40% DTI on 80% Cash Out Too High?

Financing, Hard Money Lenders, Private Money
1

A mortgage company I’m working with uses automated underwriting. They said they could not get me any cash out on a deal I’ve been working on, only a rate-term refi. They said my DTI was too high at 40%. Credit score was around 700.

Does this seem correct to you? I was approved before at a higher DTI but maybe things have tightened up even more. What is the threshhold on DTI with a decent credit score to get cash out on investment property.

Thanks.

2

Also the rate is currently at 7.25% on a rate-term refi. Is that a little high?

3

I can do 50% DTI with a 700 FICO all day long…the problem is your High DTI AND LTV… Where is the property located? How long have you owned it?

4

Landmarx,

Most everything has to run through an Automated UW system these days, and the computer decides what the threshholds are. Even if the lender has guidelines that allow for higher LTV and DTI the AUS may approve you for less than the maximum and that is what the lender is going to abide by. There are several pieces of information you left out. Are you going full doc or stated? How many months of reserves do you have that are verifiable? Are you self-employed or w-2’d?

For example…I have a regular customer that is a buy and hold investor and she buys at 60-65% and then refi’s and cashes out to 80%. She has a high DTI (in the 60’s), but she has 150K in the bank, she is a full doc self-employed borrower with 720+ ficos.

You have to look at the puzzle and see where all the pieces fit. Is this the same guy who gave you the runaround on your previous property until it was too late?

5

We had $11,000 cash, $47,000 401 K, full-doc. What do you think now?

Also, this is a different mortgage company, same property. They fixed the chain of obligation problem, only now to run into this. I was accepted before by 3 other banks with a higher DTI and less cash reserves. That is why I am puzzled.

Would it be just as good to get a home equity loan, after a rate-term refi?

6

I have owned the property for 10 months.

7

You should have no problem getting this file approved. Is there an issue with the appraisal? Seasoning should not be an issue at all. Man you have had nothing but issues with this property.