Mortgage I am not liable for counted in my DTI

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Mortgage I am not liable for counted in my DTI

Mike MalyyPro Member
Investor · Sacramento, CA · Member since 2019 · 44 posts · 38 votes

Hi,

I am a still a small time investor and still work my W2 while I try to build a portfolio. I am currently running into an issue with some lenders which prevents me from acquiring financing. I own an investment property, but not a primary residence. The issue is, I am on the deed to my parents' primary residence, but not on the mortgage. I have reached out to a number of lenders and brokers, and I am being told that they are required to count my parents' mortgage as a liability against my DTI, which prevents me from getting another mortgage. I find it ridiculous. I understand that I am liable for taxes and insurance because my name is on the deed, but not the mortgage. Additionally, Chase bank tends to agree with me as they had absolutely no problem qualifying me for another mortgage, but Chase doesn't want to finance anything that has dry rot (which any discounted property will have) due to it being a health issue. Needless to say, Chase won't finance anything I want to buy.

My mortgage broker suggested either taking me off the parents' deed (which I don't want to do at this point) or providing 12 months of bank statements that my parents have been paying mortgage out of their account without my name on it (which I am unable to do because of certain arrangements with my parents).

It would be great if a lender or an experienced investor could chime in and let me know if there are other alternatives to deal with this as I have already found the property that I want to purchase.

Thanks

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Shaun Weekes
Loan Officer / Processor / Life & Health Agent · Rancho Cucamonga, CA · Member since 2014 · 1k+ posts · 757 votes
4y
Originally posted by @Mike Malyy:

Hi,

I am a still a small time investor and still work my W2 while I try to build a portfolio. I am currently running into an issue with some lenders which prevents me from acquiring financing. I own an investment property, but not a primary residence. The issue is, I am on the deed to my parents' primary residence, but not on the mortgage. I have reached out to a number of lenders and brokers, and I am being told that they are required to count my parents' mortgage as a liability against my DTI, which prevents me from getting another mortgage. I find it ridiculous. I understand that I am liable for taxes and insurance because my name is on the deed, but not the mortgage. Additionally, Chase bank tends to agree with me as they had absolutely no problem qualifying me for another mortgage, but Chase doesn't want to finance anything that has dry rot (which any discounted property will have) due to it being a health issue. Needless to say, Chase won't finance anything I want to buy.

My mortgage broker suggested either taking me off the parents' deed (which I don't want to do at this point) or providing 12 months of bank statements that my parents have been paying mortgage out of their account without my name on it (which I am unable to do because of certain arrangements with my parents).

It would be great if a lender or an experienced investor could chime in and let me know if there are other alternatives to deal with this as I have already found the property that I want to purchase.

Thanks

The taxes and Insurance will be included in your DTI since you own the home. The mortgage payment shouldn't be counted unless you're on the mortgage and in this case you're not.

I hope this helps.

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  • Andrea Lane
    Member since 2021 · 116 posts · 79 votes
    4y

    Mike

    Are you purchasing the property as your primary property or a residence? Is the loan in your name or an LLC? What state are you looking to purchase in? If this is not a primary residence or LLC I can give you a list of HMLs that may be able to help you can see if any of them can help (I am NOT a broker nor do I get a referral fee).

    0Reply
  • Mike MalyyPro Member
    OP
    Investor · Sacramento, CA · Member since 2019 · 44 posts · 38 votes
    4y

    @Andrea Lane thank you for your reply. The financing would be in my name and would be for a primary residence, because I don’t have one at the moment, and I want to take advantage of low down payment option.

    However, I wouldn't mind getting your HML contacts as I'm looking at investment properties as well.

    0Reply
  • Shaun Weekes
    Loan Officer / Processor / Life & Health Agent · Rancho Cucamonga, CA · Member since 2014 · 1k+ posts · 757 votes
    4y
    Originally posted by @Mike Malyy:

    Hi,

    I am a still a small time investor and still work my W2 while I try to build a portfolio. I am currently running into an issue with some lenders which prevents me from acquiring financing. I own an investment property, but not a primary residence. The issue is, I am on the deed to my parents' primary residence, but not on the mortgage. I have reached out to a number of lenders and brokers, and I am being told that they are required to count my parents' mortgage as a liability against my DTI, which prevents me from getting another mortgage. I find it ridiculous. I understand that I am liable for taxes and insurance because my name is on the deed, but not the mortgage. Additionally, Chase bank tends to agree with me as they had absolutely no problem qualifying me for another mortgage, but Chase doesn't want to finance anything that has dry rot (which any discounted property will have) due to it being a health issue. Needless to say, Chase won't finance anything I want to buy.

    My mortgage broker suggested either taking me off the parents' deed (which I don't want to do at this point) or providing 12 months of bank statements that my parents have been paying mortgage out of their account without my name on it (which I am unable to do because of certain arrangements with my parents).

    It would be great if a lender or an experienced investor could chime in and let me know if there are other alternatives to deal with this as I have already found the property that I want to purchase.

    Thanks

    The taxes and Insurance will be included in your DTI since you own the home. The mortgage payment shouldn't be counted unless you're on the mortgage and in this case you're not.

    I hope this helps.

    1Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    4y

    If you are on your parents deed because you expect to inherit it someday. You should get yourself off the deed. That will give you a stepped up basis and avoid a ton of taxes. If there’s another reason then NM and carry on. 

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  • Mike MalyyPro Member
    OP
    Investor · Sacramento, CA · Member since 2019 · 44 posts · 38 votes
    4y

    @Shaun Weekes thank you for your input.

    @Bill Brandt I was originally added to co-sign for their HELOC as they are semi-retired. It's now closed, but we plan on opening another one in the future so we don't want to touch it right now because it triggered tax reassessment last time we did it. I will eventually inherit that property, but things will be restructured by the time it happens.

    0Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    4y

    You should be able to co-sign on the heloc without being on the title. I did that for my mom about 5 years ago. You’re just opening yourself up to $10’s of thousand in additional taxes, and additional liability exposure on their home, on top of the current problems it’s causing you. 

    0Reply
  • Mike MalyyPro Member
    OP
    Investor · Sacramento, CA · Member since 2019 · 44 posts · 38 votes
    4y

    @Bill Brandt that’s what I thought too, but lender stated that I had to be on the title and they added me at closing.

    1Reply
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