Denied for Home Equity Loan?

[Anonymous]

Hello,

I am 29 years old.  Gross income of $41,000/year with a credit score of 711.

I own a home, which my father purchased for me as a gift for $230,000.00 with cash in 07/2015.  I have no mortgage, my utilities are no more than $120-$150/month. The appraised value of my home is $300k.  I have no other bills except for car insurance/home insurance every 6 months. 

I previously had a 5-year car loan for $20k but paid it off in 1 year.

My only debt now is $5,100.00 on a credit card.

I applied for a HELOC with BOA for $160k but was denied for two reasons:

1. Debt to income ratio is 47% while bank allow 42%.

2. Information on application is not verificable.

My only debt is my $5k cc balance.  I called and left 2x messages to my heloc app processor and she neve called be back.  So I am trying to figure out exactly why I am being denied for my application.  Primary reason for heloc is to remodel update a few sections of the home.

My credit score is not the best as I have made a lot of foolish decisions in the past, ie late payments/revolving credits.  I may go ahead and just pay off my entire $5k cc balance and try to reapply again.  I figure that my remodel figure would be close to $30k but the mortgage specialist listed my app at $160k. 

Any thoughts on how I should aproach this?  Try with another bank or a CU?

[StartingOver10]

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@Anonymous wrote:

Hello,

I am 29 years old.  Gross income of $41,000/year with a credit score of 711.

I own a home, which my father purchased for me as a gift for $230,000.00 with cash in 07/2015.  I have no mortgage, my utilities are no more than $120-$150/month. The appraised value of my home is $300k.  I have no other bills except for car insurance/home insurance every 6 months. 

I previously had a 5-year car loan for $20k but paid it off in 1 year.

My only debt now is $5,100.00 on a credit card.

I applied for a HELOC with BOA for $160k but was denied for two reasons:

1. Debt to income ratio is 47% while bank allow 42%.

2. Information on application is not verificable.

My only debt is my $5k cc balance.  I called and left 2x messages to my heloc app processor and she neve called be back.  So I am trying to figure out exactly why I am being denied for my application.  Primary reason for heloc is to remodel update a few sections of the home.

My credit score is not the best as I have made a lot of foolish decisions in the past, ie late payments/revolving credits.  I may go ahead and just pay off my entire $5k cc balance and try to reapply again.  I figure that my remodel figure would be close to $30k but the mortgage specialist listed my app at $160k. 

Any thoughts on how I should aproach this?  Try with another bank or a CU?

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The first mistake was applying to one of the big box banks - go with a lender that only handles mortgages and originates, underwrites and funds their own loans. 

I think the thing that killed the application was the sentence in red above  The sentence highlighted on your post above - what happened here?  Are you filing tax returns and getting pay stubs etc?  Or are you in a cash business? Something must have been on the application that generated the statement that your info isn't verifiable.  Could have been an error with BOA too.  

Another issue might be the size of the loan on your income.  A good LO will be able to work closely with you to determine the size of loan appropriate for your income.

[bartoe]

Where do you bank at?  Sometimes if you go through your primary financial instutiton they will work better with you than some random fiancial institution.  I would check out your local banks as well as Credit Unions.  

[Anonymous]

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@Anonymous wrote:

Hello,

I am 29 years old.  Gross income of $41,000/year with a credit score of 711.

I own a home, which my father purchased for me as a gift for $230,000.00 with cash in 07/2015.  I have no mortgage, my utilities are no more than $120-$150/month. The appraised value of my home is $300k.  I have no other bills except for car insurance/home insurance every 6 months. 

I previously had a 5-year car loan for $20k but paid it off in 1 year.

My only debt now is $5,100.00 on a credit card.

I applied for a HELOC with BOA for $160k but was denied for two reasons:

1. Debt to income ratio is 47% while bank allow 42%.

2. Information on application is not verificable.

My only debt is my $5k cc balance.  I called and left 2x messages to my heloc app processor and she neve called be back.  So I am trying to figure out exactly why I am being denied for my application.  Primary reason for heloc is to remodel update a few sections of the home.

My credit score is not the best as I have made a lot of foolish decisions in the past, ie late payments/revolving credits.  I may go ahead and just pay off my entire $5k cc balance and try to reapply again.  I figure that my remodel figure would be close to $30k but the mortgage specialist listed my app at $160k. 

Any thoughts on how I should aproach this?  Try with another bank or a CU?

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Within the confines of this question, your statement is not accurate. The debt-to-income ratio includes the debt payments that will arise from the HELOC against your monthly income. This will constitute the bulk of your debt, as the cc debt probably counts for $50 per month of debt. If you lower the amount that you are seeking, you will fit in.

[Anonymous]

I am banking with BOA and may try with a credit union like BECU. 

When I re-apply I will lower the amount I seek and see if I qualify.

Do you guys think that by having the $5k cc balance I should pay it off before I apply?

[StartingOver10]

If you have the funds to pay it off, talk with the loan officer first to see if they want you to pay it off.  A good LO will guide you through your mortgage application.