Mortgage refinance denied!!!

Anonymous · ‎12-05-2016

Hello, everyone!

A lot of you are good at this stuff and I've gotten great advice and tips the short time I've been here. I applied to do a refinance and was denied! I have two mortgages. One is an investment property which pays for itself and of course the other one is my home. The reason for the denial was because after looking at my tax returns, they decided that I might be at risk for not being able to make payments. They practically said I made too many deductions and I might not have enough for the payments. It gave me a good laugh. I do have a lot of deductions and they're all legit. I told the lady, I don't have to make those deductions, but If I don't I will end up paying back instead of getting something back. So she practically told me, pay back the next two years and then you'll get approved if I try again after two years. She also mentioned that the lending criterias are a lot stricter now.

In 16 years, I have never missed or had a late payment in. So, I asked her, I could pay it for the past 16 years with no issues, but if my monthly payments were lower, they would think I might not be able to pay it? Left me a little speechless as that was their reason for denial.

My credit profile is clean. Scores at the time were, as provided by the report via the lender.

Equifax Beacon 5 - 812

Experian Fico 2 - 804

Transunion Fico Classic 4 - 822

Would I get the same result if I try to do it myself via a credit union? Are their underwriting criterias less strict? If not, I might just have to eat it and pay back the next two years. Thanks in advance!

DallasLoanGuy · ‎12-05-2016

If you make $100,000 per yr.... but tell Uncle Sam that you make $10,000 per yr.....

You make $10,000 per year.

Plain and simple.

Pay your taxes or don't get a loan.

I have heard all of the stuff.... "my write offs are legit"... well, if they are 'legit' then those wrote offs were the cost of earning your money.

depreciation is treated separately.... but if you tell Uncle Sam(the guy backing your loan) that it cost you 90k to make 100k.... then that is what you make as far as the lender is concerned.

Look into 'Stated Income' loans if you want. Maybe you have income a lender cannot use... But is workable in a 'Stated Income' loan.

Very few lenders have it. US Bank is one that does.

Expect to pay a premium to offset your tax advantage

Retired Lender

ktl72455 · ‎12-05-2016

Check into Portfolio Loans. They go on Bank statements not income taxes.

Also if you rental income is all the income you have, open a solo 401k and dump money into it, you get it claimi t the same as you would a legal dedution to off set what you pay in taxes. and it then becomes a asset. Interest and Depreciation, taxes and Ins are rolled back into income after all the deductions, nothing else is.

From MI.
12/4/12 TU 589 MyFico ~EQ 579 MyFico ~EX 577(Fako)

Myfico 8 scores
6/12/20 TU 803 ~ EQ 814~ Ex 784
My Wallet: Cap1 3,500K ~FH 2950~Credit One 1750~Credit one #2 1250~Orchard Bank 400 ~NFCU nRewards 18,000~NFCU Cash Rewards 18,500 ~Care Credit 12000~Discover 6000~Lowes 5450~ Amex 5400.00 ~ Harvest King 8000 ~ Langley~Penfed~Service CRU~red stone cru~
UTL 17%

DallasLoanGuy · ‎12-06-2016

@ktl72455 wrote:
They go on Bank statements not income taxes.

oh yeah. there is subprime that will do that i am pretty sure.

Retired Lender

Anonymous · ‎12-06-2016

@DallasLoanGuy wrote:
If you make $100,000 per yr.... but tell Uncle Sam that you make $10,000 per yr.....

You make $10,000 per year.

Plain and simple.

Pay your taxes or don't get a loan.

I have heard all of the stuff.... "my write offs are legit"... well, if they are 'legit' then those wrote offs were the cost of earning your money.

depreciation is treated separately.... but if you tell Uncle Sam(the guy backing your loan) that it cost you 90k to make 100k.... then that is what you make as far as the lender is concerned.

Look into 'Stated Income' loans if you want. Maybe you have income a lender cannot use... But is workable in a 'Stated Income' loan.
Very few lenders have it. US Bank is one that does.
Expect to pay a premium to offset your tax advantage

Appreciate the reply. That totally makes sense if I made 100k and took 90k in deductions. That would only leave me with 10% of my income to pay the bills. That isn't the case with me. My deductions only take away about 25% of it and the majority of that 25% is my 1098 mortgage interest deduction. I don't even take the full amount. I'm left with 75% of my income to pay the mortages, bills, and daily life expenses. It could of just been the lender who didn't want to work with me. It was pretty shaky from the beginning. I'll definitely look into the stated income type of loan. Thanks!

Anonymous · ‎12-06-2016

@ktl72455 wrote:
Check into Portfolio Loans. They go on Bank statements not income taxes.
Also if you rental income is all the income you have, open a solo 401k and dump money into it, you get it claimi t the same as you would a legal dedution to off set what you pay in taxes. and it then becomes a asset. Interest and Depreciation, taxes and Ins are rolled back into income after all the deductions, nothing else is.

My investment property(apartment complex) is an additional income. My main income is from my salary. I'll definitely look into a portfolio loan. it looks good to me by how you said it. Thanks!

VALoanMaster · ‎12-06-2016

@Anonymous wrote:
@ktl72455 wrote:
Check into Portfolio Loans. They go on Bank statements not income taxes.
Also if you rental income is all the income you have, open a solo 401k and dump money into it, you get it claimi t the same as you would a legal dedution to off set what you pay in taxes. and it then becomes a asset. Interest and Depreciation, taxes and Ins are rolled back into income after all the deductions, nothing else is.

My investment property(apartment complex) is an additional income. My main income is from my salary. I'll definitely look into a portfolio loan. it looks good to me by how you said it. Thanks!

I would get a 2nd & 3rd opinion from a mortgage banker before you go looking into other options that are going to cost you more money.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.

Anonymous · ‎12-06-2016

@VALoanMaster wrote:
@Anonymous wrote:
@ktl72455 wrote:
Check into Portfolio Loans. They go on Bank statements not income taxes.
Also if you rental income is all the income you have, open a solo 401k and dump money into it, you get it claimi t the same as you would a legal dedution to off set what you pay in taxes. and it then becomes a asset. Interest and Depreciation, taxes and Ins are rolled back into income after all the deductions, nothing else is.

My investment property(apartment complex) is an additional income. My main income is from my salary. I'll definitely look into a portfolio loan. it looks good to me by how you said it. Thanks!
I would get a 2nd & 3rd opinion from a mortgage banker before you go looking into other options that are going to cost you more money.

Will do definitely. Thank you!

Anonymous · ‎12-06-2016

I would get a second opinion. Regardless of common sense, we still have specific ways we need to calculate income. I cannot determine if your first lender did their due diligence or not.