Finance Questions? Ask a Financial Expert for Answers ASAP
Although this is a question that the loan underwriting dept of each bank or credit union (and their respective answers might be different bask on that institution's policy guidelines) The answr, in my professional opinion, would be yes
with that kind of income to patments ration you should be find, especially, given that your credit is good
I WOULD consider payng (not OFF but down to a few dollars) the redit cards
available credit on cards (closing them completely lowers this number) is a big factor on the FICO credit score
And they look at it (along with other things) as a percntage (what percentage of your available consumer credit are you using)
I WOULD try for the mortgage vs using the non-residential property as collateral because of the interest write off that's allowed for a first AND second home debt
Here are some of the ratios currently used:
Front-end ratio: The housing expense, or front-end, ratio shows how much of your gross (pretax) monthly income would go toward the mortgage payment. As a general guideline, your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not exceed 28 percent of your gross monthly income.
so, that means that even subtracting the current heloc and car payment, you should be able to afford another 1800, 1900 of payment to service a mortgage
Back-end ratio: The total debt-to-income, or back-end, ratio, shows how much of your gross income would go toward all of your debt obligations, including mortgage, car loans, child support and alimony, credit card bills, student loans and condominium fees. In general, your total monthly debt obligation should not exceed 36 percent of your gross income. To calculate your debt-to-income ratio, multiply your annual salary by 0.36, then divide by 12 (months). The answer is your maximum allowable debt-to-income ratio.
S0, 91000 x .36 = 32760/12 = 2730
Here's an excellent article: http://www.bankrate.com/finance/mortgages/how-much-house-can-you-buy--1.aspx
I am not really in a position to pay that much down on the credit cards- I am pretty close to the limits on several - I would have to check on these. Also, would the heloc have to be paid off with the mortg?
I understand... no based on the ratios provided, conventional underwriting would not require you to have to pay off the heloc
At the 91000, you have more than enough to service another 2000 per month approsimately
The standard debt-to-income ratios are the housing expense ratio and the total debt-to-income ratio. These are also known as the front-end and back-end ratios, respectively.... and using both of those, even WITH the heloc, your OK ... unless you're looking at a mortgage that would be well over 2000/month
Soomething else, you may already know this, if you shop for several mortgage within a 30 day period, they credit bureaus will know your shoping and that will not hure your score .... spreading that process out over severla months CAN hurt your credit score
sorry for the typos ("the" credit bureaus ... know you're "shopping" ... will not "hurt" ...
But again, at that level of income, and the relatively low CURRENT debt service, most institutions would not require paying off the heloc..... depending of course on the SIZE of the new mortgage and the market to value ration of the second home to the new mortgage
If you buy a second home and the loan to value ratio is better 80% you should be OK
you have been extremly helpful - one last question - we have not found a 2nd home yet - we are looking and would like to be pre-approved for aprox. 275,000, do we apply or get pre-approved?
SO... on a 250,000 second home, financing 80% (200,000) at 3.5% for 30 years ... you'd be looking at Principal and interest of 898/mo ... well within the range
I think getting pre-approved helps show good faith in negotiations, just remember that the loan companies/banks/credit unions always qualify what that means ... may times they won't do the full underwriting until fairly close to closing ... although that's gotten better in the last couple ofyears
thank you, XXXXX XXXXX very helpful
The typical process followed by most mortgage lenders is to first perform a pre-approval. With this process, the lender will take a loan application and obtain a credit report. The information in the application and the credit report are analyzed by the lender, and then the lender will issue a decision (either verbally or in writing) on whether or not you are qualified for the loan. The pre-approval will state that you are qualified for the loan subject to verification of certain items. Thus, it is important to note that the only item that has been verified is your credit history via the credit report.
The next step is the verification process. During this process, the information on the application is verified (i.e. income, employment, assets, etc.), the property appraisal is ordered, and the title search is ordered. Once these activities are completed, the lender can then issue a loan commitment.
Do most pre-approvals result in loan commitments? Assuming the lender is diligent during the pre-approval process, yes. However, it is not uncommon for a consumer to receive a pre-approval and then find out later that the pre-approval was subject to conditions the consumer could not meet, thus prohibiting them from receiving the loan, or forcing them to accept a loan at a higher interest rate or lower loan amount.
SO watch for that
Have a good one, and good luck!