Preapproval & DTI question....

[hejamada]

Hi Gang,
Been awhile since i talked to y'all. Been busy little beaver since i've been gone, but how is it that us newbies always seem to have more ?'s at just about the time we think we have the ans.?:confused: Anyway, (a) i've read
that when purchasing rental property, lenders consider 75% of rental income toward your total monthly income.(i.e. add it to your monthly JOB income).
If this is the case, would it make sense to locate a potential rental to purchase so that you would have the rent roll info. for them to consider,
BEFORE you went to get preapproved, so to increase your potential mortgage
loan? Or would it really even matter that much? (b) Is debt to income ratio
figured on your "gross"(pretax) monthly income, or your "net"(after tax) monthly income? And is 28/36 the ratio they use?(lenders).
Thanks all!! Lots of forums out there, but this one still leads the pack:praise:

[hejamada]

Hello out there. Seem to be some changes since my previous encounter with this forum. Seem to be "less" posters here. I seem to remember ?'s
getting answered almost before you could leave the site, this post on here day an half, still no ans. HHmmmmmm!!! Did i post on wrong board? Does the ? seem to illogical for even a noob? Is it worded so as it doesn't make any sense? Have i PO'd somebody in the past??? Or are y'all just getting tired of ans. noob ?'s Sure can't say i'd blame ya there!!! Oh well, guess i'll wait alittle longer and see!! Thanks again!!

[Debbie]

Hi Gang,
Been awhile since i talked to y'all. Been busy little beaver since i've been gone, but how is it that us newbies always seem to have more ?'s at just about the time we think we have the ans.?:confused:
You're not alone. Even oldbies get confused every once in a while....
Anyway, (a) i've read that when purchasing rental property, lenders consider 75% of rental income toward your total monthly income.(i.e. add it to your monthly JOB income).
Not always. In my case, it's 3-20% down (our choice) based on our job income. We chose 20% down. Although they did include 75% of the NET income of the rent profit.
If this is the case, would it make sense to locate a potential rental to purchase so that you would have the rent roll info. for them to consider,
BEFORE you went to get preapproved, so to increase your potential mortgage
loan?
If I understand your question, it would not make sense to seek mortgage when you do not have a property to purchase. Find a rental property (sfh, duplex, triplex, fourplex, etc) first then do your due diligence. That would include knowing the fees of property taxes, insurance, maintenance fees (if any), proof of rents, etc.
Or would it really even matter that much?
Yes, it does matter much. See my last comment above.
(b) Is debt to income ratio figured on your "gross"(pretax) monthly income, or your "net"(after tax) monthly income?
See above blue comments.
And is 28/36 the ratio they use?(lenders).
That really depends on each lenders. Not all are the same.
Thanks all!! Lots of forums out there, but this one still leads the pack:praise:

Thanx for the praise!:thumbsup:

[Debbie]

Hello out there. Seem to be some changes since my previous encounter with this forum. Seem to be "less" posters here. I seem to remember ?'s
getting answered almost before you could leave the site, this post on here day an half, still no ans. HHmmmmmm!!! Did i post on wrong board? Does the ? seem to illogical for even a noob? Is it worded so as it doesn't make any sense? Have i PO'd somebody in the past??? Or are y'all just getting tired of ans. noob ?'s Sure can't say i'd blame ya there!!! Oh well, guess i'll wait alittle longer and see!! Thanks again!!

Nope, you didn't post in the wrong forum. We LOVE to answer questions!!!

It's springtime! We like to go outdoors when weather gets warmer. Your current and future questions will be answered but give us a little time to respond during spring - summer. :D

[hejamada]

Thanks Debbie:
Locating potential property first seemed a to make sense to me also, but have
been researching, and seem to run across alot of "conflicting" info. Guess i need to trust my own instincts alittle more, but it sure is GR8 to have a
website where the people on it still remember what it's like to be at the beginning edge of the learning curve. Thanks agian!!!

[hejamada]

P.S.......Oops.....forgot, spring does hit IL. abit sooner than it does
upstate New York. (bummer)!!

[Aldo]

If you believe, based on your current financial position, that you will be preapproved for a dollar amount likely to be enough to finance any property (not a specific property) in your price range, do it. There isn't much advantage for you, but sellers are more likely accept an offer when they know financing won't become an issue. Remember, too, that your preapproved amount is not necessarily the max you can borrow. If your lender considers 50% or 75% of a property's positive cash flow as income, that will increase the amount of money available to you.