hi all,

I'm doing my first refi's today. Got two loans through referrals, but it's Sunday and i can't get in touch with my manager.

On one loan, The owners are rfinancing their primary residence. they're cashing out to pay off the mortgage on an investment property they have. When I'm working on their debt ratios, do I need to include the payments on their primary residence and the property they're paying off? I'm confused because their current payment on their primary will be changing since it's the subject property, and the payment they make on the investment property will disappear (except for maintenance costs) once the refi is done since they're paying it off. So what do I include as housing expenses? Or do i just ignore both?

If it makes a difference, they're going stated income verified assets. She's a REALTOR and he's retired but gets SS, pension, and rental income.

thanks in advance,

Dan

Dan, the DR will be computed based on the new payment for the subject property. Since the investment will be paid off you don't have to include any mortgage payment for it, just the T&I. Of course you have to pay the investment off through the closing so the lender knows it will get paid.

Check with the lender's rep before submitting as the allowable DTI ratio on a stated deal will usually be lower than one on a full doc deal. The rental income will probably be subject to a 25% vacancy factor.

Also you can go stated with her no problem but most programs will not let you take a retired person stated so be careful. Can she state enough income if you have to go full doc with him? Again, run everything by your manager or your rep before submitting and don't coach the borrower on how much she must state.

Thanks for the reply SD.

Yes, she can state enough even if I have to go full doc with him.

So the T & I will still need to be mentioned as part of their monthly debt. OK. The allowable DTI on the loan is 38% for a reduced doc C/O Refi according to the guideline, so I should be OK. She's stating about $90K for herself which is actually a bit low. She made nearly twice that in '05, but '04 before was closer to $75K. Their only major debts are the two mortgages. Beyond that they pay about $500 a month in CC debt.

We're just staing about $3000/month for him, so if they want to see it, we can prove it.

thanks for the info.

Dan