All Forum Posts by: Shaun Weekes

Hello Mike,

I just wanted to talk about DTI. All the calculations I've seen on here are accurate however I've personally seen approvals with DTI's as high as 49% back end.

Now as stated by another lender on this thread typically banks are going to be good at 45% back end and even more at 43% back end.

Fannie Mae uses a system called DU ( desktop Underwritter ) and this is a computer putting in various numbers from you 1003 application. If DU approves a loan at 47% then the loans is eligible for delivery to fannie or wells fargo or penny mac or whoever is going to buy the loan on the secondary market. The key is that you find a lender that has no overlays which means they follow fannie, freddie, FHA, VA, USDA guidelines. If you run into a bank that says you can't go over 43% DTI then they have overlays. If you run into a bank that says you need two years of rental history in order to use rental income they have overlays or aren't approved with Fannie. If you run into a bank that says you can't have more thank 4 financed properties they have overlays or aren't approved with Fannie. Overlays are put into place to protect the investor that is buying the loan or maybe the bank is holding the paper and they feel comfy with whatever their overlays are.

The next thing I want to chat about is the 2 year rule on rental income.  I wrote a blog about this last week.  Freddie Mac requires 2 years of rental history so if your mortgage guy/gal says he is going to run your file under LP ( Loan Prospector ) then you know that's the computer system Freddie uses to determine if you're file is accept or caution.  If you don't have two years you're not going to get anywhere with Freddie products for rental homes.  Or for using extra income to qualify for your primary or second home. 

Now if your mortgage guy/gal says I'm running DU then you know it's a fannie program and Fannie Mae DOES NOT REQUIRE ANY RENTAL HISTORY.  If you buy a house tomorrow and your renter paid you one month of rent for 1k then you can use 75% of that income right away. 

If you can initialy get a HML you can turn around and do a R & T refinance on that same loan the next day.

In other words you won't have to pay the HML because the conventional refinance will take care of this.  You can do 5-10 loans at R & T but you can't more than 5 cash out unless you do delayed financing.  Which means that you would basically have to cash out within 6 months of purchasing the property.

I hope this helps Sir.

Hello Paul,

Fannie doesn't have a two year rule on rental income. 

If your shedule E is showing a loss it will hurt your DTI and if it's showing possitive it will help you depending on your schedule E calculations ( How the UW calculates the income ) If you have a wage earner job and say for example that you're making 48K a year. That's 4k a month but say your schedule E after income calculations is showing -750. You're making $3,250.00, so you could be cash flowing but if you're claiming losses it could really hurt you. I've seen this on a lot of 1040's. So look over your 1040's and see what they look like. If you see a - besideschedule E on page 1 of your 1040's it could be the issue. If you're mortgage payment is high after schedule E calculations you still could be in trouble. I will contact you to explain this further as rental income has so many variables.

I hope this helps. 

No problem Brandon.  Take care and good luck Sir.

Hello Brandon,

Typically lenders will use your credit report for 90 -120 days.  I would check with your lender and see what the require in regards to how long they can use your report.  If it's 90 days and you're pulling credit 4 times a year that's not going to have a huge impact on your overall fico score.

Pay your items on time and keep your revolving debt at 30% or less and you'll be fine.

Visa card with the most you ever borrowed on it is 10K so keep your balance under 3K.

It doesn't go by the credite limit it goes by the most you've ever borrowed. 

I hope this helps a bit Sir.

Have your funds been in your bank account for at least 60 days?  If so you won't need to source those funds.

Hello Denny,

If you term is above 15 years and you're putting down 10% your MI will last for 11 years.  In regards to grants I'm not familiar with any but I do know that some counties in different states will give you a down payment assistance of 3%  Which would make your down payment .5%

At your LTV this isn't required so it's probably a portfolio loan or it could be an investor overlay.

Typically the only time you'll be told to do impounds ( escrows ) is if it's MI ( mortgage Insurance ) or if the LTV is over 80%

Hello Joe,

You always want to think ahead when it comes to your DTI ( debt to income ratio ) becasue that will be a huge factor in getting conventional and government loans in the future. You want to typically keep that number under 43% to be really safe. I've seen approved loans as high as 48% but you would need a lot of compensating factors ( High Reserves and low LTV )

Future rents can also help with DTI as you can use them right away if you're doing a fannie mae or FHA loan.

  I thought this was the seller not the buyer speaking.  My apologies as I'm backwards on this one.  Thanks K. Marie

Since this is the the buyer this is a huge risk.  What if you don't get the home?  I'm pretty sure the seller isn't going to give you your money back if that happens.  Plumbing and a boiler aren't little things...

This doesn't sound right and if you can get your EMD ( Ernest Money Deposit ) back I would and find a new realtor as well.

That's just me though.