topic DTI for Heloc? in Mortgage Loans

DTI for Heloc?

Anonymous — Fri, 06 Jul 2018 21:50:56 GMT

I am closing on a mortgage in a few weeks. I will have substantial equity after I close, over 200k. (put 40% down). I want to immediately obtain a HELOC for like 150k. I plan to use this to buy a cheap property to help my daughter move closer to me while she gets her life together and finishes college. She will just pay the mortgage to me as rent.

My income from all sources is $7981 a month ($2568 self employment, got this figure by averaging 2 years as reported to IRS, $3813 W2 salary and $1600/mo commission income).

I read that alot of HELOC companies allow 49% DTI. If so, this will be $3910 max for all expenses. My primary housing payment will be $2600. Problem is I have 2 car loans totalling almost $1000/mo. This leaves me with only $260 a month "disposable" in the DTI calculation. Can't get a very high HELOC with that remaining as income.

I want to apply anyway and let them pay off one of the cars which will free up about 500 a month and will allow my DTI to be in range.

What do you all suggest? Who should I get a HELOC from? My CU that I do business with? Wells Fargo? Suggestions? Will they factor in the HELOC paying off the car to allow for higher DTI?

Are there HELOC's that allow for higher DTI?

Thanks

Re: DTI for Heloc?

Anonymous — Sat, 07 Jul 2018 00:21:55 GMT

First, I’ll mention I work in banking and have experience with HELOCs. If you don’t bank primarily with Wells, don’t even bother especially with that high of a DTI.

Most applications will allow us (loan officers) a place to document the car payoff with proceeds. It’s the best way to show the underwriters what your plan is and does change your DTI accordingly...

However, you may still find it hard to be approved for the amount you want. I can’t say I’ve ever seen someone be approved at 49% DTI. Income and credit score will play a huge role in that approval.

Generally speaking, credit unions will hold a tight reign on lending or will cost more in interest.

If Wells is your PFI than I’d say they might be a good bet, but with your ratios that interest rate will be high.

Re: DTI for Heloc?

Revelate — Sat, 07 Jul 2018 15:03:30 GMT

Hmm, I have a somewhat different opinion even if Paying4it's advice does play out as I agree your ratios are high.

Socialize your situation with a few CU's directly, and if you talk to a few you're going to find their policies and UW guidelines are all over the map when it comes to HELOC's.

It costs you basically nothing to have the conversation, and you might wind up doing better than what's been suggested. Maybe.