High DTI and utilization - need HELOC to consolidate - what options do I have?

[nomoneytowaste]

I'm in a cycle I need to break.  Good news is I am under 50% LTV on my home.  Bad news is I can't access the equity due to high utilization on unsecured AND high DTI.

Is there any lender that will take the time to understand - and possibly direct pay the credit cards with the loan proceeds - knowing this will address both the DTI and my adversely affected credit score?

How else - besides additional income - do I get out of the cycle of paying interest only each month and never gaining any traction on principal of the credit cards?  I am fighting just to make the minimum payments!

Thanks for the suggestions in advance!

[NoMoreE46]

Hello @nomoneytowaste ,

Welcome to my Fico.  I understand you have some unsecured debt that you want to pay off with the equity in your house.

I am going request that a Moderator move your question under the Mortgage/HELOC area.  Under this area, you should hopefully get an industry experienced response.

[ShanetheMortgageMan]

There are a lot of HELOC lenders that will exclude the payments on the debt you'd be paying off with the HELOC from your DTI calculation.  Not all of them will though, so just make sure that is one of the first questions you ask potential HELOC lenders so you can decide to continue the application process with them or not.

[nomoneytowaste]

This is awesome news Shane, thank you!

Can you point me to any lenders you know of that offer this?  Or a "list" that may be out there somewhere to help me narrow down the options some?

So if I can overcome the DTI hurdle, how big of a hurdle is my CS?  I currently have a 688 Ex Fico8 score.  I believe it would be 780+ if it weren't for 90%+ utilization.  I have no derogatories, good mix and age, and low inquiries....

[NoMoreE46]

@nomoneytowaste, it would best to do your own homework from here to avoid any potential TOS issues.

Going off of what @ShanetheMortgageMan  provided,  you need to find lenders that will accept "front end DTI" calculations.  Linked is an explanation of the two types of DTIs:  Front-End Debt-to-Income (investopedia.com)

Good luck!

[Shooting-For-800]

What about that new credit card HELOC company?

[Shooting-For-800]

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@Shooting-For-800 wrote:

What about that new credit card HELOC company?

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Aven. Maybe other similar cards for fast and easy?

[nomoneytowaste]

Excellent suggestion - thank you!

Unfortunately, they do not support my state (Delaware) at this time.  Definitely open to any and all suggestions though, so keep them coming!

[ShanetheMortgageMan]

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@nomoneytowaste wrote:

So if I can overcome the DTI hurdle, how big of a hurdle is my CS?  I currently have a 688 Ex Fico8 score.  I believe it would be 780+ if it weren't for 90%+ utilization.  I have no derogatories, good mix and age, and low inquiries....

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Credit score is one of the factors they use to determine if you can qualify, it's just as important as a qualifying DTI or any other guideline that has to be met.  Some HELOC lenders use your mortgage FICO scores and some use FICO 8's.  You can ask what bureau(s) and scoring model they use to determine if you qualify.  A 688 score would meet most programs requirements, especially if you are at a lower CLTV.

As as far as recommendations, I'd suggest you ask the loan officer who helped you get your current mortgage.  You might want to ask your bank about their HELOC program, if any, or if they don't have one then ask if they have any recommendations.  Call around other banks local to you.  Ask your existing mortgage company if they offer a HELEC.  If you keep in touch with your real estate agent ask if they have a loan officer that offers HELOC's.

[swsjfs1]

Just curious if you were able to find a HELOC loan?  I'm currently in a similar situation and would appreciate any recommendations/advice.  Thanks