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Any fixed rate programs that will lend me more than 55% LTV???

Just submitted offer for 150K. Lender with whom I am getting pre-approved said because of my income (I have been completing 3 programs of study so have earned less income than I will be earning in subsequent years), they can't lend me more than 55% LTV, even though I have a 800+ credit score, so this means I would need to pay $74K out of pocket!  I have 90K in savings but want to put a max of $50K down, so that I have plenty of cash reserves. I know RESPA guidelines have changed, but are all lenders being so tight with their LTV and Loan to Income ratios?  Aren't there any reasonably priced fixed rate programs that would allow me to put closer to 50K down and finance the rest? I have not owned a property since May of 2007. The property is in Phoenix, Arizona and is bank owned. I am the most responsible borrower any lender could have and find it hard to believe that I can't borrow another 20K!

Thank you,
V
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April 19 2010 - Phoenix
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Answers (7)

Best Answer

You have a few options to increase your purchasing power a little bit.

Find out what amount they are using for your annual hazard insurance.  See if you can line up a policy for less than their estimate.   Sometimes a higher deductible can accomplish this.   You might be able to add 3 to 5,000 to your loan amount with this tweak.

Another option would be to consider buying down to a lower qualifying interest rate.  This lower rate would also free up some purchasing power by keeping your debt to income ratio in line.

Last option would to ensure they are caculating your income accurately.  If they are using only an estimated income and not an exact one, it will be subject to the final qualifying income determine by underwriter.   

I'm not sure all of this will get you an extra 20,000 loan amount, but you might find about half of that with some of these changes.

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April 19 2010

After reading through everything, you will be able to borrow more if you pay off your truck-  The issue is not the LTV-  The issue is your DTI and since income is a fixed amount, you can raise your buying and or increase your finance amount by removing debt and or getting an exact amount for what your insurance will be.  Additionally, you may want to go FHA as they allow for much higher DTI's-  You will need mortgage insurance even if you put more than 20% down so that must be taken into account as well.

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April 20 2010
No problem, Manuel's point about the other debt is also a factor.  On the $20 credit card payment, you ask if they can omit that debt from the findings, and if the underwriting policy will allow this debt omitted provided you verify the account with zero balance prior to close. 

That $20 removal can give you another 2 or 3,000 on your loan amount.

On the truck, depending on the balance, you could consider paying that off, and in that event you would then get a much higher loan amount approved.   Also, if you happen to have less than 10 payments left on the truck, that would be sufficient to omit the debt as well (without paying off the remainder, as long as it is not a lease payment).  If it more than 10 payments left and high dollar balance/low interest rate already, might be best to just leave as is.

I hope it works out for you.  Let us know how it turns out.
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April 19 2010
Profile picture for Love2Hike
Thanks for responding.  To address Manuel's question, my only debt is a $350 monthly truck loan payment and about $20 credit card (I pay my balance off every month), but with how low my income is, I see your point that this would affect the LTI ratio. I really appreciate Justin's suggestions, particularly because the loan processor sounds very young and a little unsure of herself, so there may be something getting overlooked or some options that she isn't aware of -- I will look into all of these.  Whatever I can do to avoid having to pay out so much in cash will be helpful -- I always like to have a decent cushion for emergencies and houses often need some repairs that were unforeseen.  Thank you for your input, gentlemen!
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April 19 2010

Your front end ratio is pushing 40% for a loan of 100K.  I bit high but doable based on your reserves.  You must have some debts that is pushing the back end ratio over 55%.  Fannie/Freddie  lays out the rules that the banks need to abide with if they want to sell the loan to them, and they are the only real buyers right now for mortgages.  Freddie Mac allows a 60% backend ratio but the overall file must be very strong.

Send a Zillow Qoute request to see who you can find that can help you out.

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April 19 2010
Profile picture for Love2Hike
Ah, thank you for clarifying.  The processor was not very clear in her explanation, so perhaps that is what she meant. My income is only $25,000/year right now, though, so isn't that already going over the 55% threshold?  Are there any lenders with programs which would allow me to borrow a little more (like $10-20K more) so that I don't have to put as much cash down?
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April 19 2010
Are you sure the restriction is not 55% of Debt To Income?   55 is a common barrier for Debt to Income.  

Max LTV of 55 doesn't make any sense in the context of what you have written.
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April 19 2010
 
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