10 days to closing and lender denied loan due to taxes issues
Member since 2022 · 1 post · 3 votes
10 days to closing and lender denied loan due to taxes issues
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Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
4yQuote from @Alejandro Gonzalez:
Hi everyone.
I need help urgently.
I've been working with a credit union for at least 3 months now.
After a long time looking for the right property, 3 weeks ago or so I found the house and is now under contract.
To put everyone into perspective I have 2 rental properties and a 3rd one (primary home with a mother-in-law suite) that is my primary (soon to be a complete rental)
I have good W2 income, plenty of cash in the bank and my properties are cash flowing strong at the moment, however due to certain initial investments and the way my taxes were filled the last 2 years the bank is now (10 day to closing) telling me that they can not use my rentals as income so my DTI is now completely different, now the "only" income I have is my W2, this morning I received a call from the bank after 3 days trying to reach them to find out about all this that I'm sharing.
Is there something I can do, any lender that can give me a hand so I don't lose the deal?
Sincerely,
Alejandro
I don't like giving this advice, but it's time to look for another lender. I know it's wasted time but it's the "Golden Rule". He who has the gold makes the rules. Call a mortgage borker (not a bank) and see what they can put together. They have access to hundreds of companies.
8 Replies
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes4y
Quote from @Alejandro Gonzalez:
Hi everyone.
I need help urgently.
I've been working with a credit union for at least 3 months now.
After a long time looking for the right property, 3 weeks ago or so I found the house and is now under contract.
To put everyone into perspective I have 2 rental properties and a 3rd one (primary home with a mother-in-law suite) that is my primary (soon to be a complete rental)
I have good W2 income, plenty of cash in the bank and my properties are cash flowing strong at the moment, however due to certain initial investments and the way my taxes were filled the last 2 years the bank is now (10 day to closing) telling me that they can not use my rentals as income so my DTI is now completely different, now the "only" income I have is my W2, this morning I received a call from the bank after 3 days trying to reach them to find out about all this that I'm sharing.
Is there something I can do, any lender that can give me a hand so I don't lose the deal?
Sincerely,
Alejandro
I don't like giving this advice, but it's time to look for another lender. I know it's wasted time but it's the "Golden Rule". He who has the gold makes the rules. Call a mortgage borker (not a bank) and see what they can put together. They have access to hundreds of companies.
- 4yStephanie P.Pro MemberWashington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
Quote from @Alejandro Gonzalez:
Hi everyone.
I need help urgently.
I've been working with a credit union for at least 3 months now.
After a long time looking for the right property, 3 weeks ago or so I found the house and is now under contract.
To put everyone into perspective I have 2 rental properties and a 3rd one (primary home with a mother-in-law suite) that is my primary (soon to be a complete rental)
I have good W2 income, plenty of cash in the bank and my properties are cash flowing strong at the moment, however due to certain initial investments and the way my taxes were filled the last 2 years the bank is now (10 day to closing) telling me that they can not use my rentals as income so my DTI is now completely different, now the "only" income I have is my W2, this morning I received a call from the bank after 3 days trying to reach them to find out about all this that I'm sharing.
Is there something I can do, any lender that can give me a hand so I don't lose the deal?
Sincerely,
Alejandro
Go with a DSCR loan for the new property and call it a day. You'll probably have to get an extension to the contract, but you should be able to close in under 30 days since you have all of your ducks in a row. Taxes aren't required nor is W2 income, so as long as the new property is cash flowing and you have decent credit, you should be good.
Stephanie
- Lender · Austin Texas · Member since 2022 · 319 posts · 156 votes4y
DSCR is going to take 21ish days to close - you could close it quickly (in 10 days or less on a bridge) - typically 30% down.
As others have said - go with a low doc DSCR. They do not care about your DTI, w2, or taxes.
Or if you are at risk of losing your earnest money and the contract, and really want to close it- a 1 yr bridge should be fairly easy to accomplish in tampa.
- Lender · Member since 2020 · 331 posts · 209 votes4y
Quote from @Alejandro Gonzalez:
Hi everyone.
I need help urgently.
I've been working with a credit union for at least 3 months now.
After a long time looking for the right property, 3 weeks ago or so I found the house and is now under contract.
To put everyone into perspective I have 2 rental properties and a 3rd one (primary home with a mother-in-law suite) that is my primary (soon to be a complete rental)
I have good W2 income, plenty of cash in the bank and my properties are cash flowing strong at the moment, however due to certain initial investments and the way my taxes were filled the last 2 years the bank is now (10 day to closing) telling me that they can not use my rentals as income so my DTI is now completely different, now the "only" income I have is my W2, this morning I received a call from the bank after 3 days trying to reach them to find out about all this that I'm sharing.
Is there something I can do, any lender that can give me a hand so I don't lose the deal?
Sincerely,
Alejandro
Ugh sorry this happened. so frustrating. I recommend calling a mortgage broker who does both conventional and DSCR. Have them calculate your DTI. There is a conventional investment home loan that allows you to use the proposed rental income on the subject property to qualify. We are getting Clear to Close on our conventional loans in 10 days or less if clients are responsive. If it were me, I'd chase down conventional first before going DSCR because terms will be better (no PPP, better rate, etc). But DSCR is a back up option if DTI doesn't work. As others said, closing takes longer. Good luck!
- 4yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Alejandro Gonzalez:
Hi everyone.
I need help urgently.
I've been working with a credit union for at least 3 months now.
After a long time looking for the right property, 3 weeks ago or so I found the house and is now under contract.
To put everyone into perspective I have 2 rental properties and a 3rd one (primary home with a mother-in-law suite) that is my primary (soon to be a complete rental)
I have good W2 income, plenty of cash in the bank and my properties are cash flowing strong at the moment, however due to certain initial investments and the way my taxes were filled the last 2 years the bank is now (10 day to closing) telling me that they can not use my rentals as income so my DTI is now completely different, now the "only" income I have is my W2, this morning I received a call from the bank after 3 days trying to reach them to find out about all this that I'm sharing.
Is there something I can do, any lender that can give me a hand so I don't lose the deal?
Sincerely,
Alejandro
You might be able to do a DSCR loan if this is for an investment property. If they are okay with extending for 3 weeks you should be fine. If not, you could look into doing a short term loan and then refinancing into a fixed term loan.
LuxePrivate Investments LLC 570 Reviews - Realtor · SC · Member since 2019 · 8 posts · 0 votes4y
Hi normally you cannot lose your escrow deposit if the bank denies your loan. If you want to continue
with this sale, you should put in an extension for the closing asap giving you enough time to find another mortgage company or private lender. Good luck.
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