Debt To Income Ratio Aggrevation !

Hello,

Just closed on my first REI. It almost didn't happen though due to the Debt to Income monster !
My sitch : earn $55k yr salary, credit score around 775, consumer debt almost nill, primary residence mortgage $985 mos., no auto payments.
REI property : $208k, 5 yr. Int only @ 6.125 %, did a lease option to purchase 1 yr. later @ 20%.
Only reason the loan went through was due to the fact I had a signed lease BEFORE ( tenant literally fell into my lap via developement salesman ! ) loan would approve !
Have another property in same developement @ the same price that I will need to close on in Feb/Mar, any ideas !!!!
HELP !!

Thanks !

Comments(7)

  • niravmd10th December, 2004

    dont understand why you're having such a problem. my salary is comparable to yours. no debt other than house payments of 1300/mo.
    i have a dependant non-working wife. debt-income ratio looks bad but not enough to get turned down. plus my credit score is 686.

  • getgoing10th December, 2004

    I would look for a new lender, it does not sound right. You could also go stated income..

  • LadyGrey15th December, 2004

    Doesn't sound right to me either. Is it because the REI price was so high?

  • leadman16th December, 2004

    Thanks for the replies. Not sure why the hassle, however this was the SECOND lender I was going through ! The first just denied w/ no recourse available to me. I must say, that the lender I was able to use had closing cost and ALL prepays toataling right at $4k. That appears to have been pretty good. The next property is due to close with the builder in feb/mar and if I use the builders lender they will cover $4k of the closing. Might work out ok. ( I have about 6 builder approved lenders to choose from. ) . Doing new construction and renting them out comes down to how cheap I can borrow $ for to allow cash flow. Since the first prop is going to be sold ( plan to 1031 it ) in 1 yr. the second I will hold onto as a straight rental ( for 4 yrs then 1031 it as well - time frame determining factor is that the mortg. will be via a 5 yr. int only loan ). Still nervous about getting snags though when going for the loan app. Won't the 1st prop rent count as income at around 70% ?

    Thanks

  • DaShow16th December, 2004

    With a score like that, you can do whatever you want. I happen to be a mortgage broker and have an office in Fla. if you are interested in seeing a few different options of what may be available to you, simply im me and I will be glad to put something together for you.

  • mitnc17th December, 2004

    Depending on the LTV (Loan to Value) you could have went stated income/stated asset meaning a no doc loan or at the very least stated income. Then you should DTI just fine.
    [addsig]

  • millivanilli21st December, 2004

    its been my experience that builder-approved lenders are the worst lenders to deal with. go with your own lender even if it costs u more in closing.

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