topic Re: Please Critique in Mortgage Loans

Please Critique

Anonymous — Wed, 19 Mar 2008 13:46:25 GMT

I need someone to help me determine if we are considered to have too much debt, or doing ok from a bank's stand point. I think we are doing ok given that we are not over our heads but I sometimes wonder if we are pushing it.

Our monthly debt and income:

Monthly income net: 7220

Auto loans: 1200

3 CC Balances total: $7000. I pay 150 on each.

Current Mortgage payment: $1000. Just sold this house.

Would we be able to afford a mortgage payment of $2600/month if the Credit Cards are all paid off?

Thanks for any sort of help.

Re: Please Critique

Anonymous — Wed, 19 Mar 2008 14:37:32 GMT

From what I have been told you can carry a max DTI of 45% of Gross pay to get a conventional mortgage.

Re: Please Critique

Anonymous — Wed, 19 Mar 2008 14:41:14 GMT

No, that can't be correct. I didn't think that there was a concrete DTI lenders look at. BTW, we are seeking VA not conventional.

Re: Please Critique

tryingtogetitrightnow — Wed, 19 Mar 2008 15:17:06 GMT

From what I've read VA actually prefers 41%. However, they can go up from there with compensating factors. Here are a couple links:

http://www.valoans.com/va_facts_debt.cfm

http://www.veteranloancenter.com/handbook/debt_income_ratio.html

@Anonymous wrote:
No, that can't be correct. I didn't think that there was a concrete DTI lenders look at. BTW, we are seeking VA not conventional.

Re: Please Critique

Junejer — Wed, 19 Mar 2008 15:35:09 GMT

TA, lenders use gross income to do D/I calculations.

Re: Please Critique

BallBounces — Wed, 19 Mar 2008 15:53:16 GMT

A couple notes:

Your exisitng (or past) mortgage has no bearing on your future DTI calculation.
If your CCs are paid off, they have no bearing on your DTI.
Use your GROSS income to calculate DTI.
YOU should decide if you can afford 2600/month, the LENDER will decide if they will grant the loan
1200 is a hefty monthly chunk for auto loans that will add to your back end DTI

Message Edited by VistaV on 03-19-2008 08:53 AM

Re: Please Critique

Anonymous — Wed, 19 Mar 2008 17:21:00 GMT

Your exisitng (or past) mortgage has no bearing on your future DTI calculation.

If your CCs are paid off, they have no bearing on your DTI.

Use your GROSS income to calculate DTI.

YOU should decide if you can afford 2600/month, the LENDER will decide if they will grant the loan

1200 is a hefty monthly chunk for auto loans that will add to your back end DTI

Very true but I just threw those numbers in there because if I didn't I would get questions like: do you have other debts? etc.

I know I can afford that much in a mortgage payment only because we don't spend on things like going out to eat, etc. We also don't have children (not with car payments like we have now).

But how much is too much debt for a lender to say ok you have decent credit but we cannot lend to you because you are too deep? Is there a cap DTI?

Re: Please Critique

BallBounces — Wed, 19 Mar 2008 18:06:34 GMT

trashyart2000 wrote:
But how much is too much debt for a lender to say ok you have decent credit but we cannot lend to you because you are too deep? Is there a cap DTI?

Now that is the 64K question (and I asked it in another thread yesterday).

It varies by lender and situation. If you are at 30 front end and 40 back end DTI, I think you will be OK with most lenders

Re: Please Critique

Anonymous — Wed, 19 Mar 2008 18:08:12 GMT

64K huh? Why so low?

Re: Please Critique

Junejer — Wed, 19 Mar 2008 19:38:27 GMT

Times, they are a-changing. When I first got in banking (1993), mortgage lenders were looking at 28/36 front to back. Then, the back crept up to 40%, 45%, 50%. I even heard of some lenders looking at 55% back end. Many don't even worry about PITI D/I anymore, just total D/I. They are starting to pull back towards more historical lending though.

Re: Please Critique

Anonymous — Mon, 24 Mar 2008 06:24:29 GMT

My hope is to finalize a lease/purchase option next month and I think I have everything in order. For the past year I have been working to clean up my CC with some success. Current mid score is 635, up from 580 eight months ago. No real baddies, just heavy revolving cc use and balances. My DTI is 38% (which includes a new mortgage of $1600) total revolving balances of about $18,000 and a consumer line of credit of $11,000. My utilization is high I know, but once I finalize the purchase of my house (I am hoping for an FHA loan), I will be able to eliminate my current cc debt. I have 30+ years credit history, 15 years working for the same employer at a current salary of 75K. I am an empty nester.

Everything I have read on these boards talk about DTI. I understand that my high revolving balances is keeping my FICO scores low, but will the high utilization of credit put me at risk of not being approved for a mortgage? From what I have read, my 635 score will not hold be back from finalizing my house purchase.

Am I fooling myself here?