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Old 02-09-2009, 05:55 AM
 
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I've seen that loans to be paid off in 10 months or less are not included when figuring debt:income and was wondering if that is true 100% of the time or does this depend on the lender? Does anyone know if it is a hard line rule or if there is, say, 12-13 months left on an auto loan at the time of application, might it still possibly be excluded?

Also, is there any issue with too much available credit when applying for a mortgage? We have quite high limits on CCs and most of it is open. Will lenders look at what we could potentially charge negatively? Do they even care what the balances/limits are or just what the current minimum payments are when it comes to determining a mortgage limit/approval?

Thanks!
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Old 02-09-2009, 10:35 AM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,102,432 times
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Quote:
Originally Posted by overclocker View Post
I've seen that loans to be paid off in 10 months or less are not included when figuring debt:income and was wondering if that is true 100% of the time or does this depend on the lender? Does anyone know if it is a hard line rule or if there is, say, 12-13 months left on an auto loan at the time of application, might it still possibly be excluded?

Also, is there any issue with too much available credit when applying for a mortgage? We have quite high limits on CCs and most of it is open. Will lenders look at what we could potentially charge negatively? Do they even care what the balances/limits are or just what the current minimum payments are when it comes to determining a mortgage limit/approval?

Thanks!
Pretty sure that the 10 month rule stands across the board. Available credit is not an issue with a mortgage lender. Our primary concern is credit score, debt to income ratio, and loan to value.
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Old 02-09-2009, 10:40 AM
 
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Originally Posted by Daddys///M3 View Post
Pretty sure that the 10 month rule stands across the board. Available credit is not an issue with a mortgage lender. Our primary concern is credit score, debt to income ratio, and loan to value.
I'm curious. What's the typical maximum debt to income ration you look for?
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Old 02-09-2009, 10:50 AM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,102,432 times
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Originally Posted by ZugZub View Post
I'm curious. What's the typical maximum debt to income ration you look for?

Depends on what type of loan program we are talking about. Conventional loans use a guideline of 28% for the mortgage payment and 36% for the total long term debt (all loans, credit cards, etc). FHA uses a guideline of 31% for the housing payment and 43% for the total debt. When reading guidelines DTI ratios will usually look like 31/43, for housing and total debt. Now, these are just guidelines and it's possible that automated underwriting findings can come back with an allowable DTI ratio above these guidelines, provided the algorithm likes the risk factors involved. VA loans usually don't go over 45% total, and that is with a very large amount of compensating factors. VA also has a residual income guideline, which means that they will take into consideration your tax liability as well as maintenance and utilities on the home you are purchasing to determine if your net income is sufficient to support the mortgage payment as well as yourself and your family. These guidelines vary by family size and region of the country.
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Old 02-09-2009, 11:12 AM
 
1,788 posts, read 4,152,301 times
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Quote:
Originally Posted by Daddys///M3 View Post
Depends on what type of loan program we are talking about. Conventional loans use a guideline of 28% for the mortgage payment and 36% for the total long term debt (all loans, credit cards, etc). FHA uses a guideline of 31% for the housing payment and 43% for the total debt. When reading guidelines DTI ratios will usually look like 31/43, for housing and total debt. Now, these are just guidelines and it's possible that automated underwriting findings can come back with an allowable DTI ratio above these guidelines, provided the algorithm likes the risk factors involved. VA loans usually don't go over 45% total, and that is with a very large amount of compensating factors. VA also has a residual income guideline, which means that they will take into consideration your tax liability as well as maintenance and utilities on the home you are purchasing to determine if your net income is sufficient to support the mortgage payment as well as yourself and your family. These guidelines vary by family size and region of the country.

Thanks, that was very informative!
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Old 02-09-2009, 02:37 PM
 
13 posts, read 46,337 times
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Quote:
Originally Posted by Daddys///M3 View Post
Pretty sure that the 10 month rule stands across the board. Available credit is not an issue with a mortgage lender. Our primary concern is credit score, debt to income ratio, and loan to value.
Nice, thanks for the info. Any idea if there is wiggle room on the 10 months? If it's a strict limit, I'd need to start making double payments this month.

I'm glad you brought up the "family size" thing because I've actually wondered about that out of sheer curiosity. I thought it was a bit skewed since a family of 2 making $xx dollars could have noticeably more income left over than a family of 5 making the same $xx does. Would they have a tendency to be more lenient with larger families because of their size or with smaller families because of less potential expenses? Is it VA loans only that delve that far into it?
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Old 02-09-2009, 03:04 PM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,102,432 times
Reputation: 952
Quote:
Originally Posted by overclocker View Post
Nice, thanks for the info. Any idea if there is wiggle room on the 10 months? If it's a strict limit, I'd need to start making double payments this month.

I'm glad you brought up the "family size" thing because I've actually wondered about that out of sheer curiosity. I thought it was a bit skewed since a family of 2 making $xx dollars could have noticeably more income left over than a family of 5 making the same $xx does. Would they have a tendency to be more lenient with larger families because of their size or with smaller families because of less potential expenses? Is it VA loans only that delve that far into it?
To my knowledge there is no wiggle room on the 10 month rule. The family size guideline for determining residual income is strictly a VA guideline.
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Old 02-09-2009, 03:12 PM
 
13 posts, read 46,337 times
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Thank you!
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Old 03-18-2009, 04:23 PM
 
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Does anyone know the allowed debt ratio on mortgage loans on Case bank loans.
We are applying for borrowers assistance program & need to complete monthly expenses
form which is critical to qualifying for a reduction in interest rate on loans.

Jim
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Old 03-18-2009, 07:00 PM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,102,432 times
Reputation: 952
Quote:
Originally Posted by jim19643 View Post
Does anyone know the allowed debt ratio on mortgage loans on Case bank loans.
We are applying for borrowers assistance program & need to complete monthly expenses
form which is critical to qualifying for a reduction in interest rate on loans.

Jim
The ratios I mentioned above should be a good start. However it sounds to me (based on the need to complete monthly expens forms and interest rate reduction) like you are working on a loan modification in which case I couldn't give you any specific numbers.
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