All Forum Posts by: Phoenix Ocionna

Fund and Grow ask you to leave reviews about them after you have worked with them I usually don’t have the time or inclination to do that but this company is unusually good and deserves it. There are a lot of very positive reviews so it would appear that they are very consistent.

Brandon Kroon was my account specialist and is very professional and courteous. Always attentive to my questions. Always reliable with communication. I would highly recommend him. So far, after 2 rounds he got me 95k in business credit lines with 14 months 0% interest. This company is definitely worth their fee.

sorry for the long post but i was wondering if anyone knows how Fannie treats rental income for DTI. i found the following conflict:

with regard to how Fannie addresses rental income as shown on a schedule E when calculating DTI, i found information in 3 places:

in the guide B3-3.1-08: Rental Income, Worksheet for Investment Property(s) Form 1038 and Worksheet for Principal Residence, 2- to 4-unit Property Form 1037

  for investment properties: they seem to say take the net profit from the sched E, remove the ITIA expense, remove the depreciation expense (because that is not a cash expense) remove any one time expenses that would not occur every year, such as repairs due to a hurricane(because such an expense distorts the true average yearly income)

Then bring back the ITIA expense (yes we just removed that but whatever!!!)- and then include any mortgage principal (P) expense (that is not deductible and thus does not appear on a sched E).

And there is your rental income. As this is your true actual cash flow this is logical (although i am not sure i would call their methodology to calculate it logical)

if it is negative, they consider it a debt obligation and thus it has to get added to the debt part of your DTI. if it is positive then it is added to the income part of your DTI.

for a principal residence property: the same calculation is carried out except the PITIA expense is left out and the resulting number is used as your rental income. this is counter intuitive as it is not your actual cash flow at all, your actual cash flow is a lot less than that number, it could very well be negative

but what is also counter intuitive is that the PITIA (ie the housing expense of the entire building) is added to the debt part of your DTI.

(so maybe omitting PITIA from your cash flow calculation is a way to compensate for having the housing expense of more than your own home being added to the debt part of your DTI.)

anyway all this seems to say as long as the cash flow for all properties is positive, only PITIA from your principal residence is added to the debt part of DTI.

all this is supported by:

B3-3.1-08: Rental Income in the paragraph

 thanks fro the advice Brandon, the loan officers i spoke to never said this.  

thanks for helping me see that  Linda. i have zero interest in committing   fraud, i have actually mentioned this to lenders not just brokers no one pointed out it was fraud they all just say we cant tell you anything until you give us tax returns. i had every intention of telling them because i thought they would approve. (not to mention is it not ethically generous to give to society more than your share!)

 thanks Jerry, good to know , as i am very likely to have a lot more questions!

 consistent and significant LTCG is impressive! hats off to you John!. we did actually have 30k of CG in 2013 but its a one time thing  so i assumed it cannot be used 

 thanks to you (and your girlfriend) for the reply Erenik,

i have got conflicting info from brokers about the LTV. i heard nyc is a high income area and thus the limit is $625 not $417 and thus 75% is allowed. I tried reading through the fannie and freddie manuals but am still unsure

for DTI i have all of the data: the credit score, the primary res HOA and HOI and property tax, the income and all expenses from the investment properties are there on the sched E, and the self employed income (no w2 income). i was wondering what else do they need and how complicated can it be to calculate the DTI from that.

regretably there are no liquid assets (just 1.2 million of debt free property!)

FHA sounds like a great idea i will check it out.

thanks for the info but why would we hide this from a lender , would they not be impressed that we have enough financial capacity to forgo deductions, surely that  indicates financial strength to them. and why is it not a good thing to ask them how their formula works so that no more taxes than needed are paid , does that not indicate good financial governance. 

Have the following :

a primary res in NYC valued at 800k,

2 investment 3 fams in New Haven, CT each valued at 150k cashflowing 15k each per year, and an investment condo in Baltimore, MD valued at 100k cashflowing 10k per year.

Paid all cash for all of them. Have no debt obligations of any kind, credit score is 750.

2013 income from self employment was 25k thus total inc was 65k.

To get the 600k out of the primary res am trying to figure out how much income is needed to show for 2014.

HOA and tax(which is abated thankfully!) adds up to 500 /mon and if take 600k out thats approx 3k/mon mortgage . thus debt will be 3500/mon. if DTI of 45% is permitted then income needs to be 8k/mon approx =95k approx per year.

Need inc to be 95k average over 2 years so for 2014 need to forgo deductions to get inc to 125k. So with income from inv properties at 40k then self employed inc in 2014 needs to be 85k. By forgoing deductions and paying 35k or so in tax (ouch!) this can be made to happen.

Problem is mortgage brokers seem to be very reluctant to confirm these calculations, is there any way to know what income exactly is needed so the tax paid is no more than necessary?

2nd question :

After that ,should be able to get 75% cashout refi on the other properties because the inc on them easily covers the mortgage. Because they remain cashflow positive even with a mortgage, DTI is irrelevant and only applies to primary res financing. Is there anything wrong with this reasoning ?

Sorry for long post but dont know how else to communicate this situation.