we were Denied....again
Investor · Bath, NY · Member since 2015 · 149 posts · 44 votes
well.... we just got denied for another loan...DTI ratio too high for me and my hubby. I'm starting to get discouraged. I wish I would have found this site years ago or read rich dad poor dad. Too many credit cards...in too deep and trying to get out but stuck in the "rat race". Still not giving up but hoping I catch a break soon. We found a great deal and now have no way to finance it.
@Nicole Wood can you buy with hard money or private money or finance it with a partner that is qualified?
Call the credit card company and ask for a discount or reduction. I'm assuming you have some capital saved up to put down on the new place... apply it to your debt.
Now, if you go the reduction/discount route check to see if/how it'll impact credit scores.
well.... we just got denied for another loan...DTI ratio too high for me and my hubby. I'm starting to get discouraged. I wish I would have found this site years ago or read rich dad poor dad. Too many credit cards...in too deep and trying to get out but stuck in the "rat race". Still not giving up but hoping I catch a break soon. We found a great deal and now have no way to finance it.
We had the same problem starting out. Merge all your debt into one person.
My wife has the better credit and better W2 job. So we concentrated on paying off the debt in her name first, and I even used some of my own line of credit, credit cards, etc to help pay some of hers.
That allowed us to purchase property in her name and get started.
well.... we just got denied for another loan...DTI ratio too high for me and my hubby. I'm starting to get discouraged. I wish I would have found this site years ago or read rich dad poor dad. Too many credit cards...in too deep and trying to get out but stuck in the "rat race". Still not giving up but hoping I catch a break soon. We found a great deal and now have no way to finance it.
We had the same problem starting out. Merge all your debt into one person.
My wife has the better credit and better W2 job. So we concentrated on paying off the debt in her name first, and I even used some of my own line of credit, credit cards, etc to help pay some of hers.
That allowed us to purchase property in her name and get started.
Just confirming that this can indeed work. :)
Were selling some things we dont need..such as the hot tub thag was here when i bought my current home..obviously before i knew about investing and a slew of of other things to raise capital. :)
@Nicole Wood Don't give up! There is always a way.
Sometimes losing a deal can just mean that you need to take a step back and get your finances in better order. Do you have any high priced vehicle loans that you could dump quickly? We bought our primary residence after basically turning over our truck to the dealer to eliminate the loan and lower our DTI. Remember there will always be another deal out there. I hope it works out for you.
i dont have a 20% downpayment yet or i wouldgo commercial. So much easier. Were thinking of saving up and buying with a 203k loan through fha. It requires 3% down of purchase price plus rehab costs. But dti has to be 50% or lower.
We both have hogh vehicle payments. But currently im a home health nurse so i have to have a reliabke vehicle plus the way my loan was with "taxes and tags" i now owe 15000 still on a car only worth 9000 or so. NEVER BUY A NEW CAR FROM A DEALER.
Owner financing would be amazing however i feel like the realtors in my area arent exoerienced with this so dont even end up asking the seller. If i met up with the realtor and wrote an offer with owner financing she would have to show it to them correct?
for an FHA you have to live in the property. So if its a single family, its not really an investment. Min for investment mortgage is 15%.
I'm not entirely sure, but yes, I believe the realtor would have to show the seller. My only concern with that is would the realtor be willing since it could affect their commission? I mean, im sure they'd still get one if the home sold at the price they were asking, but it would be over time unless you found an investor who would buy the house with cash for you and you pay the investor back. Just brainstorming here. I'm interested in knowing if that could work.
Definitely don't give up! I believe there is a way. I'm interested in learning about more options that don't really involve the banks.
The realtor still gets paid thats why you have to give a down payment when you do owner financing.
Also fha yes you have to live in it however the house im looking at we would offer 42000 have 20000 for rehab and arv is 90000 or higher in that neighborhood. If it werent to sell we could easily rent it out for 1000 or more. Home is listed for 49000 however has been on the market a while. So we planned to live there a year sell it take profit for a down payment on the next one hopefully a duplex or higher.
ive never had a bankruptcy. Quite a bit of debt though.
If a mortgage on a 42k property puts you over 50% DTI then you have way too much debt to be worrying about REI at this point. Pay down the cards and build an emergency fund and then start REI.
Very true.
Maybe i should explain more everyone. I already own my current home through the usda. I also own a home that i am selling rent to own...bad deal for sure. Either way my fiance was the one who went for the loan. He only makes 15$ am hour amd had a truck loan and a few credit cards. He got denied. I cannot get another usda loan because i own the house already amd were hoping to rent it out when we move. Also my dti would be fine im a registered nurse however the fha doesnt allow you to use rent as income to offset debt. So i would have to sell my current home rather thab renting it out or have my dti be 50% with 2 house payments which the fha loan officer says is close. Even though i would be making 200 on cash flow after all expenses on this property none of it would count so the entire 845 house payment would count as a debt. But...i am currently selling some items we dont need to pay down credit card debts etc. Also does anyone reccomend consolidating debt on credit cards etc?
@ Nicole Frawley You said car payments high and I know you need reliable transportation for work but what about trading your cars in for ones with lower payments and lower price but still relatively new. That would reduce your debt some or even buy a good used car for cash temporarily just to get the car loans off until you get a loan. You can always get another car loan after. Car loans are much easier than home loans.
Also, maybe pay down the mortage on the home you currently own? You said your close to the 50% so If you can just get something down even temporarily until you can qualify. Also, if you do get an approval don't buy anything or open any new credit cards until it closes escrow. I've heard of people who have been approved loosing their financing right before close because they bought something on credit or opened a new credit card.
If all else fails, you can look into owner financing but if your looking to flip owner financing usually doesn't offer enough equity for that but if you want it to live in yourself or rent it out for long term it could be a way to get another property without traditional financing.
You can talk to owners yourself, and just ask if they would consider it, worse they can do it say no.
last i checked i couldnt trade my car in unless i was buying a more expensive car thats ehat the dealer told me...does anyone knoq how to do that for sure?
@Nicole Wood you have had a lot of advice here that is good. I will try to fill in a few blanks. I have helped a lot of people get started.
- If you are upside down in your car I would drive it until it dies. It is a bad idea to keep rolling previous car debt into new loans.
- I would NOT pay down your mortgage faster, that money will work more for you paying down other debt, which is your real issue.
- I would NOT consolidate debt. Statistics show that most people who consolidate debt end up owing even more in the future. It's a weird psychological thing. Plus consolidating debt doesn't reduce it, and may actually cost you more money in fees to accomplish.
- check out Dave Ramsey's books and envelope program. His debt snowball concept has worked for literally thousands of people. I like the Dave Ramsey method of paying down the smallest debt first. Most people tell you to pay highest interest rates first, but there is a great sense of accomplishment of getting something totally paid off. The envelope system is a great discipline as well and helps you see where there is excess spending you will not miss.
I am glad to hear your credit is good, it is one of your most valuable assets in life. You seem determined so here is what I would do in your position, just some suggestions of things that have worked for me and might work for you too:
1. sit down and compile a list of all your debt and all your assets.
2. make a list of the decisions and behavior patterns that caused you to be in debt. DO NOT let yourself get into the head space of beating yourself up about it. You are in debt because of decisions you made in the past, all you are doing here is recognizing what CAUSED you to make these decisions so you can be more aware the next time you are tempted, and make different decisions that help you pay down debt so you can create passive income by investing in real estate.
3. make a list of all the reasons why you want to be out of debt. What do you want to do in life? Who do you want to be? What and Who matters most to you? How will getting out of debt help you have and do the things that matter most to you? This is your WHY. Post this someplace you will see it multiple times a day - I like the bathroom mirror. When you are tempted to stray, be impulsive, or simply want something you can't afford, your WHY will help you stay on course.
4. make an expense plan. I like this better than a budget. You are not doing without. Instead, you have limited resources, like we all do, and must choose how you will spend your money. This allows you to choose to pay down debt instead of eating out etc. Make paying down debt a priority.
You said that you could probably qualify for loans on your own, so consider paying down debt in your name first like another investor here shared they successfully did.
5. Continue your real estate education and get out and meet other investors. Learn to analyze deals, know your target market, and put together your vendor team. Call and talk to lenders, follow up on some of these posts with referrals to creative lenders with more flexible criteria, look into commercial loans that look at the property as collateral and have lower borrowing requirements. Find your insurance agents general contractors and the other trades you will need. This way, when you find a lender who will qualify you to buy you will be ready!
You can do this! Good luck!!
thank you! And yes i made some definite bad decisions at one point but am hoping to turn things around. Weve been sticking to a tight "budget" amd are putting anything extra toward credit debts. Ive been on biggerpockets for a long time. Ive listened so far to 2 pages of the podcasts and am currently reading brandons book on rental property investing. Anither nice thing is i get pretty good income tax return so that will significantly pay down a lot of debts come next april or so. Im most upset about my car that was a very bad credit move and i dont plan to buy brand new again. Lessons learned. I definitely am not giving up. Just have to work harder and longer but we will get there.