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