Can my wife buy her own home?
We're looking to add property to our portfolio. I currently can no longer qualify for any conventional financing due to DTI requirements, however, my wife is NOT on the title or note of any of our holdings. Therefore, there won't be any mortgages on her credit report.
Could she use her good salary and decent credit to purchase a home herself and leave me out of it? If I co-sign, will my excellent credit score help her or sink the whole deal since I have a large mortgage under my name? Will the lender be curious where she is currently living since she isn't renting, but isn't paying a mortgage either?
Thanks.
Why cant she claim she is renting, if shes living with you, you might not directly charge her rent, but im sure she helps out in some way, and you could claim this as her "rent" I dont believe they ask for leases or anything like that. She would just have to qualify for the property based on her income and DTI.
I would NOT suggest putting youself on the property. Im currently doing this as we speak.. so far so good...
My wife and I started to go down this road as well. If memory serves correct, your wife will have to be able to carry your rent/mortgage on your primary entirely on her own in addition to the additional debt load of the new property. In our case we did have to provide copies of our leases/mortgage for our primary to demonstrate what that amount was in addition to any other debt that would show up on the credit report. If you want to cosign the lender will probably want to look at your credit profile as well. If they see your DTI is too high, you most likely won't be allowed to cosign.
-
Contractor
- First Property Management
That is a great topic. I'd be interested to know as well. My FICO is great but no way I can qualify because of my DTI as well. I'd like my wife to eventually buy a house when she is up to speed on her income (She just finished nursing school :mrgreen: ).
brian, if the lady gives you trouble, you can you evict her??
#2 Off Topic Contributor
- Real Estate Investor
- the villages, FL
My wife just qualified for her first property on her own, a rental. It is to help her increase her ficos. Rich
some great points have been made...i'm going to elaborate a little more...
your wife will need to qualify solely alone based off her income and her credit.
your great credit score will no way help her since it also comes with a high dti...you cannot/should not/will not be on app.
the lender may ask what her current mortgage payment is (this would show on her credit report), what her rent payment is (this wouldn't), or what her living situation is (ie, lives with parents rent-free). this is to factor in a debt ratio seeing that i take it this loan isnt for her to occupy.
Originally posted by Josh Green:
the lender may ask what her current mortgage payment is (this would show on her credit report), what her rent payment is (this wouldn't), or what her living situation is (ie, lives with parents rent-free). this is to factor in a debt ratio seeing that i take it this loan isnt for her to occupy.
Thanks Josh. My wife doesn't have a mortgage payment since I bought the house myself before we were married. She's not exactly renting or living with parents, she's living with me. Can she just tell the lender her husband is paying the mortgage or are they going to stick their nose into that business? Thanks again.
OK, So I would add some other questions. What if my wife is a partner with me in two of my LLCs. Those LLCs own properties but I am the only one on the mortgage. (Properties were moved to the LLCs after purchase). How that effects her ability to qualify?
What about California's Community Property laws? Since my wife is entitled to 50% of my property, isn't she also liable to any debt attached to this property whether she is on the mortgage or not?
If I solely the responsible party of the mortgage on my own residence as well as rental properties, can she buy a property as "2nd home" rather than "investment property"? I'm aware of the fact that she cannot rent it, but she may decide to have a family member living in it.
eddie, i would think as far as the banks are concerned, that your wife is not involved with those properties in your llc, unless you for some reason give them a copy of the operating agreement. otherwise, the bank will see that you are on the hook for them and not her. anyone else???
Originally posted by Eddie Ziv:
What about California's Community Property laws? Since my wife is entitled to 50% of my property, isn't she also liable to any debt attached to this property whether she is on the mortgage or not?
Ah, good point!
I think we'll just go check with my credit union and see if and what she pre-qual's for. If this works, I'll let all of you know.
Sorry, I never updated.
Our credit union turned out to be a real pain in the chops when my wife applied for a mortgage on her own without me as a co-borrower. Just so you know, our credit union is VERY conservative and regards investment property as favorably as a Southern Baptist views Las Vegas. They wanted to know things like WHERE we got our savings from - Ummm, from SAVING our money, DUH!!! So we abandoned our application with them and started looking at other avenues.
We discovered VA foreclosures and my wife just got approval last week on a house we found in a nearby county. We were supposed to close tomorrow, but the VA hasn't got their paperwork in order and we will have to extend closing into next week. Anyways, the approval process was still pretty involved requiring several "letters of explanation", but we got'er done. Basically we had to provide:
1) A statement that our primary residence was "in husband's name only"
2) A letter from me granting my wife access to all joint funds for this purchase
3) A letter explaining several deposits into our joint checking account that were NOT my wife's Direct Deposit paycheck were MY deposits
4) A form stating what my wife was paying for child care since she is a "working" mom (the answer was zero since I watch our daughter when my wife is at work)
5) All the other standard lender stuff like bank statements, pay stubs, etc.
I hope this sheds a little light on some of the underwriting requirements when one half of a married unit applies for a mortgage on their own. Of course, a great deal depends on the lender, but this was how our ordeal went down. Good luck to everyone.
#4 sounds sexist and discriminatory. I've never been asked what I pay for child care on a mortgage application or in the process.
gladyou got it worked out mitch....btw, i think it's awesome that your wife is as intersted in rentals as you are...did it take her awhile to come around?
Originally posted by BryanA:
i think it's awesome that your wife is as intersted in rentals as you are...did it take her awhile to come around?
Bryan, that could be an entire thread of its own!
When I met my wife, I already owned a house and had been renting out my condo for years. She had broken up with her boyfriend and his house was shortly foreclosed on, leaving her to rent a room in a co-worker's house.
By the time we were seriously involved and she moved in with me, she expressed interest in buying some investment real estate since she was making good money as a registered nurse and most of it was simply going into the bank earning 1%. At the time, 2006-07, things were still pretty expensive, so I told her we should wait.
Then the bubble burst, prices plummeted, and we had a nice little nest egg saved up for investing. I told her now is the time to snatch up real estate. So we bought a house in Murrieta, CA in 2009 and are currently very close to closing on another in Moreno Valley. I hope to buy one more in 2011.
Her emotions run the gamut from apprehension, fear, and buyer's remorse, to excitement, curiosity, and optimism. Usually, she only expresses her negative feelings to me, probably so I can comfort and assure her we're doing the right thing. However, when others (friends, co-workers, etc.) criticize her for investing in real estate, she turns into a tiger and defends our actions.
Back in 2009, our daughter's Godmother told my wife, "Why are you blowing your money on a rental house? You should spend your money at the mall and help out the economy." My wife quickly replied, "Why should I fix the economy? I didn't screw it up!" :mrgreen:
So altogether, I think she believes deep down real estate investing is the way to go, but she needs me to sway her fears aside from time to time as they surface. One day she'll tell me, "We are NOT buying any more houses after this one!" and the next day at work, she'll tell a doctor, "You should buy real estate! What's all your money earning you in the bank?"
That's my girl. :wink:
Originally posted by Jon Klaus:
#4 sounds sexist and discriminatory. I've never been asked what I pay for child care on a mortgage application or in the process.
It certainly took me by surprise as well. I've never seen anything like it before, but it's something the VA requires. Below is a cut & paste of the form they sent us:
The following information is required by the Veterans Administration and will accompany your application for loan approval.As employed parents of minor children, I/we certify that the following information concerning child care expenses is true and correct.
My/Our Children are cared for by _______________________
Whose address is _______________________
Telephone number ________________________
The cost of this care is $_______ per week $_______per month
The joys of dealing with a government agency.
Hi Mitch,
Which bank provided you the financing on this property? And did you use a mortgage broker or not?
Thanks
With my situation we are in California I am retired so I have no income other than investments but my wife makes over 100K from her job so we have been putting the rental homes in her name so she gets the tax breaks. It has been working out nicely, eventually she will no longer have to pay taxes on her work income by offsetting it with the deductions from the homes.
Originally posted by Arun Iyer:
Which bank provided you the financing on this property? And did you use a mortgage broker or not?
This was a VA REO offerred through their Vendee Program, so it was basically "seller" financed by the VA. There wasn't any mortgage broker involved, but the "loan" officer, processing, and servicing were all provided by the morons at BofA.