Home loan question

[Anonymous]

So my mom and I are about to do a pre-qualifer with PNC or Chase Bank and I had a big question! My question is, if my mother owns a property that she is currently renting out to a tennant with a lease agreement, can she use that portion up towards another mortgage? She is renting the house out for $900 and that is a big chunk of her DTI ratio if she has to count that. She just started renting it out a month or two ago also, but she has received both payments on time. If someone could please respond to this I would really appreciate it as my mom and I want to purchase a home for my brothers and I in Arizona soon  

[krielly]

Sorry, 2 months of rental history will not be enough to allow it to be counted as income.

It seems I have heard you need 2 years of rental income history (which also must be claimed as income on tax returns, and is offset by any associated expenses). I am uncertain if 2 years is a "standard", but others may chime in.

K

[StartingOver10]

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@Anonymous wrote:

So my mom and I are about to do a pre-qualifer with PNC or Chase Bank and I had a big question! My question is, if my mother owns a property that she is currently renting out to a tennant with a lease agreement, can she use that portion up towards another mortgage? She is renting the house out for $900 and that is a big chunk of her DTI ratio if she has to count that. She just started renting it out a month or two ago also, but she has received both payments on time. If someone could please respond to this I would really appreciate it as my mom and I want to purchase a home for my brothers and I in Arizona soon  

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Two comments:

1) Yes, she has to count her current mortgage payment

2) Big box banks like PNC or Chase have more lender overlays and lower allowed ratios than regular mortgage bankers.  I would not go to a big box bank for your mortgage, go to a lender that only does mortgages.  

[Anonymous]

Would you recommend Quicken Loans? I just started talking to them and they sound like they know what they are doing. The lady also said that my mom can count her rental income as long as she has a 12 month lease agreement signed in place (which she does). 

[krielly]

I suggest doing a search of them here on the forums. I've heard mixed reviews....... No experience with them personally......

K

[Anonymous]

Who would you recommend personally? Sorry if I'm being pushy I just don't want to get ripped off or go through a horrible LO. 

[Anonymous]

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@Anonymous wrote:

Who would you recommend personally? Sorry if I'm being pushy I just don't want to get ripped off or go through a horrible LO. 

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Do you have any friends or family who have purchased a home soon? If they have a lender that did a wonderful job, that could be a great place to start. If you don't know of anyone who recently purchased, you can always do research and check lenders' online reviews.

[Anonymous]

My mom has purchased quite a few homes locally, but she did so through small credit unions. I don't think that credit unions in Arizona would be willing to work with us if we currently reside in Indiana? I've been talking to Quicken Loans and my LO seems confident and sounds like she knows what she's doing so I might go with them. I've also contacted Wells Fargo, but people on here tend to look down upon big banks for mortgage lending and say to go with lenders who specialize in mortgages? 

[BrianB_The_Loan_Professor]

As long as she has a solid equity position (usually 30% or more) you can count the rent without the two year history

Does she owe quite a bit less than what the rental is worth?

Good Luck - 

BrianBTheLoanProfessor

[Anonymous]

Well she owes around 98k on her rental house and it is worth around 120k so she looks good from that stand point. Like I said originally though she has a 12 month lease agreement in place already. If it helps any her salary is 60k/yr and her DTI ratio counting both  houses and her other debt is 36%. So with the new house payment it would increase her DTI to 43% which every lender I've talked to said is okay as long as it's under 45% or so. But if we could include her rental income than her DTI would be much much lower!