topic Re: Modern ARM qualification (DTI) in Mortgage Loans

Modern ARM qualification (DTI)

Revelate — Thu, 23 Jan 2014 03:07:04 GMT

So ARM's were the four letter word of the mortgage crisis; I've heard some things have changed so my question is regarding DTI calculation... is it made on:

The introductory rate
The market average rate (for conforming or jumbo loans)
The maximum ARM rate

I only question this as I may have to go the starter home route (non-kid-ideal home, no real yard, sub-optimal school district, fewer than 3 bedrooms, etc) and if expecting to turn it over within 7 years anyway after trying to conserve my assets by going with a cheaper home, but affordability even in this situation might either be equivalent or more difficult than simply doing a fixed rate mortgage.

Many thanks!

Re: Modern ARM qualification (DTI)

ShanetheMortgageMan — Thu, 23 Jan 2014 03:32:23 GMT

On a 3-year or 5-year ARM, usually qualifying is done based on the higher of the Note rate + 2% or the fully indexed rate. On a 7-year & 10-year ARM, usually qualifying is done at the note rate.

Re: Modern ARM qualification (DTI)

StartingOver10 — Thu, 23 Jan 2014 03:35:03 GMT

Shane, what index and margin is typical now for jumbo's?

Re: Modern ARM qualification (DTI)

Revelate — Thu, 23 Jan 2014 03:39:38 GMT

Thank you again Shane, apparently going to owe you many beers in short order at this rate.

Also thank you S10 for your advice in the other thread as well.

Re: Modern ARM qualification (DTI)

ShanetheMortgageMan — Thu, 23 Jan 2014 05:34:40 GMT

@StartingOver10 wrote:
Shane, what index and margin is typical now for jumbo's?

Usually they are based on the 1-year LIBOR and a 2.25% margin, with a 2/2/5 cap structure.

Revelate, Delirium Tremens or Trappistes Rochefort would do just fine

Re: Modern ARM qualification (DTI)

Revelate — Thu, 23 Jan 2014 18:33:43 GMT

@ShanetheMortgageMan wrote:
@StartingOver10 wrote:
Shane, what index and margin is typical now for jumbo's?
Usually they are based on the 1-year LIBOR and a 2.25% margin, with a 2/2/5 cap structure.

Revelate, Delirium Tremens or Trappistes Rochefort would do just fine

Ah Belgian connoisseur, good man, with excellent style and taste!

Re: Modern ARM qualification (DTI)

ShanetheMortgageMan — Fri, 24 Jan 2014 02:51:41 GMT

I have a few of them in my fridge staring at me. Since I've sworn off alcohol this month it's been absolute torture opening the fridge. Feb. 1st can't get here quick enough.

Re: Modern ARM qualification (DTI)

Revelate — Fri, 24 Jan 2014 05:22:43 GMT

@ShanetheMortgageMan wrote:
I have a few of them in my fridge staring at me. Since I've sworn off alcohol this month it's been absolute torture opening the fridge. Feb. 1st can't get here quick enough.

Heh, that's one New Year's resolution I couldn't make; I don't partake of that much alcohol these days but sometimes...

Well at some point I'll restock you since I strongly suspect that not only am I going to continue to ask a bunch of random and/or stupid questions, and it's entirely too likely at this point I'm going to be near your backyard with my next gig.