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Old 06-04-2018, 08:24 PM
 
Location: Research Triangle Area, NC
3,069 posts, read 2,079,298 times
Reputation: 4520

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Quote:
Originally Posted by BoBromhal View Post
not when they're pre-qualifying you with a credit inquiry and they can all see it's 3-5 mortgage companies.

which does remind me to tell the OP - do NOT open ANY new credit accounts until you close your mortgage. Not even at a furniture store that tells you "12 months no interest" and all you've done is order the furniture for delivery 4 weeks after closing. NO NEW CREDIT
UNLESS you total your car the day after your DD is up and you have no choice but to finance a new one because your cash is tied up in the home purchase.....and your loan officer tells you that you're insane but he can make it work but you know he resents you for it....and then two years later you end up working in the same office with him....and you laugh it off...and get your first client to switch from 0% down ARM from a credit union to a much better conventional fixed 3% down loan with him and now you're definitely cool.....
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Old 06-04-2018, 10:05 PM
 
1,459 posts, read 333,227 times
Reputation: 1667
Quote:
Originally Posted by BoBromhal View Post
not when they're pre-qualifying you with a credit inquiry and they can all see it's 3-5 mortgage companies.

which does remind me to tell the OP - do NOT open ANY new credit accounts until you close your mortgage. Not even at a furniture store that tells you "12 months no interest" and all you've done is order the furniture for delivery 4 weeks after closing. NO NEW CREDIT
Borrowers must be aware of “the split” for their type of mortgage. A USDA Direct loan, for example, allows 29/41, or your mortgage PITI payment to be up to 29% of your gross income, and your total debt payments, including mortgage, to be 41% of your gross income.

100,000 income
/ 12 months =
8,333 monthly gross
* 0.41 =
3,416 monthly recurring debt payments
which breaks down into:
2,416 monthly mortgage PITI
+
1,000 monthly non-mortgage debt (car payments, student loan payments)

If the total of your car payment + other debt payments = more than $1000 in this case, it reduces your maximum approved mortgage payment amount, dollar for dollar.

Also, beware, banks won’t just use whatever your statement says is your minimum payment. They use the higher of your minimum payment or 2% of the balance.

Finally, you can’t buy more house by paying taxes and homeowners insurance annually. Your premiums and taxes are figured in monthly when determining an approval amount.
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Old 06-05-2018, 06:43 AM
 
Location: MID ATLANTIC
7,600 posts, read 17,629,190 times
Reputation: 8084
Everyone keeps missing there are two progams offered by USDA, Guaranteed and Direct. I have no clue what Direct requires, that program cuts out the middleman and handles the low income population. They must cut out the middleman to be able to offer well below market rates. How they qualify and underwrite is published, but never being involved, it's hard to say if the numbers can be pushed.

On the Guaranteed USDA program, there are published ratios, but they are simply a guideline. The industry is actually trending to a single DTI. USDA uses the GUS (government underwriting system) for automated loan approvals. This is a similar system to Fannie's DU or Freddie's LP. A credit score is required, and if present, the computer will approve/deny the loan, but rarely are the ratios at their published guidelines. There are other factors considered, some which we know about, others we have no clue. If any debt obligation is close to being paid in full within 10 months, that debt is removed from the equation. I believe on government backed loans it still matters if it is revolving or installment debt (meaning revolving is counted regardless). Assets not used for the purchase (reserves) could help support a ratio over 45%. Or, in the case of no debt, a single ratio could allow for a higher monthly payment. (This ties into the way credit reports now provides a 2 year payment/balance data. Just paid off that 10K credit card? You aren't fooling anyone. Will you get the same max DTI as the same person that has no debt showing for 2 years? That's an unknown right now).

Where the published guidelines really come into consideration is with the borrower with no score. And this is true whether the loan is USDA, VA, FHA, or conventional. No score borrowers are manually underwritten. So while ratios are important and how they are applied, matters, it is important to remember they are a guideline. Everyday we see those ratios pushed, especially with the automated systems, which is about 80% of the loans.
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Old 06-05-2018, 08:01 AM
 
126 posts, read 41,350 times
Reputation: 302
This thread shows me that we haven’t really learned much from 2008, except how to wrap things up in different paper and add a bow.
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Old 06-05-2018, 09:13 AM
 
9,280 posts, read 7,300,835 times
Reputation: 22786
Quote:
Originally Posted by Greeniejeans View Post
This thread shows me that we haven’t really learned much from 2008, except how to wrap things up in different paper and add a bow.
This thread has nothing to do with the market crash. Escrow and credit report fees existed way before the crash.
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Old 06-05-2018, 10:00 AM
 
10,272 posts, read 6,506,221 times
Reputation: 10852
Quote:
Originally Posted by SmartMoney View Post
Everyone keeps missing there are two progams offered by USDA, Guaranteed and Direct. .
Not everyone, I mentioned this in this thread before.
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Old 06-05-2018, 11:13 AM
 
1,459 posts, read 333,227 times
Reputation: 1667
Quote:
Originally Posted by SmartMoney View Post
Everyone keeps missing there are two progams offered by USDA, Guaranteed and Direct. I have no clue what Direct requires, that program cuts out the middleman and handles the low income population. They must cut out the middleman to be able to offer well below market rates. How they qualify and underwrite is published, but never being involved, it's hard to say if the numbers can be pushed.

On the Guaranteed USDA program, there are published ratios, but they are simply a guideline. The industry is actually trending to a single DTI. USDA uses the GUS (government underwriting system) for automated loan approvals. This is a similar system to Fannie's DU or Freddie's LP. A credit score is required, and if present, the computer will approve/deny the loan, but rarely are the ratios at their published guidelines. There are other factors considered, some which we know about, others we have no clue. If any debt obligation is close to being paid in full within 10 months, that debt is removed from the equation. I believe on government backed loans it still matters if it is revolving or installment debt (meaning revolving is counted regardless). Assets not used for the purchase (reserves) could help support a ratio over 45%. Or, in the case of no debt, a single ratio could allow for a higher monthly payment. (This ties into the way credit reports now provides a 2 year payment/balance data. Just paid off that 10K credit card? You aren't fooling anyone. Will you get the same max DTI as the same person that has no debt showing for 2 years? That's an unknown right now).

Where the published guidelines really come into consideration is with the borrower with no score. And this is true whether the loan is USDA, VA, FHA, or conventional. No score borrowers are manually underwritten. So while ratios are important and how they are applied, matters, it is important to remember they are a guideline. Everyday we see those ratios pushed, especially with the automated systems, which is about 80% of the loans.
SmartMoney is extremely smart.

Yes, there are some scoring methods, such as the FICO Auto Score 2, which score based on HOW you're attacking your debt. If you're only making the minimum payment on your accounts, even with a perfect payment history, you'll likely not be able to get very close to the highest score.

Despite this, if you're thinking you'll buy both a home and a vehicle in the next few years, always, ALWAYS buy the house first. It's much easier to get approved for a car after buying a house, than the opposite. Take your time, try to find a credit union, B.Y.O.Financing if you're not paying cash.
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Old 06-05-2018, 11:32 AM
 
10,272 posts, read 6,506,221 times
Reputation: 10852
Quote:
Originally Posted by TarHeelNick View Post
UNLESS you total your car the day after your DD is up and you have no choice)
You mean if you didn't have collision insurance nor uninsured underinsured coverage?
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Old 06-05-2018, 12:37 PM
 
Location: Union County
5,702 posts, read 8,139,182 times
Reputation: 4708
Worth it for the chuckle reading though this... even when it obviously jumped the shark into trollville.

In the end, like with most financial transactions, it comes down to leverage. If you really want to negotiate, using a government assistance program to buy a house is not the way to go. Even then, you can get fees "waived" and find they they slip in something else. Mortgages can be complex.

Don't forget - you're borrowing their money, for cripes sake... and it isn't all about the score - DTI is a big part of the equation, too. Your ability to pay them back is just as important.

I can hardly wait until the thread when he tries to sell his first house. lol
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Old 06-05-2018, 01:16 PM
 
1,459 posts, read 333,227 times
Reputation: 1667
Quote:
Originally Posted by MikeyKid View Post
Worth it for the chuckle reading though this... even when it obviously jumped the shark into trollville.

In the end, like with most financial transactions, it comes down to leverage. If you really want to negotiate, using a government assistance program to buy a house is not the way to go. Even then, you can get fees "waived" and find they they slip in something else. Mortgages can be complex.

Don't forget - you're borrowing their money, for cripes sake... and it isn't all about the score - DTI is a big part of the equation, too. Your ability to pay them back is just as important.

I can hardly wait until the thread when he tries to sell his first house. lol
Agree. And whether the DTI limits are hard or flexible, they still exist for a reason. You don't want someone getting -too far- out of bounds when lending money.

Especially on products like a USDA loan, which technically finances 102% of the home's value. The 2% is the USDA origination fee, not meant to cover realtor commissions or other closing costs. You're lending 102%, with 0 down, on W2/stubs, DTI, and a NOMINAL credit score. 580 for direct loans, my SunTrust USDA-guaranteed loan was 620 minimum FICO. There's no asset requirement, most people getting these loans actually have a negative net worth at the time of origination. Which, if you maintain a perfect payment history, means nothing except you have a lot hanging in the balance in the first few years of your loan. A lot longer if you buy just as the market starts to cool off, live in an ex-urb, etc.

I got my loan on a cheap but solid house that met my needs. $106,000. 45 minute commute to two cities 250k+ in population. Nice and rural-ish (but 10 minutes from the interstate). Perfect.
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