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Old 07-19-2012, 12:26 PM
 
Location: earth?
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I have a bunch of questions about the prospect of refinancing a first and/or second mortgage in the current market;

1) Since the mortgage debacle, have underwriting standards, in general lightened up, or not?

2) I have excessively high student loans - at one time, only the payment was added into the debt to income ratio, not the full dollar amount. Is this still the case/

3) In the current market, is it possible for a retired (on SS) person with additional self-employment income to get a mortgage based on loan to value ratio and credit scores only (as opposed to debt to income ratio, which is too high - the irony of this is that if I were able to refinance, my debt to income ratio would be much better - obviously the point of the refinance).

4) Over all, is there any work-around in terms of refinancing with someone with a high debt to income ratio if all other factors are favorable?

A reverse mortgage doesn't work at this point - not enough equity and too young.

Thank you!
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Old 07-20-2012, 05:51 AM
 
Location: MID ATLANTIC
8,411 posts, read 21,640,503 times
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Quote:
Originally Posted by imcurious View Post
I have a bunch of questions about the prospect of refinancing a first and/or second mortgage in the current market;

1) Since the mortgage debacle, have underwriting standards, in general lightened up, or not?

2) I have excessively high student loans - at one time, only the payment was added into the debt to income ratio, not the full dollar amount. Is this still the case/

3) In the current market, is it possible for a retired (on SS) person with additional self-employment income to get a mortgage based on loan to value ratio and credit scores only (as opposed to debt to income ratio, which is too high - the irony of this is that if I were able to refinance, my debt to income ratio would be much better - obviously the point of the refinance).

4) Over all, is there any work-around in terms of refinancing with someone with a high debt to income ratio if all other factors are favorable?

A reverse mortgage doesn't work at this point - not enough equity and too young.

Thank you!
1) Yes, most certainly and most dramatically have we seen UW clamp down. This is for several reasons: the investors (banks) are flush with REO and don't want any more, people tend to fabricate their qualifications when tightening occurs, resulting in fraud being at an all time high, and appraisal standards have been strengthened with a firewall between lender and appraiser.

2) yes

3) DTI is still the gold standard, but you still should contact your lender. Many streamline programs still exist where you only have to prove you have income and ratios are not run. However, on a qualifying refinance, if your ratio was, say 65 before and now it's 54, one lender is not going to take on another lenders unqualified borrower, and why you should contact your current lender.

4) On your own - only on some streamline refi programs and HARP. A full refi, "let me shop for the best rate" refi is not going to happen. A qualified co-borrower may be of assistance.

Unfortunately, I don't see the relaxing of requirements for a long time and never to the extent we once had. And because fraud is at an all time high, those that have nothing to worry about are heavily scrutinized as if they did have something to worry about.......it's the sign of the times. Your best bet is to start with your current lender for an in-house refi and then if they can't help, get a second assessment from another lender.

Good luck!
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Old 07-20-2012, 10:07 AM
 
Location: earth?
7,288 posts, read 12,300,543 times
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Quote:
Originally Posted by SmartMoney View Post
1) Yes, most certainly and most dramatically have we seen UW clamp down. This is for several reasons: the investors (banks) are flush with REO and don't want any more, people tend to fabricate their qualifications when tightening occurs, resulting in fraud being at an all time high, and appraisal standards have been strengthened with a firewall between lender and appraiser.

2) yes

3) DTI is still the gold standard, but you still should contact your lender. Many streamline programs still exist where you only have to prove you have income and ratios are not run. However, on a qualifying refinance, if your ratio was, say 65 before and now it's 54, one lender is not going to take on another lenders unqualified borrower, and why you should contact your current lender.

4) On your own - only on some streamline refi programs and HARP. A full refi, "let me shop for the best rate" refi is not going to happen. A qualified co-borrower may be of assistance.

Unfortunately, I don't see the relaxing of requirements for a long time and never to the extent we once had. And because fraud is at an all time high, those that have nothing to worry about are heavily scrutinized as if they did have something to worry about.......it's the sign of the times. Your best bet is to start with your current lender for an in-house refi and then if they can't help, get a second assessment from another lender.

Good luck!
Thank you very much.

One more question. My current lender's web site has a link to a FannieMae DTI calculator. That calculator only uses principal, interest, R.E. taxes and insurance as its debt - no other debts are considered. Is that how all banks figure debt?
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Old 07-21-2012, 07:05 PM
 
Location: MID ATLANTIC
8,411 posts, read 21,640,503 times
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Quote:
Originally Posted by imcurious View Post
Thank you very much.

One more question. My current lender's web site has a link to a FannieMae DTI calculator. That calculator only uses principal, interest, R.E. taxes and insurance as its debt - no other debts are considered. Is that how all banks figure debt?
Fannie Mae uses two ratios.......the first is the PITI + HOA divided by gross monthly income* = front ratio. The second........PITI + HOA + monthly bills** divided by gross monthly income = 2nd ratio.

* if any of the income is tax free, you can add 20% of the tax free income back into the income before running ratios. Tax free income includes: child support, disability, ongoing insurance settlements, some military stipends.

** debts considered are credit cards with a balance, car loans, consumer loans, student loans, alimony, child support and IRS payment plans. Not included: doctor bills, insurance, utilities, tithing, 401k contributions
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Old 07-21-2012, 07:18 PM
 
Location: earth?
7,288 posts, read 12,300,543 times
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What are acceptable front and second DTI ratios?
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