Estimating monthly expenses for the lender when modifying a loan – Better to over estimate or under estimate?

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I called BofA before I was late on my mortgage to request a loan modification. I had been borrowing frequently from credit cards to help pay the loan. The woman asked me what my monthly expenses were, and I was not prepared because I thought she would mail me out a packet. I over estimated thinking that would make the need seem greater. She advised me that I did not qualify because I owed quite a bit more then I made. I then decided to stop making the payment and now that I am going on three months delinquent I again requested a modification, and this time I am faxing them the information. Am I correct to assume that after calculating (mortgage calculator) what I desire (realistically) in a payment, that it is best that my expenses when subtracted from my net pay should leave me with, for example, $ 200-$ 300, above what I would want me mortgage payment to be? That way showing that after the payment and monthly expenses I at least a have a couple of hundred dollars left over for the month.

I recently read about a gift equity loan on yahoo answers and am a little confused on how it can work best for me.

My parents bought a home for 350K and put 20K into the home and have rented it for 3 years. With the rent they have received, they have been breaking even with the bank and only owe 310,000. They want to sell me the home for the 310K so in this situation what is the best way to go about this, would using a gift equity loan be the best option and could you explain why?

Info:
Annual salary: 380,000 (before taxes)
Im willing to put a downpayment of around 60,000
Good credit
No debts, car payments, or student loans

Also, I have heard that banks will give around 3x your annual salary as a loan which in my case would be close to 250K and with my 60K down payment that works out perfectly but if I can save my down payment to put towards fixing up the home or other things that would be amazing so any ideas?

Ive used a few mortgage calculators and without the gift of equity loan I will pay around 1600 a month including taxes and hazard insurance so can someone tell me how much I might pay with the gift of equity loan?
Wow another great answer tax lady, if you read this again, could you edit your response and let me know what YOU think the best way to go is for my parents and I?

2 Comments
  1. Reply
    Landlord
    January 28, 2011 at 12:34 pm

    Laura, submit the real facts. You are going to screw it up if you continue to try to con them with BS.

  2. Reply
    the tax lady
    January 28, 2011 at 12:38 pm

    Didn’t you ask this last week? If a bank is involved, the 1099-S will NOT be for $ 310K. It will be for $ 380K. If a bank is not involved and they sell you the property for $ 310K, they still have to show the gift of $ 70K and cannot take any losses.

    Let’s see, your parents have rental property. They paid $ 370K for it and have probably depreciated it $ 30K so far. That means their cost basis is $ 340K. If it’s worth $ 380K and you end up being the one to buy it, they will have to show $ 40K in gain ($ 30K repaid at 25% tax and $ 10K at 15%). Your basis would then be $ 380K.

    From the banks point of view, you are buying a property worth $ 380K. You appear to qualify for a loan of $ 250K, so you need a down payment of $ 130K which is $ 70K more than you have at the moment. Your parents can “gift” you the money. This can be done by them accepting less in cash for the house, but they will still have to file 2 gift tax forms (one by dad and one by mom) *and* pay the income tax on the gain of $ 40K. The fact they didn’t get the cash is a non-issue. A bank is involved, the 1099-S *will* show $ 380K.

    If you get a loan of $ 250K at, say, 5%, for 30 years, the mortgage part will be $ 1342 plus escrow for property tax and insurance.

    If mom and dad give you even more equity and the loan is, say, $ 200,000, the payment drops to $ 1075 or $ 270 less a month.

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