Re: Will an inherited home affect getting my own mortgage??
10-05-2012 12:32 PM
If the lender is adding you to the mortgage than there is a good chance that they will report the payments on your CR.
As pointed out before, even if the lender/servicer doesn't report the payment on your CR, you will have to disclose that you are responsible for the loan and then you will need to show the new lender that the payments have been made on time.
Yes, it will impact your DTI.
In order to use whatever rental income you receive from the property, you will need to report that income on your tax returns. The new lender will want a copy of your returns showing the rental income and expenses.
Also, as pointed out, they will not use 100% of the rental income. The new lender will put in an amount for vacancy and collection even if the property is fully rented and everyone is paying ontime (on a single family home its is typically 25% of your gross rents - on a multi-unit residential building it can vary from lender to lender). Keep great records of your rental receipts and expenditures too. It will help at tax time AND when you need to get a mortgage for your new purchase.
You might want to contact a CPA now to have him show you the way to handle the rentals from a financial and tax viewpoint so that you get the overall best result from your investment property. There are some real benefits to owning rental property along with a few problems.