES $30,000

ONLY MONTHLY IS AUTO FOR $534

RENT-FREE

NO LATES IN THE LAST 12 MONTHS

ALL BALANCES ARE $0

LOAN AMOUNT IS 255K

[natasjlp]

alright so say I qualify for 0 nothing, not negative just nothing and my mother who is on the mortgage already doea qualify (and when you mean qualify - because she is already on it - qualifies for the mortgage remaining?) and I don't hurt our combined qualification. If I am then added, when could we remove her name?

I would definitely like more info about combined qualifying for an existing mortgage where there is a bunch of equity already.

[ShanetheMortgageMan]

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@natasjlp wrote:

alright so say I qualify for 0 nothing, not negative just nothing and my mother who is on the mortgage already doea qualify (and when you mean qualify - because she is already on it - qualifies for the mortgage remaining?) and I don't hurt our combined qualification. If I am then added, when could we remove her name?  When you could qualify on your own then you'd be able to refinance the mortgage out of both of your names and into your name only... but if you are self-employed and qualify for $0 now, that usually means your income isn't sufficient, and in order to make your income sufficient you'll need 2 years of tax returns filed showing an average of the income you need to have in order to qualify.

I would definitely like more info about combined qualifying for an existing mortgage where there is a bunch of equity already.  What info specifically?

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[natasjlp]

thanks for bearing with me. I am trying to understand how and what they are looking for in order to add someone. It sounds like if my mother already qualifies for the mortgage, then she could pretty much add anyone to the mortgage she wanted, granted that person is not a negative risk (which I am not even sure if that is possible).

Then a seperate question is if and when i am on the mortgage, how does the process of being qualified on my own work. Do I need to be qualified for the 286k left on the mortgage? how does qualifying for a refi differ? If I am on the mortgage how much does the equity to debt ratio count towards being 'qualified' on my own? How much does the shown income from the units count? Is it possible to qualify with no personal income (not my case, just want to understand the process) with a high enough unit rental income from the property?

I know a lot of questions, but i figure this is the place to ask - thanks!

[ShanetheMortgageMan]

No worries, it sounds like you just need some specific help so being very specific in your questions helps people help you.  Adding someone to qualify for a refinance isn't very involved at all, it's just like refinancing with only the existing person except for now there is 1 more person, just means documentation for both people will be needed, both will be evaluated... it's like refinancing with 1 person but times 2.  When that new person being added to the mortgage is residing in the home that is being refinanced, the process is no more complicated than that.  You are correct in your assumption in paragraph 1, if your mom already qualifies then as long as you don't bring on too much negative risk, then odds are you would both qualify if you went for the refinance together.

For paragraph 2, are you talking about when eventually you'd be refinancing in your own name, without your mother, down the road?  Or are you talking about the refinance with both of you together?

If it's down the road, then whatever loan amount your mom needs you to obtain in order to pay off the existing mortgage + pay her what she needs (the reason she wants $400k if it'd happen now), if that is $286k or $400k, you would need to qualify for on your own (or if you are married/significant other you could add them to help qualify).   

I believe the term you are looking for is "loan to value ratio" or LTV for short, the "debt to income ratio" applies to your income/debt payments.... the LTV need to be below a certain percentage depending on the loan program you are attempting to qualify for.  When you are talking about refinancing and taking cash out, FHA permits an LTV up to 85%, VA (if you are an eligible Vet) permits 100% LTV, USDA only does rate/term refinances with no cash out (and you must already be in a USDA mortgage), and conventional allows cash out to 90% but because of other limitations 80% is the industry standard now.  So given that your LTV, even if you were to have a new $400k loan amount, would be roughly 50%.... you are looking good.  That is such a good LTV that it could compensate for other areas in your qualifying profile that aren't as strong, such as a slightly high debt to income ratio or perhaps blemishes on credit, or even lack of available reserves after closing.

 
If you scroll back I touched on the rental income part, if the property has been owned for at least 2 years the qualifying rental income will be taken off the tax returns (your mom's since she is the current owner), Schedule E to be exact... if the property hasn't been owned long enough to report the income on the tax returns then a copy of the current leases will be used and usually 25% of the rental income is taken off due to expected vacancy/maint. factors.  If there is sufficient qualifying rental income to not need employment income to qualify then that is OK.