I'm 26 and do not currently work. However, my father, 85, receives a decent government pension of around $50k a year. Together, we have a large amount of cash that we'd like to invest in rental properties, but I spoke with an adviser today who said that we may have trouble getting banks to give us loans, citing the age of my father and my lack of an income. I should add that both of our credit scores are excellent, and that we have 2 fully paid off properties from which we could draw equity.
Would anyone be able to speak on this matter? I've read that traditional banks will offer around 4 mortgages, and then it gets much tougher, probably requiring new avenues such as portfolio lenders, but I wonder if we could even get those first 4 mortgages?
It is illegal to discriminate in mortgage lending based on age, I gave a 92 year old man a 30 year fixed Fannie Mae loan! You need to see your bank or mortgage broker and get another adviser!
It gets "harder" with each loan as your debt to income ratios will be at play in the application process. Seems currently that 4 is the limit, this number bounces around. There are different rules to "cash out" for owner occupied, second homes and non-owner occupied (rentals). If your paid off properties are owner occupied, refi those first, if not there are several methods you might ask about with a lender that both sells loans in the secondary market and holds loans in portfolio. Good luck :)
Yeah, I'd have trouble getting a loan myself because my income is mostly from flipping. "Mr. Shepherd, how are you going to pay this $2,000/mo?" Well I'm gonna go find a house that's a POS, then sink tens of thousands of dollars into it, then sell it and profit on that one house more than you made last year" doesn't sell. It gets easier with tax returns, but my business pays for most of my life, so I personally still don't use much (any) bank money.
Buy and hold is different from flipping, though. Like Bill said, the age wont factor in, its illegal, but they are highly regulated and will need to see proper debt to income to make the payments. You can have $200,000 in their bank, ask for a $50k loan, and if you dont have monthly income you'll probably get turned down. Just the way they look at things. A lot of what you'll be able to do will depend on what else your dad has to spend that $50k on.
You'll probably want to start looking at commercial lending if you are planning on buying a bunch of stuff. You'll pay a little more in interest and will have higher down payments, but its a cost of doing business if you are going to make this into a business.
@Brett Wolk As other have stated, using age do deny a loan is a FHA violation and carried penalty. A mortgage loan is based on your ability to repay. The most important factor would be your income, the amount of current outstanding debt and amount of new debt you want.
If you have a sizable liquid assets (cash, stocks/bonds, life insurance, etc.) then some lenders will put a lean against that and let you borrow.
You want to find a mortgage banker who is knowledgeable and has access to many loan programs.
Please let me know if I can answer any other questions.
Thank you for the responses guys. The person who suggested the age limitation was a retirement planner, so he may not have been up to date on the details; I'll talk to my mortgage lender and figure things out. Thanks again
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