Loan Officer Gustan Cho
Loan OfficerForum Replies Created
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Thank you, George. I appreciate you, my friend. I know you are a preferred lender with several home builders, so I am asking you for advice. I am not out to take over another lender’s preferred lender relationship with the home builders. I would have an opportunity to be the scratch-and-dent second lender, and if the first lender cannot get the borrower approved, give my team and me a shot. It’s like jumbo shrimp 🍤. They can have the meaty, delicious part of the shrimp 🍤, and I will take the shrimp tail and be very happy. Not greedy. Just like the opportunity for some scrap. Scavenger hunting. Also, I think builders expect to get paid somehow legally. Like a co-marketing agreement or monthly desk charge. There’s got to be some gray area these home builders have under the cuff
Like to know what that is. It guarantees that home builders will not just give us an opportunity for our good looks and sense of humor. Thanks again for your input on this matter, my friend. I hope everything is going great with you and your family.
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Chad, my buddy Bill Burg aka Bill Burger-King @Bill Burg has a very nice beautiful home in Sarasota Florida with an indoor pool, great yard, in an upsale community. $645,000. It was listed for $800,000. Also, Terry Daye has a single family home with a mobile home that is bringing in $1,500 in rent in North Carolina. Both Bill Whopper and Terry Daye are members of GCA FORUMS. The Sarasota, Florida home is 2,575 square ft. and is on the classified ads section. Just for your information in the event if you want some house for the money versus hovering in Orange County, California.
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Chad, theres EPM DPA PROGRAM. Contact Chritian Sorenson of Equity Prime Mortgage. Forgiveable DPA and you can refinance out of it after six months.
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Such cases can be frustrating. However, some solutions are available for you:
- Foreign Income Earned.
- The reported income is a concern for other issues.
- Who receives the foreign income, and how is it accounted for?
- Lenders take such information only to the extent that foreign-earned income is incorporated in the tax return to line W-2.
- This is because it is only excluded from providing other information that carries more weight than a statement made.
Respondents Provided The Following Responses Regarding Challenges:
Supply more documentation:
- Approach your employer and request more information on how your earnings are structured in relation to the foreign tax credit.
- Any salary increment, housing office, or other amenities.
- That would give the loan giver a wider perspective about one’s earnings.
Consult a tax professional:
A tax professional may assist you in deciding whether it is worth going for the amendment. Or whether there are other methods without going for another amendment. Contact a specialist in offering mortgages:
- Exploit the possibility of getting with lenders or banks who give mortgages to immigrants or people earning foreign income.
- They tend to be more sensitive when finding solutions to your problem.
- Or contact us at Gustan Cho Associates.
- The team at GCA Mortgage Group are experts in helping foreign nationals and ITIN borrowers.
Another option is the FHA loan:
- FHA options have been considered less scrutinizing regarding outside income.
When they make you aware of all the reasons for the loan holder, be sure to bolster these:
- Indeed, it would help if you also tried to understand the reasons for the denial.
- Please provide the lender’s opinions on your application.
- It would be appropriate to appreciate their anxieties, knowing that their time comes when one seeks to for them.
Staying calm and persevering: This may be different with other people working abroad, as earning income and acquiring mortgage approval can prove much harder for them. Understanding the situation may require additional time and effort to find a suitable lender.
Self-initiated modification, when given such a suggestion, is appropriate, though, to the extent that it redeems the form and spirit of the task at hand. Are there any of these problems that you would love to have further elaborated on?
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Given your recent Chapter 7 and Chapter 11 bankruptcies, refinancing can be challenging, as many lenders require a waiting period of 2 years post-discharge for Chapter 7. However, some Non-QM lenders offer more flexible refinancing options, even for borrowers with recent bankruptcies. These loans often come with higher rates, but they may allow you to consolidate your mortgage, HELOC, and SBA loan. There is no waiting period after bankruptcy discharge on non-QM loans. Maximum loan-to-value is between 65% to 90% LTV. The loan-to-value depends on the seasoning of the discharge and the borrower’s credit scores.
You may want to work with a mortgage broker who specializes in Non-QM loans to explore your options now, rather than waiting.
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If you can afford a deposit of more than 20%, you have better options of choosing an FHA loan over a conventional loan and vice versa. Here are some details that can guide you in deciding which approach is likely to be the best for your case:
FHA Loan:
DTI Flexibility: Most FHA loans have relatively high limits for DTI. Even where your DTI goes up to 46.9% front-end and 56.9% back-end on automated underwriting system findings, an FHA Loan can still work for you, while conventional loans are more likely to be harsher.
Down Payment: On the contrary, though, the upside of FHA loans is that even though they only ask for a minimum deposit of 3.5%, you could still utilize your 20% down payment in the future towards a lower loan amount or monthly payments.
Mortgage Insurance: Monthly escalation of the mortgage insurance payment is also required when making monthly installments of FHA loans, particularly but not limited to mortgage loans with less than 10% down payment. These premiums are capped at up to 11 years for all members who could make 20% down or more.
Credit score flexibility: Even applicable to credit score informalities are the FHD loans that counter FHA lending regulations by lowering borrowers’ credit scores to 580 and requiring a 3.5% downpayment.
Conventional Loan:
Avoiding PMI: If you put a 20% down payment, you can eliminate paying for private mortgage insurance (PMI) when taking a conventional loan. Over time, this can help you save money.
Potentially Lower Costs: If you offer a conventional loan and do not have to pay mortgage insurance, this will be cheaper long-term if you have a good credit history and financial status.
Interest Rates: Conventional loans are likely to have much lower interest rates, especially for people with high credit scores. This will likely lower the monthly repayment as opposed to the FHA loan.
Stricter DTI Requirements: Most lenders want a DTI ratio lower than or equal to 50% for conventional loans, although exposed lenders may extend this relatively higher with strong compensating factors.
Credit Score Requirements: Conventional loans require high credit scores (620 and above) as opposed to FHA loans, which have comparatively lower credit risk. You can take advantage of lower rates and better terms with a high credit score.
Which Direction to Go?
If Your DTI is High: If your DTI ratio is relatively high and you are worried about your chances of qualifying, then FHA is likely the best alternative since it is less restrictive.
If Your Credit Score is Strong and DTI is Manageable:
Traditional mortgage loans are more favorable, with a 20 percent down payment and sound credit score. A 20% lower conventional loan may be in order. You and your spouse will eliminate PMI, get a lower interest rate, and incur reduced costs in the long run.
Consider Your Long-Term Plans: If you plan to remain in the house for a long time, the cost-benefit of a conventional loan that avoids PMI may be sizable.
Final Recommendation:
Check Your DTI: Calculate your debt-to-income ratio and see if it is within the normal range for FHA or conventional loans.
Speak with Lenders: Speak to lenders for a preapproval for an FHA and conventional loan that compares terms based on your situation.
Consider Future Flexibility: Consider when you might take out a conventional loan or sell; such a mortgage might be necessary.
If your DTI is hovering around the stress limit for conventional loans, it is reasonable to first go for a conventional loan. Conventional loans have the advantage of not having PMI. If your DTI ratio is, in fact, worse, then FHA remains a viable option to consider, as always.
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Yes, if you become a co-signer for an auto loan, your DTI ratio is modified. This may disqualify you from qualifying for other loans, such as mortgages. However, if you are a co-signer and the main borrower has made timely payments for the past 12 months, the co-signer may be exempt from the car loan if the main borrower can show the co-signer was not responsible. The main borrower needs to show 12-months of canceled checks and/or bank statements showing timely payments. Here is how:
Does Co-Signing an Auto Loan Count as Debt in Your DTI?
Yes: If you co-sign a loan, the amount becomes part of your credit report, often giving rise to a new debt to DTI features. In normal circumstances, someone other than you might be paying the loan. However, creditors will consider it debt because you are a co-signer to the amount that the borrower would not pay.
How Does DTI Work With a Co-signer?
Exposure to Inclusion in DTI: The co-signed loan to mitigate the primary borrower’s risk has an assumed monthly payment that is included. Most lenders assume that this debt will be used when evaluating fresh loans for borrowers to prevent further obligations.
Possibly, But Not Always: In such a case, when the main client has strived to make periodic repayments for a particular duration. If most have been over a year, some lenders will soften DTI norms set about co-signed debt inclusion. Some lenders would rear less of the burden so as not to acquire such unconsumed annuities. You must provide the primary borrower with documentation showing that payments are made consistently (bank statements or canceled checks).
Is Co-Signing A Personal Loan Considered A Debt?
Yes: A loan where you act as a co-signer for another person is also considered, although you are not the primary person responsible. This type of loan affects your DTI and credit profile, as you must repay the loan if the borrower fails to pay.
Does Co-Signing An Auto Loan Contribute To Your DTI Ratio?
Yes: The loan payment is part of the liabilities, which makes the DTI ratio high. An increased DTI ratio makes it hard to get other loans, like mortgage loans, for which lenders need higher DTI ratios to ensure the borrower has enough income to take additional loans.
Does Co-Signing An Auto Loan Affect Credit?
Yes:
Credit Impact: It does In this aspect. The credit report also recognizes the amount repaid through the joint loan.
If the other two borrowers stick to on-time repayments, these factors should positively affect the evaluator’s credit. Moreover, if they are late on the payments or even stop making them, then the reverse should happen.
Credit utilization: Because this debt will reflect on your credit report, it will build up your debt, which may affect your debt utilization ratio and credit score.
DTI Impact: Once co-signed, an auto loan becomes a liability and increases the debt-income ratio, hindering your further borrowing power.
Credit Impact: Co-signers can affect your credit depending on how the co-signer’s loan is managed. Timely payments are great, but their absence harms one’s credit.
Removal of Debt from DTI: In some cases, lenders may disregard the co-signed debt from your DTI plus ratio if you provide sufficient evidence that the principal borrower has been making regular payments for the past 12 months. Need to show canceled checks or 12-month bank statements showing the main borrower has been making payments.
Those who plan to apply for one more loan for a house mortgage, for instance, and have signed up for an auto loan need to consider that this type of obligation will greatly affect their borrowing ability—or eligibility.
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You cannot qualify for any type of mortgage loan if you get a bankruptcy deleted from your credit report. The reason is that all mortgage lenders will run a third-party public records background report and all public records will appear on the national public records background report. When the loan officer pre-approves you, he will get you a pre-approval when he does not see a bankruptcy on your credit report. However, when the mortgage underwriter runs the public records check, the bankruptcy will get discovered and your loan will get denied. The maximum front-end debt-to-income ratio on FHA loans is 46.9% and the back-end is 56.9% on automated underwriting system approval.
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FHA Loan with a 600 Credit Score:
Eligibility: You can qualify for an FHA loan with a credit score of 600-610.
Down Payment: With a credit score between 580 and 619, you can qualify for the minimum down payment requirement of 3.5% of the purchase price.
Loan Amount: The amount you can borrow depends on several factors, including your debt-to-income (DTI) ratio, income, and the FHA loan limits in your area. FHA loan limits vary by county, and in 2024, the limits range from $498,257 to $1,149,825 for a single-family home, depending on the location. Your loan amount will depend on your ability to qualify based on your financial profile.
USDA Loan with a 600 Credit Score:
Eligibility: USDA loans do not have a minimum credit score. However, most lenders have lender overlays on USDA loans and generally require a minimum credit score 640 to qualify. Some lenders might consider applicants with scores as low as 580. This is less common and might involve stricter underwriting requirements or the need for compensating factors such as a low DTI ratio, a larger down payment, or a stable and strong employment history.
Considerations: Even if you find a lender willing to accept a 600 credit score for a USDA loan, you may face higher interest rates or additional scrutiny during approval.
Minimum Credit Score for FHA Loans:
Lowest Acceptable Score: The FHA typically requires a minimum credit score 580 to qualify for the 3.5% down payment option. However, if your score is between 500 and 579, you may still qualify, but you would need to put down at least 10%.
Loan Amounts and Considerations:
Loan Amount with a 600 Credit Score: The loan amount you can get with a 600 credit score will depend on your income, DTI ratio, and the loan limits in your area. FHA loans are more flexible regarding credit scores, but your borrowing power may be limited compared to borrowers with higher credit scores.
Improving Terms: Improving your credit score to above 620 could provide better loan terms and more options, especially for USDA loans, where a 640 score is more commonly required.
FHA Loan: You can qualify with a 600-610 credit score, typically with a 3.5% down payment.
USDA Loan: This loan generally does not have minimum credit score requirements. However, many lenders require a 640 credit score, and some lenders may consider a score of 580 under certain conditions.
Loan Size: Depends on your financial profile, FHA loan limits in your area, and lender policies.
It’s advisable to consult multiple lenders to understand your options, as lender requirements vary, especially for USDA loans with a credit score of around 600.
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