DTI Calculation Excluding Current Mortgage Payments!
Back in 2019 we highlighted a fantastic national mortgage program being offered by a major money-center institution, Citicorp, that actually excludes current mortgage payments from the debt-to-income (DTI) calculation for a homebuyer who is actively looking for a new home and will be selling the current one!
Given the current state of the market that mandates buyers having all of their ducks in order (pre-approved mortgage being critical), it was felt that the article should be reposted.
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‘A Mortgage Application For A Property Purchase That Actually Excludes A Current Mortgage From The DTI Calculation?‘, January 2019
So let me get this straight…A mortgage applicant currently has an outstanding mortgage on their home, and those expenses can be excluded from the DTI calculation for a mortgage that will be used to buy another home?
Are we talking about a bridge loan or a loan from some other non-traditional lender?
The answer is no, that this program is from a global bank created to address the fact that selling a residential property in the current market can take a greater amount of time than it has been.
When the program was first described to me it took a few minutes to digest the concept, and once that happened I wondered why I was unaware that it existed.
Then I felt that I would like to share it, because in the current residential real estate environment it seems like a program that many home sellers who have identified a home they would like to buy, could definitely benefit from knowing about.
Of course for this mortgage program there are reserve requirements that will vary depending on each applicants financial profile, and where the current home is in the selling process. In other words is the home for sale, or is it in contract.
In addition proof is required that the current home is actually on the market (or in contract). And then, all of the other typical underwriting guidelines will need to be met.
But, for those who may fit the scenario of actively selling a residence while wanting to purchase the next one, this mortgage product sounds as if it has great potential.
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