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High Debt Ratio

I am looking to buy in the UP Mi area.My income, due to a divorce is being cut from 4400. a month to just 15K a month starting the beginning of Sept.I've been looking a low cost homes under 70k and although it seems my measly soon to be income in not getting in the way of a home loan, my soon to be dept to income will get in the way.I have a $522./mo car payment I cosigned for six months ago as a trade in for another car more suitable and one student loan at $157./mo. I'm so far ahead on the student loan, I wouldn't have to pay them for a year. The loan is now just under 7k left on it.With those two loans, that makes my income to debt too high as of Sept.I "might" have found one lender willing to work with me even through the car loan is only six months old taking into consideration the original cars payment turned in for the new one.I would like other options however incase they cannot do this after all. Most lenders have told me they cannot take into consideration two car loans and want 12 months of proof I'm not the one paying for the six month old car. I only have six months of proof on that one, soon to be seven.My credit is with in guildlines and should be no problem on that end. It's just that car.I cannot wait for the car to be paid off.Once I rent, pay the moving expenses, my option to buy a home will be gone. I can only move once and a rental is too expensive to consider but might be forced apon me if I can't get a mortgage.Any lenders out there that deal with debt to income on my soon to be income?Gale by capps._844_856 from Frazier Park, California. Feb 11th 2013 Reply


Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

Purchase a home now, at a price range that will keep your total debt ratio below 43% of your soon-to-be income. Or, search for a home that offers owner financing, where your future debt ratio will not be a problem. Just don't get over your head in monthly payments, and lose it all.

Feb 11th 2013
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Barb Lanis (BarbLanis)
#70 ranked lender in Illinois - 663 contributions

Hi Michigan bound! It seems that your best bet is to go for a land contract until you have the 12 months proof that someone else is making the payment on the auto loan. Land contracts are very common in MI. I know this because I was born and raised there. Also worked for many years with land contracts. Why not consider this? Of course, there's no guarantee since none of us on this board know all of your details. Why not think about a 2-3 year land contract? Yes, interest rate may be a little higher, but it gives you some time to get settled in with a job and cash. Just keep in mind that a seller, in this market, is also having a hard time launching the property. Don't settle for a super high interest rate!

Feb 11th 2013
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,722 contributions

The problem is that FHA and conventional guidelines state how debt to income ratios are to be calculated.. and the rules are very clear and strict... anyone saying they can go around the guideline is either lying or not experienced enough to give you proper information... you have to prove that you are not paying the payments with canceled checks or bank statements from the person that is paying. No way around this.. If you're looking to move to Michigan, then the advice of looking for a land contract is best if you're looking right away... the economy there is still in the dumps and homes are just not selling.. It's a buyer's market and you should have no problem finding someone willing to finance you with favorable terms.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Feb 11th 2013
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Edgar Aranda (earanda)
#753 ranked lender in California - 93 contributions

please feel free to give me a call to discuss any possible solution to your scenario. 619-330-0832thank you

Feb 11th 2013
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Been looking at the 50K range. Any lower and most homes need too many repairs which I will not be able to afford.50K, maybe 55K.Found some lenders that will lend as low as 35K but again, those homes are scary and need to many repairs.Through about going the Land Contract route but then again, the payments would be to high every month and I don't want to worry about payments every month.I have talked to many lenders/mortgage/brokers and only one will take into consideration two separate car payments as proof I'm not paying the car loan. The first car, only a year old, was turned in for something that is more suitable for my handicap.That's where I'm stuck now. The car. The car is the only thing in my way after a hurdle of other obstacles now gone.I've been on a long road searching and I haven't given up.I do know if I move into a rental that will be it for me. I cannot move again due to the expense.

Feb 11th 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

I own and manage a few lease/option properties in my area, Portland Oregon. I set the monthly payments about the same as the market rent, or just slightly higher. Many rental homes can be turned into rent-to-own homes by using the proper approach to the landlord. Feel free to call me at 503-620-2239, if you would like to discuss this option. Dave, at TrueCompass Lending

Feb 11th 2013
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Hi Dave,Thanks but I'm not looking to buy on the west coast. My goal is to get away from Ca. and start over. I don't have an issue with a solid check every month so moving to another state will not create a job issue for me.I've been looking at a certain area in MI for almost two years now and even went to MI to make sure this is what I want and need.I was born and raised in So. Ca and I need to start over.A mortgage is cheaper then rent or a land contract by far and this is the only chance I have.I've run across a lot of bad information from lenders and rules that would make your head spin but in almost every situation I thought I was in, I found lenders that could bypass those issues but...that car. That final problem is now my only problem in finding a lender/broker.After everything I've manage to fix, this car is stopping me and there is no chance of paying it off or refinancing due to it's a lease and still has 2 1/2 years to go.So, if anyone knows a lender that will work with a DTI based on the information above, please let me know that is licensed in the MI area in the UP.I have one lender that thinks she can do it even after taking all my info but, I would like a back up in case she is wrong.

Feb 11th 2013
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The land contact is an option. Unfortunately, it's not a buyers market this year in the area I've been looking at for two years. This year, houses have sold like crazy including one I was very serious about buying. Unfortunately, the realtor didn't tell me the owner was up for a land contract when we were there so instead, went searching for a mortgage lender instead. I found out only about a month ago when the home showed up as pending finance. When I called, I then found out the owner sold it as a land contract. I would have gone for it while I was there if I had known. Now, all the homes we looked at sold and even the realtor said homes are selling like crazy. There is nothing at the moment on the market that suits my needs that a lender would consider. Meaning, the prices are too low or the homes are way to costly, beyond my means or needs too many repairs from the get go. As for the debt ratio, my loan officer already pulled my credit and that part is fine. The debt ratio due to the car, she feels she can get a lender to accept the two car payments as 12 months since one car was turned in and paid off by the new car creditor. We have 7 months of records as my not paying for it and 12 months on the other car. Plenty of bank statements on both our ends but she made no promises. She does believe she might be able to get a lender to accept both and if she does, I'll post it here along with telling the world what a fantastic LO she is and recommend her highly but, my trek at continuing the search will not stop with her. Many have told me in the past I'd "never" get a loan for various reasons only to find out that was far from the truth. Those reasons may apply to a certain lender but far from all. Far from "never".We've looked into a lease buy out on the car but that would take too long. I don't have the time. I wasn't told about the 12 months of proof until about 2 months ago and by that time, I probably talked to about 15 lenders. None said or even brought up that's all I'd need even before that. Now, I'm short providing proof of payments by 5 months. So, we're into Feb. That's puts the 12 time frame in July. That gives me two months until time runs out. That's not enough time to find a home, go through the lending process...close, and move. That's why I'm determined to find a way to make more time. Even two months more would make a world of difference. If I had been told when I first started looking that a late payment on a student loan 3 years ago wouldn't matter instead of being told "I'd never qualify for a loan through anyone" making me panic and losing more months calling that student loan creditor or, telling me my income will be too low for anyone to consider lending to me no matter what my scores are or how much I have in savings or, telling me my bankruptcy over three years ago doomed me until 2019 (I'm not exactly young) and four or five other things I can remember at this point, I'd have a home right now. Toyota, the new lender wants me to come in Thursday to see if the person I co-signed for now qualifies to get the car into his name.There is a little hope there but I doubt it really.His scores are still about the same, upper 500s but too low but I'll talk to him. The thing that is keeping me from the land contract at this point is I have to stay here until Jun..that is in Ca when my youngest daughter graduates and the next day, my middle daughter is getting married. I also have to stay a few months beyond that to go back to court before she turns 18...time undetermined until I file to do so to try to get back 50K which my ex owes me for our home and is in the final decree. So that means maintain the rent here and the mortgage for a while. With a land contact, even with what I make now that's too hard to juggle financially. I'm paying slightly over 1,500/mo now. Another rent/land contract type, even in MI is around 700-800/mo. I'm looking at 3-400/mo if I get a lender. That I can do and still save money for the actual move.Back to Land Contract. Nothing much out there right now but, if I do go that route, I was told by USDA that I'd still qualify for their program in Sept. as I would not be listed as the owner. Under a mortgage, I wouldn't qualify so there is that but, with out an owner of a reasonable conditioned home, there is nothing to qualify for. I have never seen property move so fast until this year there. I'd say, it's no longer a "buyers market". That's now over.The area isn't that well know or sought after so it's not like moving to...well here where I am now...a tourist trap. No, most people want out of that area. I want in.There has to be a lender out there who also feels it's possible to combine the cars two loans into one for the 12 month requirement. We have the proof one car merged into the other. All of it. We...no I, just need more options on the right lenders/loan officers.Sorry for the long posts.

Feb 12th 2013
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