HELOCs And Debt To Income Ratio

Are lines of credit and their limits and balances reported to credit agencies like credit cards; e.g., "$100,000 limit (HELOC), 90,000 owed, no late payments?" I have near-800 credit scores, but very little W2 income; Prior to buying property I'd been studying REI, selling a bit on Ebay, and living off of savings. I have begun investing in real estate (SFHs, apts, etc.) and am worried that my debt to income ratio will not be good if I need to get any kind of bank financing or refinancing for future deals.

So far I have a HELOC (90% used) and a new line of credit on an apt. building (0% used so far). I have no other mortgages, but do have several CDs I'm paying on. What's the best way to keep my credit scores up and the banks/mortgage companies interested in working with me?

Comments(5)

  • dannwc17th December, 2004

    It seems you have great credit. Your debt to income ratio is a problem though with the banks because they want you make sure you can handle the payments. What exactly were you planning on doing? refinance, consolidate debt, cash out?

  • kenmax17th December, 2004

    the w2 income is a problem with bank fin. they do want to see a certain a mount of income.........km

  • propertylogistics17th December, 2004

    A HELOC is a revolving line so it causes your score to be a bit more volitile. This is because your balance will be too high in relationship to the limit. It's the same reasoning behind charging your credit card to the limit. (But a HELOC has a very low interest rate compared to a Credit Card) If your concern is over your DTI, do your best to make sure your HELOCs are at a zero balance when applying for another loan. My bank allows for me to have up to 4 HELOCs and they base the credit limit on the 'outstanding' balance on my credit reports. I currently have 2 HELOCs with limits totallying 90k. As long as I apply for another loan when the balance is low, then I can get 2 more HELOCs.

    I keep my DTI low by paying cash for my car (used) and putting other expenses on Corporate Credit Card. Corporate Credit doesn't show up on my personal credit report (but I am personally responsible for it in case of default).

    One thing I did was take a cash advance on my Corporate Visa and paid off my Personal Credit Card ($10k). This allowed for me borrow more personally. Once I got the account, I paid off the Corporate with the new account. The end result was that I have an additional credit line although my personal DTI wouldn't have allowed for me to qualify.

    Hope this was helpful.

  • mojojojo_118th December, 2004

    with a score like that, stated income will work at most banks, us bank for sure. just make sure you report a annual gross that is 45% or lower debt to income. they will ask for income verification, if it is a high LTV also, over 70%, 80%. But call around and find a stated income place.

  • stevenwe19th December, 2004

    MY scores tanked because i maxed out a HELOC for 90 K with Fleet , I am now desperately trying to convert the line of credit to a fixed loan just so i can get my credit scores higher again ...... if your very score conscious , dont get a HELOC , unless you only use less than 30 % of the avail , otheriwse its bad, but 30% is perfect

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