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2nd Mortgage to Pay off Debt

I recently had my hours reduced at work. I have been looking into taking out a 2nd on my home to pay off about $37k in CC debt. My FICO is 710 and debt to income is high - $6,400/mo. I make $89k and my home was appraised at $375. I owe $335k. I have also read a bit about debt consolidation programs but I have not looked into those. I would like to get my credit score up so I figure an installment loan would help with this too. Any advise is welcome! by singer642 from Flagstaff, Arizona. Oct 29th 2018 Reply

Hello there Currently the lender that offer seconds will not usually exceed 80% CLTV (combine loan to value.- add first mortgage balance to the second loan amount and divide by estimated value). Or just take 80% of value and subtract loan amount At this point you are exceeding 80% with you current loan. With a value of 375, your maximum combined loan amount is 300k. I wish I had better news. FHA loans will go up to 85% but you are exceeding the statutory maximum loan amount. While we can not help you now, at least you have some additional tools to work with as far calculations are concerned.

Oct 29th 2018
William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,728 contributions

More info needed, but in general, you don't have sufficient equity to take out a 2nd position loan. As others have said, your maximum debt to income ratio will be capped at 80% Combined Loan to Value (CLTV)... but you are at nearly 90% LTV right now.. You just don't have enough equity for a lender to offer you 2nd position financing.. Also, when it comes to calculating your DTI, we only look at the minimum require monthly payments associated with debt.. Credit cards, car loans, student loans, etc.. and we also include the new housing payment.. we take that number and divide it by your monthly income.. We do not include things like car insurance, utility bills, cell phone bills, health care, etc.. Most borrowers calculate their debt to income ratios incorrectly.. in fact, some loan officers don't get it right either.. So if your $6400 per month is just debt payments.. then your DTI would be over 86% ($6400 monthly debt divided by $7416 monthly income = 86%) The most lenient loan programs only go to 56% DTI... I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 NMLS# 226347 / LendUS, NMLS 1938/ AZMB0121893

Oct 30th 2018
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