I have been to 4-5 brokers in search of a refi for my existing 5/1 ARM I.O. Any suggestions on where to go?

Asked by Mike Mills, Newbury Park, CA Wed Sep 3, 2008

I have been to 4-5 brokers in search of a refi for my existing 5/1 ARM I.O. Any suggestions on where to go?


Brokers say I don't qualify because of my "income to debt ratio". I wanted to combine them into one loan ($550k and a little out for home improv). Still, no one will touch it! My primary residence in California is appraised at $850k and Rental ~$450k. Credit is excellent at 760-790

The facts are as follows....
1st Mortgage = $500k (I.O.) fixed payment for 5 years,
2nd Mortgage = $32k (Home Equity)

INCOME $85k/yr salary, $ 25k/yr rental income

EXPENSES
$ 2150/mo = Mortgage 1st
$ 150/mo = Equity 2nd
$ 790/mo = Prop Tax
$106/mo = HOA
$108/mo = Insurance
$ 0/mo = Rental Mortgage
$ 100/mo = Rental Prop Tax
$ 100/mo = Rental Insuarnce

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Answers

8
James Wheeler’s answer
James Wheeler, , Tampa, FL
Wed Sep 3, 2008
When lots of professionals tell you the same thing, it's time to consider what they've told you. If you keep asking the four winds, eventually a huckster will step forward and tell you whatever you want to hear... Your debt ratio is indeed high, based on what you wrote. Having good credit doesn't mean you're exempt from everything else required for underwriting approval. Your credit history shows your willingness to repay your debts. It has nothing to do with ability... Your rental income can't be counted without proving it through tax returns. Then deductions come into play as well. That would mean more expenses than you detailed above... Without your rental income, the debt ratio you laid out above is about 50%. That's using your current interest-only mortgage pmt, which if your numbers are right is at 5.16%. That's a better rate than you'd get right now, unless you paid discount points to buy down the market's pricing. You probably paid discount points when you initially got this loan, which illustrates why paying discount points almost never makes sense... At a higher rate on a new loan, your debt ratio would naturally be even higher. And when we calculate your debt ratio, we use the fully-amortized payment, not the interest-only payment (one of the developments since last year's crisis that is now industry-wide standard practice). Using the fully-amortized payment, your debt ratio would be too high, regardless whether you could substantiate the rental income... And so far, we've only considered your housing expenses. You didn't list any other "expenses" in your facts above. Perhaps you have no auto loans, no credit card debt - no balances whatsoever in your credit report except the two mortgages on your primary residence. If you do have other balances, however, then those additional monthly payments would make your total debt ratio even worse... The loan you already have sounds good, and better than you'd be able to qualify for now. I'd suggest you keep it.
1 vote
Scott Godzyk, Agent, Manchester, NH
Wed Sep 3, 2008
There really isnt any cash out refi's anymore. First thing is take that off the table. If your credit is that goo dthere should not be a problem with the numbers you have quoted. You need to go to a trusted company, no internet companies. Also try the bank you currently bank with or already have a mortgage with you. Most lenders will allow a loan modification out of an arm and into a fixed if you have been paying your mortgage on time. first thing is start with your current lender. Good luck Mike
Web Reference:  http://www.ScottSellsNH.com
1 vote
Liz Byrd, Both Buyer And Seller, Grants Pass, OR
Wed Sep 18, 2013
try Rod Brown of Sunrise Financial Services
he really went the extra mile for Liz & Bill Byrd. He is awesome. We had approximately same issue, with one income and some rentals. he worked it all out.

Rod Brown
Sunrise Financial Services
1200 Paseo Camarillo Suite 280
Camarillo, CA 93012
Direct: (805) 388.1513 ext 21
Fax: (805) 389.6547
RodBrown99@msn.com
0 votes
Crestico Rea…, , Los Angeles County, CA
Tue Feb 17, 2009
Monthly Income of 9K and Monthly expense of 3500.00 puts you well below 45% DTI
unless i am missing something here you should qualify.

My Main Lender contact info is below. they are local in Orange County and they have very fast turn around time.

Houtan Hormozian
American Guardian Home Loans
T: (949) 242-5215
T: (877) 242-5215
hhormozian@amguardian.com
0 votes
Rosario, , Albuquerque, NM
Tue Sep 9, 2008
Right now you look like this for mortgage lenders
Monthly payments 4857 divided by Income monthly 7,083
Debt ratio 68 % to high you need to be under 50 % debt
this is your maximal of 470.000
0 votes
Other/Just L…, , Fleming Fitch Grant, Holly Hill, FL
Thu Sep 4, 2008
I agree with James. Housing ratio at present is unacceptably high... any refinance will push the housing ratio higher. There is no tangible benefit to the borrower to refinance.
0 votes
Rosario, , Albuquerque, NM
Wed Sep 3, 2008
Check my web site for options NO personal information require to check for rates if any options are available you will be able to apply online
0 votes
Jimmy80, Home Buyer, Sacramento, CA
Wed Sep 3, 2008
I would think you should be able to do two 1st mortgages based on what you said, but I know lenders have really been scrutinizing rental investments these days. You may need to break it up with two different lenders. Safe Credit Union has been advertising as the "Broken ARM Fixer" lately.
Web Reference:  http://www.safecu.org
0 votes
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