CAN SOMEONE PLEASE HELP!

[MotherOf5]

Hello Everyone,

 

My husband and I were in the process of refinancing Evest Lending, Inc. This past Friday he said that he was having a problem with our dti. He said today my husband needs to bring his scores up to 660 or 680 to get the bank to approve us.

 

This is our situation. Our mortgage is 510,000 I just paid for an appraisel and it came in at 610,000. My husband works 2 jobs. The first one he makes 68,000 and the second he makes 15,000. His credit scores have dropped because of the pulls from Evest Lending, Inc. His current scores as of this morning are 630, 609 and 612. He has 2 credit cards one for 790 and the other is for 379. He has a student loan for 13,000. The last time we were late on the credit cards was 2 years ago because my husband was in a car accident. We have not been late on our mortgage for over 2 years.

 

We are looking for a 30 year fixed with our taxes not included in the payment. We pay 3795 a month right now with the taxes and insurance included around 420 a month.

 

Can anyone help us refinance?

 

Thank You

[udsweetpea]

His credit scores won't drop because of the pulls from your lender. Mortgage pulls in a short period of time count as one pull.

[MotherOf5]

We got a raymour and flannagin card 2 months ago to get my kids bunkbeds and it showed up on his credit report this morning.

[TxQuiltGirl]

Wow. I can see why the DTI isn't working out. $68k a year ... I doubt they'll even consider the $15k a year for the second job ... that's what? $5667 a month ... more than half his monthly income is going to pay for the house. I'm guessing the payments on the two credit cards aren't more than $20 a month each? But the SL would have to be ... at least $150/month. That would put you at 70% DTI. I think that I've read here the best some of the lenders will do is 65% DTI.

 

You don't work, where your income can be included??

[VA loan source]

How long has he had a second job? Usually must have a 2 year history of 2 jobs to include the income from second job.

[MotherOf5]

No I do not work. He worked at his second job for 7 years and then he got into a car accident had to have major surgery. He took a year off and then started again about 7 months ago. I know the DTI is high. I have been working really hard for the past year on working on his credit report. I brought my husbands scores from 497 to what it is now. I have 5 children and I do not work.

[MotherOf5]

Wow. I can see why the DTI isn't working out. $68k a year ... I doubt they'll even consider the $15k a year for the second job ... that's what? $5667 a month ... more than half his monthly income is going to pay for the house. I'm guessing the payments on the two credit cards aren't more than $20 a month each? But the SL would have to be ... at least $150/month. That would put you at 70% DTI. I think that I've read here the best some of the lenders will do is 65% DTI.

 

You don't work, where your income can be included??

 

 

I know the DTI is high. Now I feel even worse.

[TxQuiltGirl]

Wow. I can see why the DTI isn't working out. $68k a year ... I doubt they'll even consider the $15k a year for the second job ... that's what? $5667 a month ... more than half his monthly income is going to pay for the house. I'm guessing the payments on the two credit cards aren't more than $20 a month each? But the SL would have to be ... at least $150/month. That would put you at 70% DTI. I think that I've read here the best some of the lenders will do is 65% DTI.

 

You don't work, where your income can be included??

 

 

I know the DTI is high. Now I feel even worse.

 

 

I'm sorry, I don't mean to make you feel worse ... it's just that it IS a lot of debt. I can see why you're having trouble getting financed.

[MotherOf5]

We had an interest only loan with countrywide. So we did not even touch the principal. Now I am in an upside down mortgage. I did not learn about any of these things until I found this board.

[liverichly]

Is your interest rate going to adjust soon? What is your current rate?

 

With an interest only mortgage you are still permitted to pay more than the interest only payment and pay down principal, so if it's not going to adjust soon and the rate isn't horrible, refinancing right not might not put you in a better situation.

 

Like other posters have pointed out, the debt ratio is a bit high, even when using the second job income. The 65% debt ratio guideline applies to conforming loan products and thus conforming loan limits, and for 1-unit properties (not in HI or AK) it's $417k. Bank of America offers a loan program, where if your income is within a certain limit, or your home is in a low-to-moderate income census tract (which I don't think a $610k home would be), then debt ratios up to 60% or higher can be approved, and on refinancing where you aren't taking cash out, it can go up to 100%. The loan amount limitation used to be $450k though, so you'd have to check if it has increased from earlier this year.

 

But if that doesn't end up being an option for you, then it appears that your husband will have to utilize a "No Ratio" documentation type in order to qualify, that is a documentation type where no income is on the application, so no debt ratios apply. The catch is with this documentation type, typically 680 scores are needed, however down to a 620 score is OK when you have 10% or more in equity (which you appear to do). Lenders are also looking for 2-4 times your proposed housing payment in reserves (IRA, 401k, checking/savings, stocks, etc.). I don't know who Evest Lending, Inc is, but it sounds like they are probably a broker, and as such, I would think they would have access to a lender who is able to get it done with a 620 score... and also be able to use a credit report they pulled that has a 620+ higher mid score (assuming there was one). But the 620 score level is going to be a pretty important plateau to reach for that option.

[MotherOf5]

Thank You So Much. My husband had scores 3 weeks ago of 602, 637, and 616. But a credit card that we got 2 months ago went on his credit sometime in the past few days. But the paperwork that they company has has the 602, 637 and 616 scores. Now they are down to 609, 630, and 612. We do have 10,000 in my husbands 401k. I don't know what to do. He just called my husband and wants to do a conforming loan. I am not to sure what this is and how it works.

[liverichly]

Conforming loans typically offer the best rates for borrowers. You do not need perfect credit to qualify and they also will take very high debt to income ratios, sometimes as high as 65%. You might've seen me mention the conforming loan in my previous post, the loan amount limit for 1-unit properties (if you aren't in Hawaii or Alaska) is $417k. The way they'd go about qualifying you guys is to get the new 1st mortgage at $417k, and then a new 2nd mortgage for the remaining balance, which would be $93k+ from the figures you've supplied. With a 616 mid score there are a couple lenders that are still doing 2nd mortgages to where you would need to be at (below 90% combined-loan-to-value), so that very well could be an option. The thing is the 2nd mortgage programs usually cap debt ratios at 55%, they have black & white debt ratio guidelines, whereas conforming loan programs can approve up to a 65% debt ratio... so the debt ratio will be key.

 

401k & IRA funds qualify at 70% of the vested amount, so if $10k is fully vested then they'd consider $7k as the amount of qualifying reserves. It's close to being 2 months worth of your proposed housing expense, but not quite... so that falls short of the "No Ratio" loan options I am familiar with. Let us know how the conforming loan option comes out, I think that's a good suggestion your LO had.

[MotherOf5]

Thank You so much Shane for your help. I should be hearing something this morning. I will let you know as soon as I hear something.